Have Silicon Valley Technology and Venture Capital firms jumped the shark on Autonomous Vehicles? - Barry Einsig
Every industry, including the technology industry, has iconic phrases that capture ideas for the market, and we all have our favorites. But given the news of the day regarding Silicon Valley Bank, and the number of companies in the last year that have announced closing up, or scaling back of Autonomous Vehicle (AV) companies or programs, we may need to look at the entertainment industry for a quote that works. It now seems like it’s time to ask if the tech and Venture Capital (VC) finance industries have “Jumped the Shark” when it comes to the promise of the safety, mobility, and sustainability benefits tech was sure it could deliver just a few years ago.
“Jumping the shark” is a phrase used to describe the episode of the television show Happy Days where the Fonz jumped over a shark on water skis, an outrageous act to try to maintain viewership. The phrase has morphed into a phrase to imply that something that had been popular was now out of favor.
Back in 2017, Connected, Autonomous, Shared, and Electrified (CASE) were considered the four horsemen that would ride in to solve the national challenge of vehicle fatalities that had stalled in the previous decade, thus fatalities began moving higher since 2020 according to the US Department of Transportation. So, the industry of auto OEM’s and infrastructure owner operators, along with their ecosystem, must and will continue to work to solve the challenges associated with driving while distracted, impaired, or otherwise unable to operate a personal vehicle safely . The transportation industry and its technology partners can no longer count on other industries to deliver on the goals of zero roadway fatalities.
At the same time as the concept of CASE was emerging, the tech revolution in transportation began as a rebranding exercise called “Mobility”. The US Department of Transportation, automobile OEM’s, their supplier ecosystem, and the infrastructure owner operators were on a path to deliver a generational change in safety technologies. These included many of the features that we see on new vehicles today: adaptive cruise control, automated lane keeping, automated breaking systems, electric drive trains and self-parking vehicles. The next incremental step developed and tested was vehicle to vehicle and vehicle to infrastructure communications (V2X). The automotive industry had come together in a precompetitive market for testing to show that connected vehicle technologies were viable and could potentially save lives.
This complex problem set, which seemed large in scale, valuable to society, and dependent on technology, made it appear to be an attractive new market to enter for many of the Silicon Valley technology companies and venture capitalists. To date, the venture capital industry has invested somewhere between $40 to $100 billion in the autonomous vehicle technology industry. The original estimate for the national connected vehicle infrastructure was $12 billion. So as an industry, if 30% of the funds invested in the autonomous technology had been able to be invested in the infrastructure, the funds invested on the vehicle technologies would have been less risky, and ultimately more successful for both the public and private stakeholders. This model of public underpinning of the risk, while supporting the development of the private companies that could use network, worked very well in the early days of the world wide web, which ultimately became the mobile internet we know today.
Almost eight years ago, I testified in front of the House Energy and Commerce Committee, in support of the National Highway Traffic Safety Administration (NHTSA) regarding the industry’s readiness to begin deploying connected vehicle technologies as well as the necessity of a rule to insure a level playing field for all involved in the surface transportation ecosystem. Unfortunately, NHTSA’s rule making process stalled. The year before the testimony mentioned above, the tech industry began focusing on automated vehicle technology birthed out of the Defense Advanced Research Projects Agency (DARPA) Challenges 2004–2007, is one of the early federal supported research developers of the World Wide Web.
The tech industry renamed connected and automated vehicle systems as autonomous and began touting the ability of these vehicle to operate without any need for communications from the infrastructure owner operators. The technology industry had a lack of faith that the public sector could design, build, operate, and maintain the level of digital infrastructure required. The AV technology companies, leveraging an array of on-board computing, sensors, mapping systems, and millions of miles of virtual, off road, and real-world testing, have yet to hit what the industry refers to as product, market, fit. This validation is the precursor to scaling an industry, such as what happened sixteen years ago with smartphones on the mobile internet.
Seven years ago, the 3GPP cellular industry standards bodies and ecosystem partnered with some of the automobile manufacturers to announce a new plan to utilize emerging 5G technologies to solve the connected vehicle technology challenge. To date, neither autonomous vehicle nor 5G technologies have been able to help slow or stop the increase of fatalities on our nation’s roadways.
This leaves the industry where it was almost eight years ago when the connected vehicle ecosystem seemed on the cusp of becoming a reality. The federal government, automotive industry, and the infrastructure owner operators must regroup and move forward to design, build, operate, and maintain the connected vehicle infrastructure necessary to increase mobility and sustainability, and reduce fatalities. This must be accomplished in close collaboration with the automotive ecosystem, while OEM’s work to incorporate the connected vehicle technologies for vehicle to everything (V2X) communications.
While some may look to politicize this challenge or seek to fix blame, I would ask for a more responsible focus on the goals and opportunities at hand. Let’s all, as an industry, roll up our sleeves and move forward as rapidly as is prudent, to get these vital safety systems of systems built so that we can begin to turn the trend back toward lower traffic fatalities on our nation’s roadways.
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Barry Einsig is the founder of Barry C Einsig Advisory Services LLC and and Non-Executive Board Director with three decades of experience driving sustainable revenue growth and shareholder value for leading technology companies. His broad-based expertise includes strategic planning, finance, sales and marketing, operations, product development, technology, customer satisfaction, partnerships, start-ups, engineering, manufacturing, investor relations, mentoring, succession planning, fiduciary oversight and corporate governance. He is dedicated towards building effective relationships and providing crucial support to investors, C-level executive teams, and boards of directors.
