A trend in the autonomous-vehicle industry toward consolidation will accelerate in the wake of the novel coronavirus, three industry experts told Business Insider.
Waymo, Ford Autonomous Vehicles, Cruise, Baidu, and Intel's Mobileye are in the best position to weather the fallout from the coronavirus, said Guidehouse Insights research analyst Sam Abuelsamid.
Small startups and larger companies that haven't made much visible progress on self-driving tech — like Uber, BMW, and Nissan — will be in a more difficult position, Abuelsamid said.
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There's been a trend in recent years toward collaboration and large fundraising rounds in the autonomous-vehicle industry as its leaders become more apparent. The economic impact of the novel coronavirus will expedite that process, three industry experts told Business Insider.
"We were already on a path for consolidation," said Matt Trotter, a senior market manager at Silicon Valley Bank who works with transportation companies. "Now, with the new environment, I think that's only going to accelerate it."
In the 2010s, some companies predicted they would have self-driving cars on the road by the early 2020s, but those plans have either been delayed or scaled back as it's become clear that developing safe and effective autonomous-driving systems will be harder than was first expected. That dynamic, combined with the fact that many companies working on the technology are not yet making money from it, will concentrate the autonomous-vehicle industry around a smaller number of larger companies as startups go out of business and automakers seek partnerships or abandon their automated-driving efforts, said Aakash Arora, a managing director at Boston Consulting Group who focuses on the automotive and mobility industries.
The trend toward consolidation is not new. Since General Motors bought the startup Cruise in 2016, there's been a wave of dealmaking around a technology that has the potential to transform consumer cars, ride hailing, deliveries, and logistics: Ford and Volkswagen invested in Argo AI, Toyota took stakes in Pony.ai and Uber's Advanced Technologies Group, Daimler and BMW formed a partnership around mobility and autonomy, and Hyundai and Aptiv created a joint-venture focused on autonomous vehicles.
Waymo, Ford, and Cruise are in a good position
According to the research firm Guidehouse Insights, the leaders in the autonomous-vehicle industry are not independent startups, but companies that combine the resources of a Fortune 500 firm with the kinds of specialized tech skills seen more often in Silicon Valley than Detroit. Waymo (an Alphabet subsidiary that was spun off from Google's self-driving car project), Ford Autonomous Vehicles, and Cruise topped Guidehouse's 2019 and 2020 rankings of companies developing autonomous-driving technology and mobility services. Those three, along with Intel's Mobileye and Baidu, are in the best position to weather the fallout from the coronavirus, said Sam Abuelsamid, a research analyst at Guidehouse Insights whose areas of focus include automated driving and mobility services. The common threads between them are strong technology and promising business models.
"It's not enough to just make an automated-driving system," Abuelsamid said. "You have to figure out how you're going to go to market with that."
In contrast, small startups that have yet to make much progress will be put in a difficult position, Abuelsamid said, as it was already becoming harder for them to raise money before the coronavirus spread across the globe. In recent months, Zoox (which has reportedly been in discussions to be sell itself to Amazon), Ike, Velodyne Lidar, and Kodiak Robotics have undergone layoffs, while Starsky Robotics has shut down.
"There's simply too many companies doing this right now," Abuelsamid said. "There was never going to be a market to have 70 different companies developing automated-driving systems."
Uber and Apple may have to abandon their AV efforts
But small startups are not the only autonomous-vehicle companies that will be challenged by the coronavirus. Larger and wealthier firms with little to show for their efforts, like Apple and Uber, may end up shutting down their self-driving-car projects, while automakers that are in a similar position — like BMW, Volvo, and Nissan — may seek partnerships instead of continuing to develop their technology in-house, Abuelsamid said.
"Although the current situation of course affects the automotive industry, our path to automated driving remains unchanged," a BMW representative told Business Insider.
An Uber representative highlighted the steps taken by the company's autonomous-driving program in 2019 and 2020, including launching data collection efforts in Washington, DC, and Dallas, resuming testing in San Francisco, unveiling with Volvo a production vehicle that could support fully-autonomous technology, and creating an advisory board focused on safety.
Apple, Volvo, and Nissan did not respond to requests for comment.
Consolidation is not likely to have much of an impact on the development timelines for self-driving systems, Arora and Abuelsamid said, but companies may shift their focus to business models that could be more lucrative in a post-coronavirus world or generate faster profits, like deliveries, fixed-route shuttles, and, Trotter said, logistics and trucking.
"The longer-term timeline should not change," Arora said. "It will just mean that we see fewer players competing more intensely, which is good for technology development."
Do you work in the autonomous-vehicle industry? Do you have an opinion on how your company or the industry as a whole will handle the fallout from the coronavirus? Email this reporter at email@example.com. You can also reach out on Signal at 646-768-4712 or email this reporter's encrypted address at firstname.lastname@example.org.