With autonomous vehicle (AV) tech at an inflection point, funding to AV companies is skyrocketing. In this brief, we examine the sector's market drivers as well as emerging themes and their implications.
Though autonomous driving technology has been slow to deliver on its promise, investors haven’t pumped the brakes.
Autonomous driving tech companies have raised over $12B this year, with market leaders Cruise ($2.8B raised in 2021) and Waymo ($2.5B) leading the charge. At this rate, funding to the space in 2021 is on track to more than double last year’s total.
Now, with leaders for full-stack solutions emerging and the technology reaching an inflection point, major players in autonomous driving are beginning to commercialize their products via robotaxi pilot programs, Advanced Driver Assistance Systems (ADAS), and more.
In this brief, we’ll look at:
- The topline findings and implications for this growth
- The market drivers underlying this boom
- And the categories receiving the most attention
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Findings & implications
The large-scale commercialization of autonomous vehicle (AV) technology has brought huge amounts of funding into the space as investors look to finally capitalize on this long-awaited opportunity.
These are the top findings and implications for the surge of funding in 2021:
- Expect passenger vehicle OEMs to begin picking a select few full-stack solutions to power their autonomous driving platforms. Many different sensor, AI, machine learning, and data-labeling startups are developing valuable technology for AVs. Now, to streamline the supply chain, OEMs will look to larger players in the AV market that can package these technologies and serve as a new version of Tier 1 automotive suppliers for full-stack solutions.
- Watch for further commercialization of autonomous driving tech. Companies like Waymo and Aurora announced expansions of their robotaxi pilot programs earlier this year. Automakers have implemented ADAS into passenger vehicle production. Expect more ride-sharing companies and OEMs to continue rolling out products for autonomy.
- To maintain its lead in the market, the US will need to ramp up its legislation around autonomous driving tech in the near future. In 2019, Chinese regulators allowed robotaxi developers to offer passenger rides in select cities across the country. Since then, funding for AV solutions in China has skyrocketed and development has accelerated.
Investors and companies have decided that now is the time to commercialize autonomous driving technology on a larger scale. Here’s why:
- The hardware and software enabling AVs are beginning to reach an inflection point. Companies in the space are deploying cheaper, more robust lidar, radar, and cameras along with AI platforms that now have millions of miles of data behind them.
- The labor shortage in the trucking industry — combined with the need for logistics companies to compete with Amazon — has created a need for self-driving solutions in long-haul trucking and last-mile delivery as soon as possible.
- Although the pandemic saw fewer drivers on the road, passenger vehicle fatalities continued to rise across the US in 2020. Investors, startups, and OEMs alike have been eager to deploy autonomous solutions that are safer than human drivers.
- While the US has lagged in federal legislation for AVs, companies working on a mix of AV solutions for robotaxis, trucking, and passenger vehicles — like Waymo, Cruise, and Aurora — have received approval to begin transporting passengers and goods in select cities and states. Companies working on adjacent solutions, like Nuro’s autonomous delivery vehicle, have received approval to deploy self-driving delivery vehicles in California as well.