Vandals Set the Night on Fire
February 18, 2024
This Week in The Autonomy Economy, The Road to Autonomy Index declined 1.15%, vandals set fire to a Waymo autonomous vehicle in San Francisco, Cruise announced the hiring of Steve Kenner as Chief Safety Officer and Aurora reported Q4 2023 earnings.
Deere announced that the company aims to deliver an autonomous, battery-powered electric utility tractor to the ag market by 2026. Samsung Heavy Industries announced that the company is on track to deploy autonomous ships in 2030.
Qualcomm’s automotive revenue continues to grow as the company expands into the ADAS market putting them directly in competition with Mobileye. We will be watching to see if Qualcomm can gain ADAS marketshare and how Mobileye will react to a new well-funded competitor entering the market.
Cruise parent GM, Deere, Mobileye, Qualcomm and Waymo parent Alphabet are The Road to Autonomy Index component companies
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Vandals Set the Night on Fire in San Francisco
On February 11th during a Lunar New Year celebration in San Francisco, an individual decided to jump on the hood of a Waymo autonomous vehicle and break its windshield, followed by a second individual further damaging the Waymo vehicle according to Reuters.
When the second individual jumped on the hood, the situation took a turn for the worse as the crowd began cheering and clapping in approval. At some point during the mayhem a lit firework was thrown in the Waymo vehicle causing it to burn to the ground.
While San Fransisco residents rage against the machine, putting cones on Cruise vehicles, hitting them with hammers, smashing windows of Waymo vehicles and burning them to the ground, they are indirectly harming themselves.
Their “proud” moments of glory are on the verge of creating an economic situation where the machine rages against it’s attacker. That machine is tech. Tech is the economic engine that keeps San Francisco’s economy humming, employing 175,400 individuals in the San Francisco metro area.
If the rage against the machine behavior continues, companies will be reluctant to invest in San Francisco. No investment, no jobs. Jobs will disappear, the San Francisco economy will shutter, crime will increase and the city will fall further into disarray.
Unfortunately, the individuals causing the damage along with the cheering crowd failed to grasp the economic reality of their actions.
San Francisco Mayor London Breed has acknowledged this to some degree. While Mayor Breed would make the argument that we are trying to resurrect the “doom loop narrative”, we are not. We are simply stating the economic reality of the situation.
Facts are the facts. Crime and vandalism drive away residents, businesses, tourists and most importantly jobs. Crime and vandalism leads to depressed economic environments.
In a February 16th The San Francisco Standard opinion piece, Mayor Breed acknowledged it was an act of vandalism.
We always condemn acts of vandalism and work to hold these individuals accountable. Right now, our police department is investigating the incident, and I’m confident that any arrest will lead to an aggressive prosecution by our district attorney.
– San Francisco Mayor London Breed, The San Francisco Standard, February 16, 2024
It’s vandalism plain and simple. The San Francisco Police Department is currently investigating the incident, yet no arrests have been made. While the Waymo vehicle is equipped with video cameras, San Francisco Police are banned from using facial recognition technology. Potentially slowing down the investigation.
We hope that the San Francisco Police Department receives the support needed to do a thorough investigation and bring those who are responsible to justice.
Our take: Autonomous vehicles are good for San Francisco’s economy. Autonomous vehicles will offer those in need, safe and affordable access to mobility. Autonomous vehicles are in San Francisco’s DNA, just like the iconic trolley cars. Be kind and embrace the future.
Waymo parent Alphabet is a The Road to Autonomy Index component company
GM Does The Right Thing
On February 12th, Cruise announced the hiring of Steve Kenner as Chief Safety Officer. This is a home coming of sorts as Mr. Kenner began his career at GM in 1978. Fast forward 45 years later and Mr. Kenner is back at GM in a mission critical role.
Mr. Kenner brings decades of safety experience to Cruise. The hiring of Mr. Kenner is a clear indicator that GM is going to reboot Cruise and introduce a commercial robo-taxi service once again.
When GM reintroduces a Cruise robo-taxi service, the competitive landscape is likely to look a lot different than it does today. The robo-taxi industry is in the midst of change. The leader continues to be Waymo, as they embark on the largest expansion of robo-taxis in history — extending their service area to 635 square miles.
Waymo’s closest competitor was Cruise just a few months ago. Today, Cruise is no longer considered a viable competitor to Waymo. Could this change after Mr. Kenner develops and implements a safety culture? Perhaps, but will it be too late?
Mr. Kenner is going to have to work to rebuild trust with regulators, the public and GM shareholders as he embraces his new role. We will be watching to see how Mr. Kenner’s efforts impact Cruise and the eventual return Cruise vehicles to the road.
Our take: We wish nothing but the best to Mr. Kenner. He has a big job to do. Cruise vehicles will be on the roads at some point again in the future.
Cruise parent GM is a The Road to Autonomy Index component company
Aurora Q4 2023 Earnings
On February 14th, Aurora reported Q4 2023 earnings. Earnings came in at a net loss of 13 cents per share, compared to analyst estimates of 15 cents per share. Overall net loss was $192 million for the quarter. For 2023, the company reported a net loss $796 million.
