Waymo Autonomous Vehicle - The Road to Autonomy

America Needs to Lead on Autonomous Vehicle Policy

July 7, 2024

Koop Insurance - The Road to Autonomy

This Week in The Autonomy Economy is presented by Koop Insurance, a specialist insurance provider focused on robotics and autonomous vehicles.

This Week in The Autonomy Economy, The Road to Autonomy Index returned 1.77%, the need for America to lead on autonomous vehicle policy becomes more evident as Beijing accelerates its support for autonomy.

The Chinese autonomy market is getting more interesting by the day. Tesla now has permission to test FSD in Shanghai, Toyota is planning to launch an all-electric vehicle equipped with autonomous driving capabilities next year through its JV with state-owned Guangzhou Automobile Group (GAC) to directly compete with Tesla and Pony.AI is now able to operate a fully autonomous robotaxi service in a 205 kilometers (127 square mile) area of Shanghai. 

As China accelerates the development, adoption and commercialization of autonomous vehicles, American legislators at the Federal level continue to sit on their hands and take no action. Why? Politics. 

We are seeing these politics play out in State houses across the U.S. as the infamous line: “ prohibits any transporting good, or transporting passengers without a human safety operator being physically present within the autonomous vehicle” and various versions of this language appear in bills as special interests try to derail the future of the U.S. economy for their own political gain. 

While special interests play politics, the U.S. economy suffers as investors weigh the political risks and what that could mean for their investments into the sector. While investment dollars are flowing into autonomy once again as we wrote about last week, investments will truly accelerate when there is regulatory certainty. 

Regulatory certainty could also unlock the business of licensing autonomous driving systems in the U.S. When we enter the licensing phase of autonomy, fortunes will be minted and someone will become the Microsoft Windows of autonomy.

Microsoft, Tesla and Toyota are The Road to Autonomy Index component companies

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What’s Moving the Markets 

America Needs to Lead on Autonomous Vehicle Policy

Waymo Autonomous Vehicle - The Road to Autonomy
Waymo Autonomous Vehicle | Source: Waymo

Now is the time for Congress to step up, put aside their partisan differences and do what is right for the American public. America is faced with a choice, do we want to lead or do we want to follow? 

If America leads, we will usher in the autonomy economy, create jobs, lower inflation and further bolster our innovation leadership. If we follow, we will be in the same exact spot we are in today with electric vehicles and semiconductor manufacturing, following. Without Tesla, America would not even be in the electric vehicle conversation. 

Elon Musk built the market. He risked it all and he was rewarded handsomely (rightly so). Like him, don’t like him or indifferent, he is pushing the limits of what is possible and building the future. That future is now autonomous and Mr. Musk is once again about to disrupt an entire industry — autonomous vehicles.

If Mr. Musk is successful in launching and scaling CyberCab and the Tesla robotaxi network with their low-cost vision approach (camera), the market will be turned upside down simply because of economics. The cost to build a sensor heavy autonomous vehicle is anywhere between $250k to $400k per vehicle. Tesla’s approach costs a fraction of that. 

But to truly unlock what is possible with autonomy, a national autonomous vehicle framework that prioritizes innovation and American ingenuity is needed.

Bloomberg Opinion columnist Matthew Yglesias who recently took a ride in a Waymo and offers a similar takeaway; When it comes to autonomous vehicles, America requires a regulatory posture that errs on the side of innovation as a national priority, not a series of city-by-city special interest fights.

Mr. Yglesias is correct, America needs to make autonomy a national priority. If America fails to make autonomy a national priority, America will cease its leadership mantle to China. The baton will be passed and America will once again be dependent on China, despite the fact that DARPA (Defense Advanced Research Projects Agency) ushered in the industry in 2004 with the DARPA Grand Challenge.

Yet we are behind on regulatory innovation because of politics as Mr. Yglesias rightly points out in his column. 

Much of the regulatory opposition is unrelated to safety and driven instead by the economic interests of teamsters or taxi drivers. Pair those interests up with car companies’ general worry about being forced to dramatically overhaul their core business model and you have a powerful lobby for an excessively cautious regulatory posture. 

– Matthew Yglesias, Bloomberg Opinion columnist 

Why? How did we end up here? How did we end up putting politics above the interests of the American public? These are questions that we have to ponder as the Teamsters make a concerted effort to ban both autonomous vehicles and autonomous trucks. 

Banning autonomous vehicles and autonomous trucks through various driver-in bills will drive America into a recession. A recession that would be exacerbated under the stress of the current higher-for-longer interest rate environment. 

Our take: Elections are important. Elections dictate policy. Vote.

