Startups to watch at CES. Auto tech in 2018. A chat with Jim Adler.
Happy new year everyone!
With the deluge of auto tech developments last year, here’s our rundown of a few auto tech trends emerging from 2017 that will continue shaping the scene in 2018:
SoftBank’s shadow grows: Masayoshi Son’s dealmaking has put the broader venture capital industry on notice. Traditional firms are raising their own megafunds, worried that the size of SoftBank’s checks will squeeze others out. Even top-flight fund Sequoia is in talks to react with its largest fund ever.
In mobility, SoftBank has already roiled the ride-hailing competitive landscape, helping propel Didi past Uber as the most well-funded private startup. Didi is spending on international expansion, acquiring 99 and setting up a confrontation with Uber in Brazil.
99 itself was SoftBank-backed, and SoftBank of course has recently secured a sizeable stake in Uber. Didi and Uber are also linked together following the Uber China divestment (for its part, SoftBank has been a notable proponent of consolidation in other areas like telecoms and e-commerce). Our Uber Strategy Teardown looked at these entanglements and other consolidation prospects.
In ride-hailing and beyond, SoftBank is helping large startups to rake in more private capital and defer potential public offerings. By providing liquidity for existing shareholders with massive secondary market deals like Uber’s, it is also further blurring the lines of a “traditional” exit scenario.
SoftBank has probed other auto tech deals, where its deep pockets would be instrumental for startups hoping to challenge tech giants and automakers pouring billions into autonomous R&D.
On the other hand, critics worry that SoftBank’s generous deals could disincentivize capital efficiency and discipline (which large mobility startups have not been known for).
We’ll be dissecting the mobility strategies of SoftBank, Didi, and other Asian players like Alibaba, so keep an eye out.
Self-driving rubber meets the road: Many AV developers have made bold proclamations on timing, and 2018 will see some fruits from years of labor as mindsets shift towards commercialization.
Waymo and GM Cruise are pushing towards deployment, with Waymo even removing human backup drivers towards the close of last year. Others are racing to begin public testing as well; Lyft‘s open autonomy platform has seen a rush of new partners.
Despite these exciting developments, it’s not surprising that other ambitious timelines have slipped. Tesla’s Autopilot program ended 2017 quietly, missing Elon Musk’s pledge to show significant advancement on its Full Self-Driving feature (not to mention complete an autonomous cross-country trip).
To be sure, Elon Musk has a long history of giving “flexible” target dates, and Tesla’s customer base is remarkably comfortable paying deposits upfront. Nevertheless, uncertainty surrounds what is still a multi-thousand dollar option on the order sheet.
Promises will be broken; last month Volvo also pushed back its timeline to roll out full AVs through its public Drive Me test program.
The future of AI processing: We’ve been tracking this trend for its potential to transform machine learning processing across industries, an opportunity that has drawn semiconductor giants and startups (and now outsiders like Tesla) into the fray.
Radical advances in performance and/or efficiency would change the game for constrained environments like autonomous vehicles, especially for players with demanding vision-heavy approaches.
This year will more clarity on how chips from new challengers stack up against incumbents like Nvidia, which is busily promoting its new Xavier SOC at CES.
Electrification’s mainstream push: Although a new generation of longer-range, “affordable” EVs like the Bolt and Model 3 have already hit the market, 2018 will be a bigger litmus test as supply ramps up from established brands like Audi and Kia as well as startups like Byton and Nio.
Obviously, all eyes are on the Model 3 and its continuing production woes. But the Chevy Bolt quietly built up sales momentum towards the close of 2017, and a slew of new models will also test the waters, including crossovers that should be key for the SUV-crazed markets like the US.
We’re still in the early days of the new EV model onslaught, but as more EVs hit showroom floors we’ll have a clearer picture of whether hype is meeting reality.
One EV sales trend of note is that customers currently skew heavily towards leasing, which presents its own set of opportunities (financiers, bargain-hunting fleets, startups catering to monthly payment and subscription models) and risks (anyone bearing the brunt of depreciation).
This leads into our last bit, where we’ll leave you with a few more macro data points to mull over…
The bigger picture: After seven consecutive years on the rise, US car sales finally plateaued in 2017:
Meanwhile, global sales saw continued growth:
Beyond OEMs, players in auto commerce – from startups to incumbent dealer networks – will be on the front lines of these sales trends. Although startups in longer-horizon auto tech (like autonomous driving) are more insulated from standard industry metrics, many are bankrolled by, partnered with, or otherwise linked to traditional stakeholders.
Whichever way the wind blows, its impact will be considerable.
A question for you all: this decade’s AV and mobility growth spurt has fallen almost entirely under a major expansion cycle. How would a downturn affect development, and which players would be best positioned to weather one?