When will tech investors wake up and stop burning billions on all things self-driving?
This week’s acquisition of Veoneer by automotive specialist Magna International is further evidence of the trend to use technology to make humans safer drivers. Let’s look at the possible rationales behind the deal.
This was a significant week for automotive-related technology news, starting with the announcement of a partnership between Ford, Argo AI and Lyft for the commercial deployment of robotaxis. Argo AI CEO Bryan Salesky’s take is here.
Among all the words, two numbers stood out: $12.4 billion, which is Argo’s new market valuation; and 1,000, the total number of robotaxis planned to be deployed by this partnership in the next five years.
You’d be hard-pressed to find a better demonstration of the misplaced euphoria and “magical thinking” that engulfs all things self-driving than what is revealed by those two numbers. They reveal that the journey to technology replacing humans as drivers has barely begun, and that it will take much longer than many assumed. Moreover, investors clearly don’t appreciate the risks and pitfalls ahead.
Increasingly, skeptics are questioning the narrative that development of self-driving is in the home stretch, that Tesla is about to “solve” autonomy, and that technology to make humans into safer drivers is obsolete. The evidence is around us, as shown by Magna acquisition of automated driving specialist Veoneer
Readers will note my doubts about self-driving technology. My skepticism is reinforced with Magna-Veoneer deal.
The rationale behind the deal seems obvious: Magna seeks ownership of technology that Veoneer calls “Collaborative Driving.” While everyone else was focused on self-driving, Veoneer quietly built a technology stack in partnership with Qualcomm.
The goal is making humans safer drivers using a human-machine collaboration. The details were announced by Qualcomm in January.
Magna is buying revolutionary technology that is both validated and verified at OEM automotive-grade and is ready for commercial deployment. It is also getting a partnership with Qualcomm along with an established and complementary automotive electronics business with solid relationships with automakers.
All for about one-third of the current valuation of Argo AI.
Which leads me to ask: Why wasn’t anyone else paying attention to what Veoneer was developing?
The combination of Magna and Veoneer also brings together two Tier One suppliers working on the development of driver monitoring systems using software provided by Seeing Machines. This sets up an duel between Aptiv/Smart Eye/Affectiva and Magna/Veoneer/Seeing Machines for human-machine interaction that will be fascinating to watch as the importance of driver monitoring technology becomes apparent to all in the years ahead.
In January I wrote “Why Apple ‘iCar’ Won’t Be Self-Driving” in which I speculated that Apple would use Veoneer’s collaborative driving technology. I also speculated that Apple could subcontract manufacture of the iCar, most probably to Magna.
Also discussed was how automakers such as Fisker and Sony could enter the market without the challenges of developing their own manufacturing facilities by using Magma as a manufacturing subcontractor.
With Magna acquiring Veoneer, we can see all the pieces of the Apple puzzle starting to fit together.
Hedging your bets
Technology will improve safety on public roads both by making humans safer drivers and through greater vehicle autonomy. The role of technology to replace humans as drivers is extremely well documented, as seen by blanket media coverage of the Ford, Argo AI and Lyft partnership.
In contrast, the role of technology for automatic emergency braking, lane-keeping assistance and vision-based driver monitoring receives much less media and investor attention, even though these systems are validated, verified and suitable for mass-market deployment today.
Three companies appear to have successfully hedged their bets across these twin development tracks: GM, with Cruise and Super Cruise; Ford, with Argo AI and BlueCruise; and Magna, which is an investor in Waymo and is now acquiring Veoneer.
The only remaining questions are how long it takes for the major technology investors to wake up and stop burning billions on all things self-driving? The other is when will they start investing in established automotive suppliers such as Magna, or new technology suppliers such as Seeing Machines and Smart Eye?
The most likely answer? Not very long.
This article was originally published on EE Times.
Colin Barnden is principal analyst at Semicast Research and has over 25 years of experience as an industry analyst. He is considered a world expert on market trends for automotive vision-based driver monitoring systems (DMS). He holds a B.Eng. (Hons) in Electrical & Electronic Engineering from Aston University in England and has covered the automotive electronics market since 1999.