Tesla and Waymo parent Alphabet are The Road to Autonomy Index component companies

Beijing Supports Autonomous Vehicles

Baidu Autonomous Vehicle - The Road to Autonomy
Baidu Autonomous Vehicle | Source: Baidu

In clear contrast to Washington, Beijing continues to support autonomous vehicles. You could say, here we go again as China pulls ahead and sets the policy foundation for scaling a new emerging technology. 

First it was electric vehicles, now it’s autonomous vehicles. 

As part of Beijing’s effort the government aims to “promote and regulate the innovative activities of self-driving cars, the development of the industry and the construction of intelligent transport”.

This line should send shivers down the back of Congress as it is abundantly clear that China has global autonomous vehicle ambitions. Following their tried and true tech export playbook, China will incubate autonomous driving companies and then export their technology to the world. It’s only a matter of time. 

Our take: BYD followed this model for electric vehicles. Develop a lost cost solution and then scale it around the world undercutting global competition on both quality and price.

BYD investor Berkshire Hathaway is a The Road to Autonomy Index component company

Toyota Eyes Chinese Market for Personally Owned Autonomous Vehicles

Lexus Autonomous Vehicle - The Road to Autonomy
Lexus Autonomous Vehicle | Source: Toyota Research Institute (TRI)

Toyota is planning to launch an all-electric vehicle equipped with autonomous driving capabilities next year in the Chinese market through its JV with state-owned Guangzhou Automobile Group (GAC). 

This launch of this vehicle could have major implications on the global automotive market. If the launch and subsequent driver feedback comes in positive, Toyota could scale their personally-owned autonomous vehicle to Japan, Europe and the United States. 

While Toyota has been criticized for moving slow on the development of autonomous vehicles, a personally owned electric Toyota autonomous vehicle would put the company in direct competition with Tesla (of which Toyota was a major shareholder prior to selling all their shares in 2017).

The market for personally owned autonomous vehicles is beginning to emerge with Tesla, GM/Cruise and Wayve all having a seat at the table and now Toyota. As this market evolves, it will usher in the autonomy licensing model. 

Our take: Sometimes you just have to build the market. That is what Tesla did with electric vehicles and is now doing with personally owned autonomous vehicles. Toyota has studied the market and they are now dipping their toe into the water.

Cruise parent GM, Tesla, Toyota and Wayve investor Microsoft are The Road to Autonomy Index component companies

Yellow Means Go, Unless You are Waymo

Waymo Autonomous Vehicle - The Road to Autonomy
Waymo Autonomous Vehicle | Source: Waymo

That is the conclusion that San Francisco Chronicle reporter Chase DiFeliciantonio came to after riding around San Francisco in Ubers on May 7th. Following the exact same routes, Mr. DiFeliciantonio’s colleague Ricardo Cano rode in Waymos, so the reporters could compare their experiences on the same routes at the same time for an article in the San Francisco Chronicle

What Mr. DiFeliciantonio experienced and what Mr. Cano experienced can be simply described as the past and the future. The Waymo vehicles took more cautious routes, drove smoother and got Mr. Cano to his destinations all with-in 5 minutes of Mr. DiFeliciantonio’s Uber rides. 

What Mr. DiFeliciantonio experienced, unfortunately, is rather common since the introduction of UberX in July 2012 — an inconsistent experience, minus the drivers flooring it through yellow lights. 

Some drivers were chatty, others demanding and others quiet. You can enact the famous line from Forrest Gump to sum up the inconsistencies in the Uber experience today; “Life is like a box of chocolates, you never know what you’re going to get.

It’s these inconsistent experiences that are going to drive consumers to switch to robotaxis in greater numbers than is currently being projected. Consumers want a safe, clean and reliable experience. Add in an experience layer and that growth of robotaxis will be further accelerated.

While the growth of robotaxis and autonomous vehicles might cause some investors to give pause to Uber, they are missing the overall big picture. As robotaxis scale, Uber will continue to operate a hybrid network that consists of both human drivers and autonomous vehicles. 

Getting around the most congested streets in a city with terrain as challenging as San Francisco isn’t easy. But that isn’t what customers care about. 

They want efficiency — in time and cost. What we found in our test of Ubers vs. Waymos is that, unsurprisingly, Ubers are usually faster and more available. Waymo’s cars, however, offer a more reliable experience for a little more money. 

Waymo robotaxis also provide something human rideshares don’t: consistency. 

Yes, the robotaxis can sometimes drive clumsily and select routes that defy common sense. But the vehicles advance at a consistent velocity and offer a greater sense of privacy.

