Alphabet’s Waymo Raises $2.5 bln in First Fresh Funding in a Year

June 16 (Reuters) – Alphabet Inc’s (GOOGL.O) self-driving unit Waymo said on Wednesday it raised $2.5 billion in its first fresh funding round in a year, after a string of defections of executives rekindled concerns about the technology struggling to scale up.

The announcement came a day after General Motors Co’s (GM.N) majority-owned Cruise self-driving car subsidiary said it would gain access to a $5-billion credit line.

Self-driving startups are racing to build war chests to develop and commercialize technology, an expensive and time-consuming process. 

The funding led by Alphabet and other existing shareholders is the second outside funding for Waymo, which last year raised $3.25 billion in its first external investment round since its inception 2009.

Waymo has been widely viewed as the leader of the self-driving race, but attaining the holy grail of full and safe automation remains challenging as it faces growing competition from rivals backed by legacy automakers.

“There’s no greater challenge in artificial intelligence than building and deploying fully autonomous technology at scale,” Dmitri Dolgov and Tekedra Mawakana, Waymo’s co-CEOs, said in a statement.

The duo became co-CEOs after John Krafcik stepped down in April, followed by departures of the chief financial officer and other senior officials.

Waymo, which offers driverless rides hailing service in limited areas in Phoenix, has this year applied for permit for commercial deployment in San Francisco.

It has also expanded into the trucking segment, testing goods transport services using autonomous trucks.

“Self-driving startups are unlikely to be anywhere near profitable for many years to come. They need to raise the capital, in order to fund that expansion into the operational side,” said Sam Abuelsamid, Principal Research Analyst at Guidehouse Insights.

IPOS for self-driving startups would be an opportunity for investors to recoup their losses, he said.

Self-driving startup Argo AI, backed by Ford Motor Co (F.N) and Volkswagen AG (VOWG_p.DE), plans to have another funding round before pursuing a public listing next year. 

Waymo said the capital would be used for advancing Waymo Driver, the company’s autonomous driving technology, and to grow Waymo’s team, the company said. (https://bit.ly/3iL7l6t)

According to investor website PitchBook, Waymo, is valued at just over $30 billion. Alphabet did not immediately comment on the unit’s latest valuation.

Participants in this latest round include AutoNation, Magna International, Canada Pension Plan Investment Board, Fidelity Management & Research Company, as well as new investor Tiger Global.

“The latest Waymo funding round clearly demonstrates that there is a healthy investor appetite for self-driving technologies,” said Grayson Brulte, president at consultancy Brulte & Co.

“I do think investors are getting more confident after the successful TuSimple IPO,” he said.

As featured in Reuters on June 16, 2021

Waymo, Cruise seek permits to charge for self-driving car rides in San Francisco

BERKELEY, Calif., May 11 (Reuters) – Alphabet Inc’s Waymo and rival Cruise have applied for permits needed to start charging for rides and delivery using autonomous vehicles in San Francisco, state documents reviewed by Reuters showed, setting the stage for the biggest tests yet of their technology in a dense urban environment.

Neither company revealed when they intend to launch services. But they detailed contrasting deployment plans, with Waymo starting with “drivered operations” and Cruise expecting to deploy vehicles without humans behind the wheel.

California’s Department of Motor Vehicles (DMV) has yet to decide on the previously unreported applications made by Waymo on Jan. 19 and by Cruise on March 29, according to the documents. The agency had no immediate comment on Tuesday.

The efforts come at a turning point for Waymo, which Google launched over a decade ago. Waymo has given paid, driverless rides hailed through its app in suburban Chandler, Arizona, since 2019. But it has failed to scale up Arizona operations as quickly as analysts once envisioned.

Its longtime chief executive, John Krafcik, stepped down in April and was replaced by two co-CEOs.

Cruise, backed by General Motors Co, Honda Motor Co Ltd and SoftBank Group Corp, has focused on San Francisco since its beginning. It said in the permit application it has logged 2 million autonomous driving miles (3.22 million km) in the city. Waymo said it has had over 83,000 autonomous miles in its proposed deployment area, according to its application.

“You have a faster path to meaningful revenue in dense urban environments such as San Francisco than in the suburbs such as Chandler,” said Grayson Brulte, a consultant who advises companies around autonomous mobility strategies.

Waymo and Cruise could not immediately be reached for comment.

The companies would not be the first to obtain one of two permits required to operate robotaxis for hire in California. Silicon Valley startup Nuro in December became the only company to secure a DMV deployment permit. Nuro in March announced an unspecified investment from Chipotle Mexican Grill Inc, which said it was interested in new delivery systems.

