Automakers rethink autonomy goals as AV hype fizzles out

For a number of users autonomous vehicles have been touted as the future of automotive. Yet Wards Intelligence Outlook Conference illustrated that optimism has been dampened. While automakers pumped billions of dollars into numerous self-driving projects, Glenn Sanders, principal analyst, autonomous vehicles at Informa Tech Automotive Group, finds that cracks have begun to show in the sector. Subsequently, valuations and stock prices have collapsed.

He says in his introduction at the Wards Intelligence quarterly event, that explored Autonomous Vehicles Hype Fizzles Out, OEMs Rethink Autonomy Goals, that many autonomous vehicle companies have closed their doors and that the development of the technology is taking too long for many impatient investors. He finds that this is causing many AV developers for consumer vehicles to divert some of their resources away from Level 3 or 4 autonomy development to focus more on ADAS in the near term. “Meanwhile, mobility companies with deep resources continue to focus on Level 4 for robo-taxis, shuttles and trucks,” he says.

The synopsis of the conference also comments: “2022 marked a turning point in the autonomous vehicle sector, with the cancellation of major AV projects by Volkswagen and Ford, and the closure of Local Motors, Optimus ride and others.” At the Outlook Conference, Sanders looked at: “How automakers are responding by switching strategies and diverting resources away from AV development to focus more on improving and expanding the ADAS features that customers are demanding today.”

Changing development partner

With regard to the cancellations, Christian Buhlmann, head of product communications at Volkswagen Commercial Vehicles, wishes to clarify that: “Volkswagen did not cancel their AD development, we just changed the development partner.”

He adds: “The commitment of Volkswagen Commercial Vehicles to develop autonomous vehicles for its future mobility services remains unchanged. We are working with a new partner who provides the self-driving-system for our autonomous vehicles, which will be announced shortly. Correspondingly equipped ID. Buzz prototypes from VWCV are already on the road within a test program. With this step we are also strengthening the cooperation within the Group for the development of highly automated and autonomous driving at CARIAD.”

Nevertheless, Sanders found that during 2022 a number of AV projects were cancelled. Companies were also closed, or they were acquired. Valuations dropped, too, by 87%. Is this trend over? No, Sanders predicts that it will continue for the next year or so. He explains: “These are part of a hype cycle macro trend that many technologies go through. When a technology shows promise and rapid progress, it causes excitement in the market and investor community. This leads a hype cycle of large investments and inflated expectations. If technology development takes longer or is more difficult than expected, investors and the market become discouraged, leading to a trough of disillusionment. That is where we are today in the AV sector today. The sector is expected to recover after a time of consolidation, as the engineering problems are eventually overcome. Then it will climb the slope of enlightenment to become a viable market.”

Predictable slowdown

Sanders believes that the ‘fizzling out’ is a predictable slowdown, created by overheated expectations because there is still a need to solve the “few percent of rare edge cases”, which are taking years longer than most people anticipated. Yet it’s likely that this slowdown will be resolved as he sees it as being an engineering problem that could eventually be resolved with enough money, resources and time in place. There is also a need for more commitment from companies and investors to see the technology through to market.

Big advantages

Buhlmann is buoyant about the prospects of Volkswagen Commercial Vehicles, suggesting that it has three big advantages. These include going electric with autonomous driving from the ID family. He says: “The volume production technology is an important basis for reliable operation and enables easy maintenance of the vehicles, which are, of course, intended to be almost permanently in use.”

Secondly, he reveals that the company’s new development partner is to be announced shortly and that the self-driving system available today, already offer a driving quality that requires very little intervention by the safety driver. Thirdly, he comments: “With our group subsidiary MOIA, we have already been gaining a lot of experience since 2017 in respect of its popular ride-pooling service in Hamburg and Hannover, which is now being further developed for driverless operation. We are therefore sure that Volkswagen Commercial Vehicles is very well positioned compared to the competition.”

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