Even after billions in capex, self-driving cars remain stuck in neutral. The market value of Waymo, the market leader, has plunged from $175B to $30B since 2018. (Bloomberg)
NH: The last time we reported on self-driving cars (see “The Receding Mirage of Driverless Cars”) in 2021, we noted that the industry--humbled by its slow-as-molasses progress--was recalibrating its expectations and focusing on more modest goals like driverless buses along fixed routes.
Another year has gone by, and it’s looking like automakers should have set their expectations even lower.
Seven years after Google’s self-driving vehicle prototypes first hit the road, the most state-of-the-art models struggle with (among other things) bad weather, traffic cones, construction, pedestrians, crossing guards, animals, and—perhaps most crucially—left turns without a turning lane.
Investors have reacted accordingly. The estimated market value of Waymo, Alphabet’s (GOOGL) self-driving car division, has tumbled from $175B in 2018 to $30B today.
Aurora Innovation (AUR), which is partially owned by Uber (UBER) and went public last year, is down nearly 80% YTD and is now worth less than $3B. Mobileye, Intel’s (INTC) self-driving car unit, just cut its expected valuation from $50B to $16B. And countless other startups have been bought by bigger competitors, including Zoox, Drive.ai, Voyage, and Ike.
Yet big-name companies are still treating self-driving technology as a selling point, which IMO is a negative investment signal. Uber and Lyft, for instance, are no longer developing their own self-driving cars, but are both adding robotaxis to their networks of available vehicles.
These robotaxis can only travel in certain pre-mapped neighborhoods under ideal driving conditions, which greatly limits their use. Oh, and most of them still require drivers to handle problematic "edge cases."
Cruise tried running robotaxis in San Francisco at night without drivers--and more than half a dozen of them stopped in the middle of the street and blocked traffic for hours.
Many of those who once believed in the potential of self-driving cars now proclaim that they're hugely overhyped. According to Anthony Levandowski, one of the engineers who co-founded Waymo in 2009, the most complexity that these vehicles can reliably handle is an industrial site. (Levandowski is the CEO of Pronto, which develops autonomous technologies for dump trucks.)
Last week, even Elon Musk--the industry’s loudest champion--admitted that Tesla’s (TSLA) self-driving technology, FSD, isn’t ready to be used without a driver behind the wheel.
But he still insisted that in 2023, the company will have enough data to show regulators that FSD is much safer than the average human driver.
I’ve said it before, and I’ll say it again: I wouldn’t hold my breath.
Musk may be the only major public figure left who is still sticking up for self-driving cars. But his optimism rides on yesterday's hopes.
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ABOUT NEIL HOWE
Neil Howe is a renowned authority on generations and social change in America. An acclaimed bestselling author and speaker, he is the nation's leading thinker on today's generations—who they are, what motivates them, and how they will shape America's future.
A historian, economist, and demographer, Howe is also a recognized authority on global aging, long-term fiscal policy, and migration. He is a senior associate to the Center for Strategic and International Studies (CSIS) in Washington, D.C., where he helps direct the CSIS Global Aging Initiative.
Howe has written over a dozen books on generations, demographic change, and fiscal policy, many of them with William Strauss. Howe and Strauss' first book, Generations is a history of America told as a sequence of generational biographies. Vice President Al Gore called it "the most stimulating book on American history that I have ever read" and sent a copy to every member of Congress. Newt Gingrich called it "an intellectual tour de force." Of their book, The Fourth Turning, The Boston Globe wrote, "If Howe and Strauss are right, they will take their place among the great American prophets."
Howe and Strauss originally coined the term "Millennial Generation" in 1991, and wrote the pioneering book on this generation, Millennials Rising. His work has been featured frequently in the media, including USA Today, CNN, the New York Times, and CBS' 60 Minutes.
Previously, with Peter G. Peterson, Howe co-authored On Borrowed Time, a pioneering call for budgetary reform and The Graying of the Great Powers with Richard Jackson.
Howe received his B.A. at U.C. Berkeley and later earned graduate degrees in economics and history from Yale University.