Mobileye Files For An IPO (again!)- How Will Other Autonomy Companies React?

Transportation Mobileye Files For An IPO (again!)- How Will Other Autonomy Companies React? Sabbir Rangwala Senior Contributor Opinions expressed by Forbes Contributors are their own. I write about perception, sensors and LIDAR for autonomous vehicles, drones and robots Following New! Follow this author to stay notified about their latest stories. Got it! Oct 2, 2022, 06:06pm EDT | New! Click on the conversation bubble to join the conversation Got it! Share to Facebook Share to Twitter Share to Linkedin LAS VEGAS, NEVADA – JANUARY 08: A display highlights Mobileye’s autonomous driving technology at CES .

. . [+] 2020 at the Las Vegas Convention Center on January 8, 2020 (Photo by Mario Tama/Getty Images) Getty Images Mobileye started a computer vision revolution in 1999 when Amnon Shashua, a leading AI researcher at Hebrew University, founded the company to focus on camera-based perception for ADAS (Advanced Driver Assistance Systems) and autonomous vehicles (AV).

The company filed for an IPO in 2014 and was acquired by Intel INTC in 2017 for $15B. Today, it is the leading player in the computer vision and Autonomous Vehicle (AV) domain and recently announced its intention to file for an IPO and become an independent entity . Mobileye had revenues of $1.

4B/year and losses of $75M in 2021. These are for ADAS-based computer vision capabilities utilized by 50 automotive OEMs across 800 car models. In the future, they intend to lead in L4 vehicle autonomy (no driver required in certain weather conditions and geographies) using computer vision and 3D imaging LiDAR capabilities based on Intel’s silicon photonics platform.

Mobileye’s valuation is projected to be between $30-50B when they finally go public. It is easy to foresee that with these revenues, automotive penetration success, and Intel’s semiconductor prowess, Mobileye will dominate the autonomous vehicle landscape in the coming years. How will other technology companies with minimal or no revenues compete in the AV space going forward? Cruise (a division of General Motors GM ), Aurora, Waymo (a “special bet” of parent company Alphabet) and Argo (with investments from Ford and Volkswagen) recently made announcements about their AV capabilities – either coincidental with Mobileye’s press release or in response to it.

Zoox (acquired by Amazon in 2020 for $1B, likely a survival sale) recently announced significant progress in L5 autonomy (complete autonomy anywhere), confusing since they have only demonstrated operations in San Francisco. These companies have plans to expand their efforts – but the Mobileye competition is likely to be intense. AV adoption has been delayed significantly due to technology, regulatory and customer acceptance issues, and providing safe, profitable and autonomous L4 cars and services is an expensive endeavor.

The stock market, unfortunately, is not a friend anymore. AV-related equities have suffered up to 90% reductions in market capitalization since 2019. Cruise has been active in launching robotaxis in San Francisco and intends to penetrate Austin and Phoenix by the end of 2022.

The San Francisco experience has been challenging but progressing. With the backing of General Motors and investments from Microsoft MSFT , Cruise wants to launch a total of 5000 autonomous vehicles in San Francisco and other U. S markets to reach $1B/year revenues by 2025.

This makes sense – generating $1B in revenues/year with L4 ride-hailing services (to compete with Mobileye’s current ADAS revenues) translates to revenues of $2. 8M/day. Assuming $25/ride implies 110K rides/day.

An average of 20 rides/day/car requires ~5K cars. These are purpose-built electric vehicles (Origin) designed for ride-sharing, manufactured by General Motors and estimated costs of $50K per vehicle, implying a $250M investment in cars. With supporting infrastructure, this could easily translate to a $1B investment (command centers, cloud computing, engineers, support staff, etc.

). The General Motors relationship is also interesting since Cruise AV technology could extend beyond the Origin robotaxi services and deploy on millions of consumer cars. Figure 1: The interior of the new Cruise Origin fully autonomous passenger vehicle in San Francisco, .

. . [+] Calif.

, on Tuesday, January 21, 2020. (Photo By Carlos Avila Gonzalez/The San Francisco Chronicle via Getty Images) San Francisco Chronicle via Getty Images MORE FOR YOU Tesla Challenger Polestar Powers Up With Nasdaq Listing Plan Valuing It At $20 Billion Driver Killed By His Own Car Door While Waiting In Line At Fast-Food Drive-Thru, Providing Cautionary Insights For AI Self-Driving Cars Tesla Cofounder’s Recycling Startup Plans To Become EV Battery Material Powerhouse Aurora is an AV company founded by the royalty of the AV innovation space (ex-Google GOOG , Tesla TSLA and Uber leaders). Before going public via a SPAC (Special Acquisition Corporation) merger in 2021, the company had significant investments from Toyota, Amazon AMZN , Uber and Denso (a major automotive Tier 1 supplier based in Japan).

Apart from cars, Aurora is focusing on long-distance, highway trucking autonomy. Despite their pedigree, investors and track record, Chris Urmson, their CEO (who was the main force behind what Waymo is today), recently announced that the company is considering an acquisition by a large technology company (Apple or Microsoft) as an option. Factor cited in the announcement include delays in the adoption of L4 autonomy, their limited financial runway (they have about $1.

8B in cash) and punishing stock market conditions (Aurora’s current valuation is $2. 5B, compared to $13B after the SPAC merger in 2021). 06 January 2022, US, Las Vegas: Robotic truck company Aurora shows off a self-driving semi-truck at .