A DMV official wrote to Nuro in March asking whether it intended to make deliveries for the fast-casual chain in California, records show. The results of a scheduled meeting on April 16 are unclear.

LIMITED OPERATION

If Waymo and Cruise secure DMV approval, they would next need a permit from the California Public Utilities Commission to begin charging passengers.

Until now, self-driving cars in San Francisco and Silicon Valley primarily have been used on a test basis even though the vehicles – with whirring lidar gear on their roofs – have become an increasingly common sight. Cruise and Waymo plan to maintain some limits during commercial operations as public concerns grow over the safety of self-driving systems.

Waymo said in its application it would have a safety driver in its hybrid Chrysler Pacifica minivans and all-electric Jaguar I-Pace SUVs. They would operate around the clock, offering rides or transporting goods on roadways with posted speed limits of up to 65 mph in San Francisco and in the northern part of bordering San Mateo County.

Waymo said it may switch off autonomous mode in specific areas such as freeway ramps and construction zones, or for heavy rain and wet roads.

Cruise said its service hours would be late evening to early morning with speeds of up to 30 mph, according to the documents.

When ready for commercial deployment, the company would receive $1.35 billion from SoftBank’s Vision Fund as part of an earlier investment agreement.

The timeline for revenue-generating deployment of self-driving vehicles has been pushed back repeatedly.

“It’s an incredibly difficult thing that we’re trying to solve for,” said Timothy Papandreou, a former Waymo employee who now leads consultancy Emerging Transport Advisors.

This year, Waymo also has been discussing collaborating with San Francisco transportation authorities and university labs to secure an unspecified U.S. Department of Energy grant “to investigate the use of AVs to provide first-/last-mile transit service” in San Francisco, according to public records seen by Reuters.

(Reporting by Paresh Dave in Oakland, Calif., and Hyunjoo Jin in Berkeley, Calif. Additional reporting by Jane Lanhee Lee in Oakland, Calif. Editing by Joe White and Matthew Lewis)

As featured in Reuters on May 11, 2021

The Race to Build Self-Driving Trucks Has Four Horses and Three Jockeys

These are the companies set to dominate the highways of tomorrow.

Over the last five years, as it’s become clear that self-driving cars will take longer than expected to arrive on most American streets, some of the biggest players in the industry have turned their attention to long-haul trucking. Alphabet Inc.’s autonomous vehicle unit Waymo, the leader in robo-taxis, launched its trucking division Via in 2017 after a handful of start-ups, including Otto, Starsky Robotics, and TuSimple Holdings Inc., had entered the field. Aurora Innovation Inc., one of Waymo’s most formidable competitors, recently decided to focus its efforts on bringing a trucking product to market before branching into ride-hailing. The logic behind the pivot is twofold: highways are easier to navigate than city streets and cargo is less demanding than human passengers. If a robo-truck drives extra cautiously on its way to a big box store, as Aurora co-founder and CEO Chris Urmson put it when I spoke to him earlier this year, “the roll of toilet paper doesn’t care.”

There are also advantages on the business side. In ride hailing, robo-taxis need to outperform and undercut a large, flexible and relatively cheap pool of gig workers. Truck drivers, on the other hand, are in short supply, a problem that only promises to get worse as e-commerce continues to boom. In one possible version of the autonomous future — a model known as “depot-to-depot”—robot drivers would cover the long and relatively simple stretches of interstate driving and leave the trickier surface streets to human drivers who would take over at highway off ramps. The robots could operate for hours on end without running afoul of service time rules and needing to stop only for fuel, while truckers would still have jobs and could sleep in their own beds at night. TuSimple CEO Cheng Lu estimates that driverless trucks running more hours on the road can reduce hauling costs by 50%.

Self-Driving Truck Hook-Ups

The biggest names in big rigs have all hitched with one of the three leaders in autonomous trucking

Self-Driving Trucks

In theory, it’s a win-win, and a multibillion dollar business opportunity. The blank-check companies, naturally, have taken notice: special purpose acquisition company (SPAC) Hennessy Capital Investment Corp. V is reportedly in talks to merge with self-driving truck startup Plus.  Yet there are signs that self-driving trucks are already following robo-taxis into the “ trough of disillusionment.”  After a splashy demo covering ten miles on a Florida turnpike in 2019, Starsky Robotics folded last year. In December, the autonomous delivery start-up Nuro acquired trucking start-up Ike, leaving its plans for that market uncertain. For all the advantages that trucking offers, it also comes with unique challenges. “Because of the heavier weight of the vehicle and the high speeds, if something goes wrong, it’s catastrophic,” says Bruno Bowden, a former engineering manager for simulation at Aurora who is now an angel investor, “You don’t get a small accident with a big rig truck.” To avoid these catastrophes, self-driving trucks need to see farther ahead than cars do. “The heart of the problem for driving is predicting about five seconds into the future,” says Bowden. But with trucks, he says, that magic number doubles.

