The Fuse

Investment Pours Into Vehicle Tech as Focus Centers on Autonomy

by Matt Piotrowski | July 14, 2017

Global investment in auto-tech firms totaled $1.6 billion for the first half of 2017, more than double the same time last year.

Venture capital is pouring into the vehicle technology, with increased attention on autonomy. The pace has picked up steam this year as traditional car companies move resources to autonomy, policymakers at the federal and state levels advance legislation, and tech companies compete with each other to become leaders in the space.

CB Insights, which tracks private company data, said that global investment in auto-tech firms totaled $1.6 billion for the first half of 2017, more than double the same time last year.

cbinsights

Autonomy is one of the main reasons behind the sharp increase in investment. In a blog post in May, CB Insights said that roughly 44 major companies are now developing autonomous vehicles for use on the road, with players ranging from traditional auto companies to tech firms to telecom enterprises.

This week, there was more activity. AutoTech Ventures and Toyota Research Institute (TRI) both launched major initiatives.

AutoTech Ventures, a Silicon Valley venture capital firm that has already made investments in the likes of DeepScale and Lyft, set up as $120 million fund that will focus on transportation services and digital vehicle technology. The purpose of the company’s investments is to connect start-ups with corporate investors. It’s not focused specifically on autonomy but rather on shorter-term solutions to fix current transportation problems that surround issues such as parking and car repair. However, since AutoTech is dedicated solely to ground transportation, autonomy will be a key part of its investments and strategy. “We have to think about how to make money in the next 10 years, and in our view, full level five autonomous vehicles and flying cars are more than that 10-year horizon,” Quin Garcia, co-founder of AutoTech, told the FT.

Also this week, TRI, a wholly owned subsidiary of Toyota Motor North America, said it launched a $100 million fund to invest in start-ups working on autonomous driving, artificial intelligence, robotics, and cloud technology. “A lot of disruptive technologies come from startups and we want to help them be successful,” said Jim Adler, TRI’s Vice President of Data and Business Development.

It’s unclear whether just a few companies will dominate the industry, or whether most of them will see their investments realized in the coming years and decades as the auto sector and mobility are upended.

The activity in the auto sector, particularly with partnerships and investment in autonomy, will continue at a dizzying speed. Even car rental services have gotten in on the game. Google’s self-driving unit, Waymo, is teaming up with Avis to manage an autonomous vehicle fleet in Arizona, while Hertz is leasing AVs to Apple. Meanwhile, GM has produced more self-driving Chevy Bolts, one of its all-electric cars, to test on roads in San Francisco, Arizona, and Michigan. Chipmaker Nvidia is collaborating with Volvo and Volkswagen, which should help underpin the companies’ AVs plans.

The large number of partnerships in the tech and auto industries reflects the high-stakes battle as companies move forward. The head of a major consultancy said this week that the AV race will bring about only a “handful” of winners over the next decade. “There will be billions and billions of dollars lost in bets that were put in the wrong place,” John Hoffecker, Global Vice Chairman of AlixPartners, said in a speech to the Automotive Press Association. “Whoever can get to autonomous first will have a major advantage.”

“Whoever can get to autonomous first will have a major advantage.”

This doom-and-gloom outlook is far from certain, however. It’s unclear whether just a few companies will dominate the industry, or whether most of them will see their investments realized in the coming years and decades as the auto sector and mobility are upended. Firms are no doubt clambering as quickly as possible to keep up in the ever-changing market and transportation space.

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