. . [+] the CES tech show in Las Vegas.

Photo: Andrej Sokolow/dpa (Photo by Andrej Sokolow/picture alliance via Getty Images) dpa/picture alliance via Getty Images Waymo (an Alphabet special bets unit) is a pioneer in the autonomy space with a valuation of $175B in 2018, which dropped significantly to $30B by 2020 when new investments of $2. 5B from non-Alphabet investors materialized. It was the first to run autonomous, revenue-generating L4 taxi services in multiple Arizona cities and has expanded to other geographies like San Francisco.

They claim that their computers are safer drivers than humans. Their revenues are not public but probably inconsequential. Alphabet encouraged the external funding, presumably to get external validation of Waymo’s business prospects and the risks related to delayed timelines for universal L4 ridesharing services.

Alphabet’s interests in Waymo may involve more than the movement of goods and people. Advertising and search matter; capturing eyeballs and generating advertising revenues from a captive audience in an AV are probably more interesting. Given this, Waymo may have more runway than other AV companies that rely solely on transportation revenues.

Figure 2: A Lexus brand SUV – which was modified by the Google sister company Waymo to become a . . .

[+] self-driving car – pictured in Mountain View, California, US, 19 May 2017. Photo: Andrej Sokolow//dpa (Photo by Andrej Sokolow/picture alliance via Getty Images) picture alliance via Getty Images Argo. ai was founded by ex-Google and Uber alums.

They recently announced deployments of AV taxis in multiple locations (Miami, Austin). These are in concert with Lyft LYFT (which means a portion of revenues must be shared, impacting profitability). Argo’s deployments still have human safety drivers, and it will probably take some more time to achieve pure robotaxi operations like Waymo and Cruise.

Argo announced t heir intention to go public in 2021 at a $7B valuation. The company has raised a total of $3. 5B from Ford, Volkswagen and Lyft; a 2X valuation is a bit light compared to Mobileye, Waymo and Cruise.

But having major OEMs like Ford and Volkswagen as significant investors is a clear advantage in terms of vehicle integration support and enabling an expansion from L4 autonomous taxi services to ADAS and L4 autonomy-equipped consumer cars (similar to the Cruise-General Motors relationship). Figure 3: Florida, Miami Beach, ARGO self driving test vehicle by Ford. (Photo by: Jeffrey .

. . [+] Greenberg/Education Images/Universal Images Group via Getty Images) Jeffrey Greenberg/Universal Images Group Zoox was focused on AV ride-sharing until Amazon acquired it in 2020.

It had raised ~$1B since its founding in 2016. It is unclear whether this opportunity is interesting for Amazon – the technology is probably better utilized for trucking and last-mile delivery capabilities. Zoox invested in purpose-built ride-hailing taxis with significant innovations – like side parking cars and cabin designs promoting a home-like environment.

Figure 4: Engineers work on a Zoox Inc. , autonomous vehicle at the company’s manufacturing facility . .

. [+] in Fremont, California, U. S.

, on Thursday, April 7, 2022. Photographer: David Paul Morris/Bloomberg © 2022 Bloomberg Finance LP But designing and manufacturing cars and offering L4 ride-hailing services requires a lot of investment. With essentially no revenues and a significant reduction in private investment interest, it is unsurprising that Zoox sold itself to Amazon for ~1B, equal to prior investments and close to a fire sale.

It is unclear how they will monetize and become profitable in the future. But Amazon is a magician. Mobileye has laid down the gauntlet.

They generate significant revenues with ADAS now and are almost profitable. They will progress in L4 autonomy (for ride-hailing and consumer cars) with their automotive experience and Intel’s silicon photonics-based LiDAR and compute capabilities. Cruise is probably best positioned to compete, given the backing of its parent, General Motors and its progress along the L4 taxi services front.

Waymo can probably afford this with additional investments and using the L4 taxi service as a channel to generate lucrative advertising revenues. Argo, like Cruise, can rely on Ford and Volkswagen to expand their offerings beyond L4 taxi services to consumer cars. Aurora probably has to consider being acquired, as they seem to have acknowledged.

Zoox may have to pivot to support Amazon’s core business of moving goods from warehouses and suppliers to your door. I had predicted a year ago that the LiDAR space would have to consolidate, given the number of players, the investments, the revenue push-outs and limited revenue opportunities. It has proven to be accurate.

A similar phenomenon will occur in the autonomy space. There is insufficient revenue, cash, investor interest and customers to compete profitably in the L4 ride-sharing area. Extensions of the technology to trucking, ADAS and consumer L4 cars are critical.

Alphabet is increasingly worried about boring things like profitability and cash flow and is souring on the whole “other bets” thing. Aurora is realistic and indicated they are looking to be acquired. Argo’s backers (Ford and Volkswagen) have other significant priorities, like exploiting the electric vehicle space and shoring up their semiconductor supply chains.

It is unclear whether they have the stamina to continue investing. Given this, Argo’s intent to go public makes sense. General Motors was emphatic about retaining Cruise as part of the company last year when they replaced Cruise CEO Dan Amman , probably because they understood that using the Cruise technology across other General Motors products was a better strategic direction.

Waymo just brought a professional financial executive on board to worry about revenues, expenses and investments – which may be a precursor to going public. Of course, we cannot rule out acquisitions! Follow me on LinkedIn . Sabbir Rangwala Editorial Standards Print Reprints & Permissions.