It’s likely that safety drivers will remain in cabs for years to come as companies hone their sensor technology and train their software for every highway scenario. It’s expensive and painstaking work that can overwhelm even the best-run start-ups. The consensus within the industry is that three contestants stand the best chance to make it to the finish line: “It’s TuSimple, Aurora and Waymo,” says Grayson Brulte, co-founder of Brulte & Co., a consulting firm focused on transportation. TuSimple, a San Diego based-company that raised $1.35 billion in an initial public offering in April, is in the pole position, as Brulte sees it, because of its singular focus on trucking and its partnership, begun three years ago, with Navistar International to build autonomous trucks. “They’ve got the head start on it,” says Brulte.

Since that deal, Waymo and Aurora have each struck their own (non-exclusive) agreements with truck makers, leaving the four dominant manufacturers in the U.S. market—Daimler Trucks, Volvo Group, Paccar Inc., and Navistar—tied to one of the three leaders in autonomous trucking. (See chart above.)  If robots are to replace truckers on U.S. highways, these are the companies likeliest to be in the driver’s seat:

TuSimple
Source: TuSimple

TuSimple

Founded2015
HeadquartersSan Diego, CA
Employees800 (600 in U.S., 200 in China)
Funds raised$2.15bn ($1.35bn in IPO)
Testing statesArizona, New Mexico, Texas
Public road test miles2 million
Production target2024
U.S. manufacturing partner(s)Navistar
Tech bragForward-facing cameras capable of detecting objects up to 1,000 meters ahead
Competitive edgeEntire budget and staff are dedicated exclusviely to trucking.

Waymo Via
Source: Waymo

Waymo Via

Founded2017
HeadquartersMountain View, CA
Employees2,000 (across Waymo)
Funds raised$3.2bn (across Waymo, which is also funded by Alphabet Inc.)
Testing statesArizona, California, New Mexico, Texas
Public road test milesNA
Production targetNA
U.S. manufacturing partner(s)Daimler Trucks
Tech brag360-degree cameras that can detect objects at more than 500 meters*
Competitive edgeWaymo vehicles have covered more than 20 million miles on public roads since 2008–experience that may pay off in trucking.

*Spec is for Waymo’s 5th generation driving system yet to be applied to trucks.

Aurora Innovation Self-Driving Truck
Source: Aurora Innovation

Aurora Innovation

Founded2017
HeadquartersMountain View, CA and Pittsburgh, PA
Employees1600
Funds raised$1.1bn
Testing statesTexas
Public road test milesNA
Production targetNA
U.S. manufacturing partner(s)Paccar, Volvo Group
Tech bragLidar sensors that use a frequency-modulated, continuous-wave, or FMCW, system that can measure range and velocity simultaneously at up to 300 meters
Competitive edgeCo-founders Chris Urmson, Sterling Anderson, and Drew Bagnell are among the most respected engineers in the industry.

As featured in Bloomberg on May 1, 2021.

Self-Driving Cars Face Greatest Skepticism in the South

Despite self-driving pilots fanning out across Southern states like Texas, Florida, and Georgia, our March 2021 Morning Brew-Harris Poll survey found that the region is far more skeptical of autonomous vehicles than elsewhere. You can read our high-level survey findings here.

The big finding: Compared with those in other regions, US adults living in the South are less likely to ride in an AV if available, less willing to pay for them, and less likely to feel safe if they somehow wind up in one. 

  • It’s the only region where the majority of respondents (57%) said they’re not very likely or not at all likely to ride in a self-driving car if given the chance. 
Self-Driving Car Poll

Florida-based AV consultant Grayson Brulte told us this is likely because of a lack of exposure among residents of the South who live outside of regional tech hubs like Austin, Miami, and Atlanta. 

“Perhaps they’ve never met anyone who has been for a ride, or they have a skepticism of Big Tech,” Brulte said. “And it’s the industry’s fault for not engaging with these individuals and saying, ‘This technology is going to impact your life, we’d like to demonstrate it for you, we’d like to learn from you.’”