Total cash, cash equivalents, short-term investments, and long-term investments were reported at $1,348 billion. In 2024, the company is projecting quarterly cash use of $175 million to $185 million a quarter for an estimated annual cash burn of $700 to $740 million.
At the end of 2024, Aurora will have an estimated $608 million and cash equivalents on hand based on projected cash burn rates. While Aurora will have enough liquidity to last into 2025, we expect the company to raise additional funds in late 2024 / early 2025 depending on market conditions.
The market conditions for investments in the autonomous trucking sector are starting to open up as several of Aurora’s competitors are in the market currently raising capital.
We hear that investor interest in the sector is strong and the soon to be announced rounds will be successful. Furthermore, we are hearing that valuations across the board in the autonomous trucking private market are increasing gradually.
While the market for investment in the sector is opening up, Aurora is busy preparing for their commercial launch on the Dallas to Houston lane autonomously with no safety driver in 2024.
As we get into ‘24, AUR’s performance is now becoming a much more near-term story as end of year launch (beta commercial) will become a crucial proving point of execution towards a greater scaled commercialization path. So far, so good as AUR keeps sticking to their targets despite the many hurdles to cross (we’re always cautious on nitpicking AV/EV launch times as we have seen the last 10% can be 90% of the work in AVs).
Their “ARM” (Autonomy Readiness Measure) reached 93% vs 84% Q3 (needs to be 100% for launch), API of 99% implies improving performance, & AUR has now driven 1MM+ AV miles. Most impressively, however, is that pilot runs (FedEx, Uber Freight & others) are delivering >100 loads/week near 100% on-time performance.
– Chris McNally, Head of Global Automotive & Mobility Equity Research at Evercore ISI
When Aurora’s Autonomy Readiness Measure reaches 100%, they will begin Dallas to Houston runs fully autonomous.
Aurora is getting close to commercial launch. It’s an exciting time in the autonomous trucking industry as 2024 is the year that the industry begins to commercialize.
If you are interested in learning more about Aurora’s path to commercialization, we would recommend the following The Road to Autonomy podcast:
- The World’s Best Product is a Very Profitable Product, A Conversation with Sterling Anderson, Co-Founder & Chief Product Officer, Aurora (November 14, 2023)
Our take: We will be visiting Aurora in April and taking a ride in the truck. We will report back on our experience in a future newsletter.
Automotive is a Growth Strategy for Qualcomm
In Q1 FY 2024, Qualcomm reported automotive revenue of $598 million up from $456 million in Q1 FY 2023. The increase in automotive revenue was primarily driven by an increase in demand for connectivity and digital cockpit products.
In 2023, 75 new vehicle models launched commercially with Snapdragon® Digital Chassis Solution. Qualcomm is beginning to cement their lead in the in-vehicle infotainment and connectivity market.
One of Qualcomm’s biggest advantages over competitors is connectivity. As OTA (Over-The-Air) updates become commonplace and society shifts to autonomous vehicles with commerce platforms, Qualcomm stands to directly benefit.
On the infotainment front, Qualcomm competes directly with NVIDIA. While NVIDIA currently dominates the GPU market, their automotive earnings are only a fraction of their total revenue ($18,120 billion Q3 FY 2024).
In Q3 FY 2024 (November 21, 2023) NVIDIA reported automotive earnings of $261 million, up from $251 million in Q3 FY 2023.
NVIDIA’s automotive revenue only increased $10 million year-over-year, while Qualcomm’s automotive revenue increased $142 million year-over-year.
As Qualcomm looks to grow their automotive revenue segment, the company is expanding their ADAS offering with it’s Snapdragon Ride Flex SoC product. RideFlex will enable Qualcomm to compete directly with Mobileye.
The other driver of strong results was automotive, albeit to a smaller extent. Automotive grew because of the new car launches, wherein QCOM can see large content increases (current content between $200 and $3,000 depending on the car tier), primarily because of transition from cloud/connectivity to cockpit solutions. Akash stated that all major OEMs with modern cockpits are being powered by Snapdragon, and the solution is a fully integrated monolithic chip like in phones. Qualcomm has stuck with the $30Bn design pipeline and sees the next big opportunity in ADAS, competing with Mobileye.
– Stacy Rasgon, Managing Director & Senior Analyst, U.S. Semiconductors and Semiconductor Capital Equipment, AB Bernstein from Qualcomm (QCOM): Notes from the Road – Takeaways from a client lunch meeting with the CFO/COO research report, February 12, 2024
In Q4 2023, Mobileye reported revenue of $637 million up from $565 million in Q4 2022. An increase of $72 million year-over-year.
Quarter-Over-Quarter, Qualcomm’s automotive business is growing at the fastest pace. Whether this pace holds or not, has yet to be determined, but the company is clearly well positioned for the future as autonomous vehicles will become immersive connected commerce platforms.
Our take: The future of the car will be autonomous and it be defined by experiences. The companies that can unlock these experiences through a connected commerce platform will be the winners.