– Ricardo Cano, Chase DiFeliciantonio, Waymo vs. Uber: Is a robotaxi better in S.F.’s most challenging neighborhoods? San Francisco Chronicle, July 2, 2024 

When Uber expands their relationship with Waymo outside of Phoenix, they will benefit from the consistent experience as well. At the end of the day, autonomous vehicles are not a threat to Uber’s business, they are a catalyst. Sometimes you just have to look past the noise. Building, scaling and maintaining a world-wide TNC platform is extremely difficult. 

The TNC platform is for all practical purposes is a set of rails. It enables commerce to take place by connecting the driver/autonomous vehicle with a rider. Mastercard and Visa built, operate and maintain payment rails that their partners utilize every second of the day. 

American Express built, operates and maintains payment rails in a closed ecosystem for their card members. When applying this analogy to autonomy, Uber becomes Visa/Mastercard, Tesla becomes American Express and Waymo falls somewhere in the middle. 

As we have seen in the payments industry, all three are great compounding businesses. The same will be true for Uber, Waymo and Tesla as they scale their autonomous vehicle programs.

Our take: As the autonomous vehicle industry begins it’s next phase, watch the partnerships and how they evolve. You can learn a lot.

Mastercard, Waymo parent Alphabet, Tesla, Uber and Visa are The Road to Autonomy Index component companies

Piquing Our Interest

Pony.AI Can Operate Fully-Autonomous in Shanghai Pony.AI has received permission to operate a fully autonomous robotaxi service in a 205 kilometers (127 square mile) area of Shanghai. Shanghai is the fourth City in China where Pony.AI has permission to operate a fully autonomous robotaxi service. As James Peng continues to deliver for Pony.AI shareholders, the next big test becomes the New York IPO. Can he pull it off this time after the IPO never materialized in 2021?

Delaware’s Attempt to Ban Autonomous Trucks, Fails For Now SB 258 failed to become law this session, but it’s not the end of the road unfortunately. In November, Delaware will be hosting a gubernatorial election (one of eleven in the country) and banning autonomous trucks is a campaign issue. After the election we expect to see another driver-in bill introduced during Delaware’s legislative session next year. 

Expanding The Waymo Fleet Each week, Waymo is adding additional vehicles to their fleet. While the exact numbers are unknown, this is a positive step as Alphabet looks to turn Waymo into a profitable business. As Waymo scales, could Alphabet look to spin-out out the company?

May Mobility is Expanding to Eden Prairie This fall, May Mobility will begin operating an autonomous vehicle service (5 vehicles) in Eden Prairie, Minnesota as part of a three-year, $4.7 million agreement with the Southwest Transit Commission.

Social Buzz

Mirrorless Tesla Model 3s Play Peekaboo in the Bay Area

A mirrorless Tesla Model 3 with Texas manufacturer plates was first spotted in Palo Alto on May 15th, then it disappeared before it was once again spotted on July 5th, this time with a sibling. 

With mirrorless Model 3s popping up around Palo Alto, Tesla appears to be having a fun time playing peekaboo as they accelerate the testing of a new camera/sensor layout.

Is this an HW4 or an HW5 configuration that is scheduled to be released in 2026? Or could this be the sensor suite for the soon to be unveiled CyberCab? Either way, Tesla is clearly testing an updated hardware sensor suite as they prepare to unveil the CyberCab on August 8th. 

Our takeAs Tesla prepares to introduce the CyberCab, we expect to see an increase in various configurations of Tesla hardware/sensor suites being tested on public roads both in California and in Texas.

Tesla is a The Road to Autonomy Index component company

An Autonomous Driving Kit That Can Be Licensed? 

Is licensing what May Mobility is hinting at in this July 3rd tweet? Could the company be testing the waters to see what interest there might be in licensing their Autonomous Driving Kit? All is possible as May Mobility continues to focus on building a sustainable business. 

Our take: May Mobility is The Little Engine That Could of autonomy.

May Mobility investor Toyota is a The Road to Autonomy Index component company

The Road to Autonomy Index® / Weekly Performance 

The Road to Autonomy Index® is a high-definition lens into the emerging world of autonomous vehicles. It is the world’s first and only pure-play index designed to measure the performance of the autonomous vehicle/truck market.

For the week of July 1st, The Road to Autonomy Index returned 1.77%, the S&P 500 returned 1.95% and the NASDAQ 100 returned 3.05%. The Road to Autonomy Index underperformed the S&P 500 by 0.18% and underperformed the NASDAQ 100 by 1.28%.

The Road to Autonomy Index Performance – Week of July 1, 2024
The Road to Autonomy Index Performance – Week of July 1, 2024

Year to Date (YTD), The Road to Autonomy Index has returned 16.62%

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