Reaching out 

Brulte said in general the industry has done a good job connecting with residents of tech hubs—he cited Argo’s involvement in community programs in Miami as an example—but that they’ve done little outside of urban bubbles. 

From Brulte’s POV, outreach doesn’t need to be more complicated than demoing an AV in a parking lot, because, “The magic in all this is when they see the steering wheel move,” and no one is driving. The Society of Automotive Engineers did something like this between 2017 and 2019 called “Demo Days.” 

  • SAE gave rides to 1,395 participants across Detroit, LA, Tampa, and Babcock Ranch, FL, and found that 88% of riders were enthusiastic about self-driving cars after riding in one, up from 82% pre-ride. 

Bottom line: Last week, Waymo’s new co-CEO Tekedra Mawakana told us that, “At a national level, we’re seeing more interest in autonomous driving technology.” But there are still many skeptics who aren’t on board. 

As featured in Emerging Tech Brew on April 19, 2021

Aurora’s Plan to Catch Waymo in Robot Trucks, Then Taxis

On Feb. 11, about a month after closing on the acquisition of Uber’s Advanced Technologies Group, or ATG, the self-driving-car startup Aurora held an all-hands meeting. Like every other company meeting since the pandemic began, it took place via videoconference, and included the simulacra of in-person office interactions. When managers handed out awards, there was no applause from co-workers. Instead, Aurora co-founder and Chief Executive Officer Chris Urmson hit a button that produced canned cheers and clapping. “I am so looking forward to not having that button,” Urmson said after setting it off for the third time.

The weeks leading up to the meeting had been full of upheaval at Aurora Innovation Inc. Uber Technologies Inc. had essentially paid it to take ATG, forking over $400 million for a stake in the combined enterprise, which was valued at $10 billion. The deal allows Uber to unload a unit that was hemorrhaging cash while keeping a foothold in autonomous vehicles. Aurora, in return, adds almost 1,000 employees, more than doubling its workforce to 1,600 and bolstering its bid to become a credible competitor to Alphabet Inc.’s Waymo. The deal also gives Aurora what could be a bigger prize: the right to provide robo-taxis to Uber’s ride-hailing network.

“Having a strategic relationship with Uber is an incredible advantage,” Urmson says. Over the past two decades he’s done more than perhaps anyone to push the development of autonomous-driving technology. Now he’s in a leading position to be the first to truly commercialize it. But with the addition of hundreds of highly paid engineers and a large pool of potential customers, Urmson is under more pressure than ever to bring a product to market.

Since co-founding the company in January 2017—with former Tesla engineer Sterling Anderson and Drew Bagnell, who came from ATG—Urmson has been lining up deals to ensure that buyers will be waiting when his robot drivers are ready. The plan is to begin with long-haul trucking. Earlier this year, Paccar Inc.and Volvo Group signed agreements to install Aurora’s automated driving system in their trucks. The two companies would then offer these trucks, capable of operating themselves for long stretches, to their shipping customers, who would pay Aurora for the hours of automated driving.

After establishing itself in trucking, Aurora would begin cherry-picking the easiest, most lucrative trips from Uber’s ride-hailing network. A customer looking to go 25 miles, mostly by highway in light traffic, might be greeted by a driverless car. Aurora already has a deal with Toyota Motor Corp. to build robo-taxi fleets.

A 2019 investment from Amazon.com Inc. sets the company up for a similar strategy in delivery, allowing it to service the easiest routes for e-commerce customers. If all goes right, its robot drivers would take over entire fleets of cars, trucks, and vans.

Urmson says Aurora’s driving system can become better than the average trucker in a matter of years, not decades. He has a target in mind for when the first trucking product will be ready, though he’s not yet willing to share it. He knows as well as anybody how the work of building autonomous vehicles can expand endlessly. At 44, Urmson has been working on self-driving cars for most of his adult life, first as a 27-year-old graduate student at Carnegie Mellon University, where he led teams that competed in three Defense Advanced Research Projects Agency (Darpa) challenges, winning the final race in 2007. He then spent eight years with Google’s self-driving-car project, now known as Waymo.

Urmson left in 2016, shortly after Google passed him over for the CEO job and instead hired former Hyundai Motor Co. executive John Krafcik. “I’d been leading and building that team and, for all intents and purposes, general managing it for years,” he says. “Of course I wanted to run the program.” (Krafcik announced in April that he was leaving Waymo.)