Qualcomm, Mobileye and NVIDIA are The Road to Autonomy Index component companies
Social Buzz
Widely Held Views on Autonomy
Timothy B. Lee stated that the above three views on autonomy are “widely held” in his estimation. We are unsure how widely held these views are supported, but they are certainly commonplace amongst certain individuals.
Let’s break this down these “widely held claims”:
1. At some point in the future Tesla will achieve full autonomy. We are uncertain as to when, but we believe that Tesla will be able to achieve full autonomy at some point in the future. Waymo is not a joke. Waymo is the most advanced and commercially successful robo-taxi business in the world with a 635 square mile service area.
2. Waymo has successfully achieved full autonomy and operates a commercial autonomous robo-taxi service every day in multiple cities around the United States. Tesla is far from a joke. Tesla is profitable, they ushered in a future with mass-market electric vehicles. Without Tesla, EVs would account for only a small fraction of global auto sales outside of China.
3. Full autonomy is here and Waymo and Tesla are two of the most important companies in autonomy today.
Our take: The autonomous vehicle industry needs to come together to build public trust and acceptance of autonomous vehicles.
Waymo parent Alphabet and Tesla are The Road to Autonomy Index component companies
Autonomous Vehicles Impact on Safety and Health Care
Motor vehicle crashes are a leading cause of death in the U.S., with over 100 people dying every day. In 2015, more than 2.5 million drivers and passengers were treated in emergency departments as the result of being injured in motor vehicle traffic crashes.
For crashes that occurred in 2017, the cost of medical care and productivity losses associated with occupant injuries and deaths from motor vehicle traffic crashes exceeded $75 billion. If autonomous vehicles eliminate a majority of crashes, the economic impact could be astronomical. Not to mention the positive societal impact.
Our take: The time to come together for the betterment of society is now.
Waymo parent Alphabet is a The Road to Autonomy Index component company
New Apple Autonomous Test Vehicle Sensor Layout?
On February 12th, Ryan Hickman posted three photos on X of what appears to be a new Apple autonomous test vehicle sensor layout. The lines are cleaner, and the roof rack appears to be slimmer. If this is indeed a new sensor layout, all signs point to Apple’s continued progress on Project Titan.
Our take: At some point in the future, Apple is going to introduce an autonomous vehicle. It’s simply a matter of when, not if Apple introduces an autonomous vehicle. When they do, it will be sold as a subscription.
Apple is a The Road to Autonomy Index component company
The Road to Autonomy Index® / Weekly Performance
The Road to Autonomy Index® is a high-definition lens into the emerging world of autonomous vehicles. It is the world’s first and only pure-play index designed to measure the performance of the autonomous vehicle/truck market.
For the week of February 12, 2024, The Road to Autonomy Index declined 1.15%, the S&P 500 declined 0.45% and the NASDAQ 100 declined 1.56%.
The Road to Autonomy Index underperformed 0.7% and outperformed the NASDAQ 100 by 0.41%.
The top performing stocks in The Road to Autonomy Index this week were:
- Uber returned 10.58%
- Tesla returned 3.30%
- Volvo Group returned 3.20%
S&P Dow Jones Indices is the custom calculation agent for The Road to Autonomy Index
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The Road to Autonomy Index Component Companies
Latest The Road to Autonomy Podcasts
The Road to Autonomy podcast hosted by Grayson Brulte is a podcast featuring unconventional conversations about the future of mobility and the emerging autonomy economy. New episodes every Tuesday.
It All Comes Down to Unit Economics
Matt McLelland, VP of Sustainability and Innovation, Covenant joined The Road to Autonomy podcast to discuss why it all comes down to unit economics when fleets are evaluating new trucking technologies such as battery electric trucks and autonomous trucks.
Listen on The Road to Autonomy | Apple Podcasts | Spotify
Wednesday, February 14, 2024
The Current State of The Mobility Markets
Pete Bigelow, Senior Reporter, Automotive News joined The Road to Autonomy podcast to discuss the current state of the mobility markets. Markets that are in flux with EV sales falling, GM rebooting Cruise, while Waymo scales robo-taxi operations and the autonomous truck industry prepares to launch commercial operations.
Listen on The Road to Autonomy | Apple Podcasts | Spotify
Tuesday, February 6, 2024
The Politics of Electric Vehicles
Mike Murphy, Republican Political Strategist, Co-Host of Hacks of Tap and CEO, EV Politics joined The Road to Autonomy podcast to discuss the politics of electric vehicles and their impact on the 2024 election.
Listen on The Road to Autonomy | Apple Podcasts | Spotify
Tuesday, January 30, 2024
Subscribe to This Week in The Autonomy Economy™
A weekly newsletter featuring insight and commentary on the autonomy economy™ and how the financial markets are viewing its emergence.
All price references and market forecasts are as of the date that this newsletter has been sent. The Road to Autonomy is not providing any financial, economic, legal, accounting, or tax advice or recommendations in this newsletter. The information contained in this newsletter does not constitute investment advice and should not be relied upon to evaluate any potential transaction.
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