Autonomous driving companies may have to go through the darkness before dawn before they can see the light.

Waymo CEO John Krafcik posted a photo on Twitter, which showed a Volvo car with the Waymo logo printed on the rear window, with the caption "(Love) Waymo Volvo". This is considered to be a hint that Waymo may cooperate with Volvo to jointly develop L4 mass-produced models. Having just set a record for autonomous driving financing, and now flirting with car companies, what is Waymo's plan?

However, under the influence of the epidemic, European and American autonomous driving players are not doing well. Cruise, the "global financing king of the autonomous driving industry", has just announced layoffs, Zoox, which once set a record for single-round financing for independent startups, is seeking to "sell itself", and Starsky Robotics, which aims at heavy truck autonomous driving, has declared bankruptcy due to financing failure. These "tragic events" have successively detonated the industry, which means that capital is gathering towards leading companies and the elimination of autonomous driving is accelerating. From the "high-spirited" in 2016, to the "misery" since 2018, to the "life and death test" in 2020, can the players in the autonomous driving track still hold on?

Schrödinger's Dilemma

The epidemic has disrupted people's lives and companies' future plans. Under the influence of the epidemic, "cash-strapped" autonomous driving car companies have fallen into a "Schrödinger's dilemma": if they can get financing, they can survive.

Recently, Cruise announced that it would lay off 150 people, shocking the industry. This American self-driving company, which once raised $7.25 billion, was known as the "capitalization king of the global self-driving industry" and is the self-driving company with the least shortage of money after Waymo. But even Cruise, which has a lot of money, has laid off employees. You can imagine the situation of the American self-driving industry.

On May 7, Zoox, which was often mentioned with Waymo, was reported to be considering selling. Pitchbook's report further confirmed that Zoox has confirmed hiring Qatalyst Investment Bank to handle the next round of financing or acquisition. Prior to this, Zoox had also announced that it would launch a paid shared travel service in 2020 for commercialization. However, an epidemic disrupted Zoox's plan and even pushed it to the brink of death: if it gets financing, it will survive; if it doesn't, it will either be acquired or go bankrupt. But so far, there has been no news of companies intending to invest.

Coincidentally, on March 20, Starsky Robotics, an autonomous truck startup once called "the present and future of American employment" by Bloomberg, announced that it would cease operations and close due to a broken capital chain. Starsky CEO and co-founder Stefan Seltz-Axmacher said that fundraising conditions have become more difficult over the past year. Instead, a round of financing that was scheduled to end in November 2019 fell apart, prompting Starsky to suddenly close down.

Burning money, burning money, burning money. In fact, the autonomous driving track is recognized as "burning money". At present, autonomous driving is like a newborn baby. With imperfect technology, incomplete laws and regulations, government restrictions, and public concerns and doubts, it is unable to "self-generate blood" and is in a state of needing capital "feeding". However, the cost of an autonomous driving company is very high. For example, the cost of technology research and development, employee costs, and vehicle testing costs add up to a considerable amount of data.

It is understood that due to its acquisition by GM, Cruise is currently the only autonomous driving company that has released detailed financial information. According to GM's financial report, Cruise's "burning money" speed is alarming: from 2016 to 2018, Cruise lost $171 million, $613 million, and $728 million respectively, with a total loss of $1.512 billion. GM Chairman and CEO Mary Barra said that Cruise's expenses are well above $1 billion per year.

In addition, according to The Information, Waymo, the No. 1 company, only earned a few hundred thousand dollars in 2019, but its operating costs for the whole year were as high as $1 billion. With such huge costs, it can only survive by continuously obtaining financing. However, with the development of autonomous driving in recent years, not to mention the arrival of the capital "winter", under the influence of the epidemic, capital is like a clay Buddha crossing the river, unable to protect itself.

SoftBank, which is "unable to protect itself", has also fallen into a quagmire in the current situation of global economic downturn and political and economic turmoil. SoftBank has always been keen on investing in the field of autonomous driving. Its investment layout ranges from autonomous driving chips and sensors to high-precision maps, autonomous driving algorithms and V2X vehicle networking technology. Investment targets include Uber, Didi, Grab, Ola, etc. Among them, in July 2019, SoftBank Cruise invested US$2.25 billion; in March this year, SoftBank invested another US$300 million in Didi's autonomous driving department. On May 18, SoftBank's 2019 fiscal year report card was released, with a net loss of 1.4381 trillion yen (about RMB 95.6 billion, equivalent to a daily loss of 1 billion) in the first quarter of this year.

This level has set a new record for Japanese companies' quarterly performance, surpassing the record of 1.3872 trillion yen in quarterly losses (January-March 2011) set by Tokyo Electric Power Group during the Great East Japan Earthquake. For the entire fiscal year 2019, SoftBank's operating loss was 1.36 trillion yen and its net loss was 961.6 billion yen, the highest since its establishment. In the previous fiscal year, it had a net profit of 1.4111 trillion yen.

According to reports, the main reason for SoftBank's huge losses is that its investment fund business, including the Vision Fund (SVF), has hit a "huge thunder". This "huge thunder" includes popular technology companies such as Uber and Didi Chuxing. "Specifically, the loss caused by the online car-hailing company Uber for the entire fiscal year was US$5.179 billion, mainly due to the shrinking market value; the loss caused by the write-down of the investment in the US shared office WeWork was US$4.582 billion. In December 2019, WeWork's valuation was US$7.3 billion, but by the end of March it had shrunk to US$2.9 billion. In addition, the COVID-19 pandemic caused a loss of US$7.502 billion to the fund's investment portfolio."

Just now, Uber was exposed to continue to lay off employees and close its AI laboratory. In a track as expensive as autonomous driving, too high a cost is like a game of Jenga. Whether it is an autonomous driving company or a capital party, if they are not careful, they will fall and be smashed to pieces. Masayoshi Son said at the press conference, "Even with the epidemic now, we have not frozen new investments. But we will learn from the lessons of the first phase of the Vision Fund and will no longer be so aggressive."

Since the beginning of 2020, only Waymo has received a new round of financing in the autonomous driving industry in Europe and the United States. In fact, autonomous driving companies not only face difficulties in financing, but also in landing. However, at a time when Robotaxi (unmanned taxis) and unmanned trucks are crowded, it seems that autonomous driving companies can only see the light of day after enduring this difficult "winter" and "big waves".