Aurora was born from meetings Urmson had with Reid Hoffman, the LinkedIn co-founder and venture investor, and Mike Volpi of Index Ventures. The three thought that the automotive industry wouldn’t tolerate a Google monopoly in self-driving technology and that Urmson was the one to develop a viable alternative. “Chris had already gone through and solved the problem once,” Hoffman says, “and now knew which things he would rebuild entirely differently.”

In 2018, Hoffman’s firm Greylock Partners and Volpi’s Index co-led a $90 million fundraising round in Aurora, which has now raised more than $1 billion. It’s likely to take even more before Aurora will be able to support itself. “I don’t understand how Aurora is going to be able to survive without raising more capital,” says Grayson Brulte, co-founder of Brulte & Co., a consulting firm focused on transportation. The acquisition of ATG and its hundreds of engineers adds to that burden. “It’s like taking two money pits and making a bigger one,” says one former Aurora manager who asked to remain anonymous when talking about his past employer.

Urmson doesn’t shy away from the possibility the company may need to raise more money, and he’s confident it would be able to do so. He says the ATG merger is already showing tangible benefits. Before the deal, Aurora spent hours calibrating the sensors on each of its vehicles, with workers walking around holding placards at set distances to be sure the sensors measured accurately. ATG devised a faster, automated process using large turntables to rotate the vehicles. On the February call, a former ATG engineer said the turntables would soon be in place at all of Aurora’s vehicle depots.Electric vehicles, self-driving cars, and whatever else Elon Musk is up to this weekGet Bloomberg.com’s Hyperdrive newsletter.

Aurora will need every possible advantage in the race to bring autonomous vehicles to market. The leading competitor is Urmson’s old shop, Waymo, which, in addition to launching the first fully driverless ride-hailing service in suburban Phoenix last year, has a passenger-sharing agreement with Uber’s top rival, Lyft Inc. A handful of startups that have joined forces with auto manufacturers, including Cruise with General Motors Co. and Argo AI with Ford Motor Co., also promise to be formidable.

Urmson sees Aurora’s singular focus as its advantage. He doesn’t have to worry about quarterly earnings in other parts of the company or trying to keep the Detroit office at arm’s length. “This is the thing we do,” he says. “This is what we’re going to be excellent at.”

During the February meeting an employee asked if TuSimple, a San Diego-based autonomous-trucking startup that raised more than $1 billion in an initial public officer this week, might beat Aurora to that market. “We do think that we are going to be first or at least meaningfully first,” Urmson replied. He defines “meaningfully first” as a commercial product that can be scaled safely.

Urmson also believes Aurora’s lidar—the laser sensors that most autonomous vehicles use to perceive the world around them—is superior, giving it an edge. In 2019 the company bought the Montana startup Blackmore Sensors & Analytics, which makes a type of lidar called frequency-modulated, continuous-wave, or FMCW, that allows the sensors to simultaneously measure range and velocity, which vastly simplifies the problem of predicting the movements of faraway objects. “When you’re driving a truck at 65 miles an hour on the freeway and you want to react to the rare events, you need to see 300 meters down the road,” says Urmson. He says no one else in the industry can match that performance.

TuSimple and Waymo—which started its trucking division, Via, in 2017—also promote the superiority of their sensors. A wild card is Tesla Inc., whose CEO, Elon Musk, sees the lidar arms race as a never-ending fool’s errand. For the past six years the automaker has been using its millions of electric-vehicle customers as test subjects in a large-scale public road experiment in camera-based autonomous systems, offering an “autopilot” that allows drivers to relinquish control to the car. Musk has said Tesla owners will eventually be able to use their vehicles as robo-taxis during downtime. Urmson is skeptical. “It’s just not going to happen,” he says. “It’s technically very impressive what they’ve done, but we were doing better in 2010.”

In 2015, Urmson gave a TED Talk in Vancouver called “How a Driverless Car Sees the Road,” explaining how Google’s software was learning to recognize cars, buses, cyclists, and pedestrians and anticipate their movements. At the end he displayed a photo of his two sons. “My oldest son is 11,” he said, “and that means in four and a half years he’s going to be able to get his driver’s license. My team and I are committed to making sure that doesn’t happen.” His son, now 17, still doesn’t have his license, but he does have a learner’s permit. Over the past few months, while trying to teach trucks to drive themselves, Urmson has also spent a few hours teaching him to drive. “He’s working towards it,” he says. “I’m not actively sabotaging him.”

As featured in Bloomberg Businessweek on April 15, 2021