Aptiv Pulls Support From Motional Robotaxi Joint Venture

Aptiv, the top-tier automotive supplier which, together with Hyundai, formed the Motional robotaxi project, based on the nuTonomy startup Aptiv and previously acquired, announced today it will no longer provide additional capital for Motional, and seeks to sell some of their stake so that Motional’s losses do not feed up into their books.

Motional has been developing robotaxis, based on Hyundai platforms, and performing tests and live operations with safety drivers in Las Vegas and some other cities, with plans for live service in Miami. After Waymo, Cruise and Zoox, they were the main other U.S. company expected to progress to a pilot robotaxi service without safety drivers. (Cruise has temporarily suspended such service, and Zoox has announced it will open such service this year.)

Motional began from nuTonomy, a Singapore/MIT based startup which was acquired for $450M by Delphi. Delphi spun off Aptiv (including nuTonomy) to handle the electronic systems, ADAS, software and autonomy parts of its business. Over time close to $4B has been invested.

Without Aptiv, Hyundai will need to support Motional on its own. It will probably seek another partner to both buy Aptiv’s share and invest more. Unfortunately it’s not clear who that other partner will be, and it’s damning that no partner was found before this announcement was made. Argo was shut down by Ford without finding a buyer. Apple recently announced it had scaled back its robotaxi plans, and the other top tech companies like Microsoft and Facebook have not expressed strong interest in the space.

Many fear that Cruise, which yesterday announced it was cutting spending in half during its operational pause, may not survive the crisis that arose from their forced shutdown in California and voluntary shutdown in the rest of the USA. This would leave only Waymo as the serious player in the robotaxi game, with Amazon’s Zoox unit poised to enter but not yet there. May Mobility, Beep and some other companies are making autonomous shuttles, but not robotaxis. Tesla promises to have a robotaxi-ready car this year, but has done so every year for almost 8 years and is not considered a serious contender at present, though breakthroughs could change that.

Back in History

The robotaxi race began when Google revealed it was trying to build one, the project that is now Waymo. (I was working on this team around the time of the reveal.) This reveal sent shockwaves through the industry. Even though Google’s project was clearly very early, it woke up people in every facet of automotive. Car executives would not tolerate the press declaring Google the future of the car. While most car companies had projects in the area and interest, none were very large, and that changed quickly. Large budgets appeared at the biggest automakers and some of the top suppliers. In some cases, promising startups were acquired—Cruise by GM, nuTonomy by Delphi/Aptiv—but allowed to run mostly like startups, to give them a chance to compete with Google’s Silicon Valley methods. Other teams were run car-company style, and tended to try to expand on the ADAS work already underway at these companies. Tons of startups were created to supply this industry with software and hardware, including scores of LIDARs and much more.

Over time, the car OEMs reduced their interest. They came to understand just how massive a project the robotaxi is, and how the consumer robocar for customers was even harder. They know the business of selling cars to consumers well. They never liked the idea of their industry being turned upside-down, and they certainly didn’t like it happening at the speed companies like Google tend to move. They either don’t want it to happen at all, or to happen at their own pace.

As such, support in the auto industry has waned, and the projects inside most companies were downgraded to focus on driver assist tools, or at the very most a freeway-only driving system. Ford dropped Argo and Aptiv has now dropped Motional. GM has not yet dropped Cruise, but it’s also highly disappointed and its fate is unknown.

In reality, it always seemed unlikely that car companies could lead this charge to replace themselves. That’s just not how history works. Those who have read Clay Christensen’s book “The Innovator’s Dilemma”—which is almost required reading in Silicon Valley—will feel no surprise at this. The tech companies like Google/Waymo and Amazon/Zoox are left, but hopefully Cruise too. There are also many startups who have promise but no track record at present, and many smaller teams acting in the background. 38 companies hold testing permits in California (including Apple, Baidu Apollo, Auurora, AutoX, Beep, Bosch, Didi, Helm.AI, May, Nissan, Nuro, Nvidia, Pony, MobilEye and many others.) There are also companies active in trucking, though it also has seen many failures. Aurora and Gatik are going full speed. Four companies have robotaxi services in China and have several thousand robotaxis deployed, though they are also tech companies, not car companies—though a few Chinese car companies also have projects.

More to the point, Waymo continues its story of great success, with a superb safety record and plans to expand to the whole San Francisco peninsula and much of L.A. The big car companies, except GM and Hyundai, seem to have ceded the race to them. They don’t feel the pressure they felt in 2011. And that’s just how the Innovator’s Dilemma works. Now, robotaxis will sneak up on them, without their participation. They won’t seem a threat. They will seem to cost too much or not go enough places. By the time they become a threat it will be too late. It’s a pattern that’s been repeated in scores of industries, time after time.

The challenge is that this is one of the hardest tech projects ever attempted. It takes patience to do this. More than public companies or even VC funds normally have. Only the vision of leaders like Larry Page, Jeff Bezos and even yes, Elon Musk if he can pull it off, is capable of lasting long enough to carry out a multi-decade project. But Larry Page doesn’t run Alphabet day-to-day any more, and Bezos does not run Amazon. It will be important that their visions continue. Cruise’s stumbles and Waymo’s slow pace tell us this project is very, very hard, and it needs a lot of money and work over a lot of time to happen. What remains to be seen is who else can figure that out. The prize is still huge—dominance of the $7 trillion global ground mobility industry—or even just a decent piece of it, is enough to dwarf the value of Google and Amazon and Apple (and Toyota and Ford and Daimler too.) The ride, however, just got bumpier.