Autonomous driving leaders need financial staying power for long-term survival

The front-runners among companies vying to develop and deploy autonomous vehicles face tenuous futures.

That's one key takeaway from a report issued Tuesday by research and consulting firm Guidehouse Insights. The report assessed and ranked the strategies of leading AV developers, spotlighting the difficulty most are navigating in building viable businesses around self-driving technology.

The clock — not the competition — is the chief challenge.

"It's a race against time to some degree, because of the financial challenges," Sam Abuelsamid, the report's co-author, told Automotive News. "The prospects of having a profitable business based on this technology keep slipping into the future, and the costs have increased dramatically."

Those headwinds became apparent last October when Argo AI, once ranked among the leaders in this mostly annual report, folded.

They're also the reason why there's a new leader atop this year's rankings. Mobileye now sits in the Guidehouse pole position, and that's in part because the company's $17.3 billion revenue pipeline related to its current driver-assist system business provides a financial bridge to an autonomous future, Abuelsamid said.

Mobileye, which spun out from Intel in an initial public offering in October, has already delivered 70,000 units of its SuperVision hands-off, eyes-on-the-road advanced assist system to Geely Group brand Zeekr in China.

In second place sits last year's leader Waymo. Baidu is third and Cruise is fourth among the 16 companies ranked on the Guidehouse Insights leaderboard.

Companies like Motional, Aurora, Gatik and Zoox are among the next group of contenders. Tesla ranks last among all companies evaluated.

Guidehouse uses staying power as a key metric to assess the industry. It also measures go-to-market strategy, technology, commercial readiness and other factors. The deteriorating financial landscape has underscored staying power concerns and made fundraising more arduous.

As a result, some companies received lower scores than they have in the past.

Aurora, the Pittsburgh-based startup led by industry veterans Chris Urmson and Sterling Anderson, stands out as one company in a precarious position, Abuelsamid said. Though Aurora expects its self-driving system to be "feature complete" by the end of the first quarter, the company's biggest challenge is attracting additional investment, he said.

"Financially, they'll have some significant challenges in the next year," Abuelsamid said. "As much good work as they're doing, I think they are one company at a significant risk of being the next Argo."

Aurora ended 2022 with $1.1 billion in cash and short-term investments, a company spokesperson said. That's enough to fund the company through mid-2024, CFO Richard Tame said on Aurora's fourth-quarter earnings call in mid-February.

Unlike Aurora, companies such as Waymo and Cruise have deep-pocketed parent companies. But that's not necessarily a salve.

At Waymo parent Alphabet, there is "less patience" for projects that are not profitable, such as the self-driving company, Abuelsamid said. Amid belt-tightening efforts, Waymo laid off 8 percent of its staff Wednesday. It's the second time this year the company has reduced its work force.

In contrast to Ford and Volkswagen pulling support from Argo, Cruise appears to still have the strong backing of parent company General Motors, Abuelsamid said. Over the long term, that may hinge on whether Cruise reaches its stated goal of generating $1 billion in revenue in 2025. By then it would need to deploy between 5,000 and 6,000 vehicles, requiring about 500 vehicles in as many as a dozen markets to reach the revenue goal, Abuelsamid estimated.

Even if Cruise achieves a mass deployment that generates revenue, "profitable operations are unlikely until much later in the decade," according to the report.

Guidehouse has typically published its leaderboard on an annual basis since 2015. Last year's report focused specifically on companies developing autonomous driving systems for the trucking sector.

By the time another leaderboard is published next year, Abuelsamid expects more consolidation in the industry.

"My guess is one or two of these companies will not be in business by the next time we do this, and it may turn out to be more," he said.

"This is certainly a high-risk time," he added.