Topics in this section: - Self-driving tech may take a backseat as automaker earnings skid - Ford courts VW as partner to share mobility costs - Investment in GM cruise arm eases capital burden - Fiat Chrysler lets Waymo figure out self-driving - Tesla autopilot progress slows, bigger issues abound
As U.S. demand plateaus and earnings decline, automakers may move to the sidelines of fully autonomous-vehicle development to refocus on the core profit-making business, while suppliers, ride-hailing and technology companies burn through capital in pursuit of progress.
Ford courts VW as partner to share mobility sosts
Ford has the most ambitious mobility plans, yet is in the midst of the most expensive and extensive restructuring initiative. As the company moves to fix its domestic and international product portfolios, the company may receive investment from Volkswagen to generate the capital needed to continue development of autonomous vehicles while also focusing on multiple aspects of creating an efficient and futuristic transportation system (smart cities, robots, drones). A $4 billion investment in Ford Autonomous Vehicles LLC shows commitment to self-driving, though the Mobility unit posted a $674 million Ebit loss in 2018 and $288 million shortfall in 1Q.
Ford is undertaking an $11 billion restructuring that includes workforce reductions and plans for 40 hybrid and electrified vehicles by 2022.
Investment in GM cruise arm eases capital burden
External investments in GM Cruise signal General Motors' commitment to developing self-driving technology, even as recent reports reveal capabilities significantly below the safety level of average human driving in terms of crash frequency. The financial autonomy of a unit that can attract its own capital eases the investment burden on core operations until the segment produces its own earnings. GM Cruise posted a $771 million adjusted operating loss in 2018 and another $189 million in 1Q, a patience-testing drag if slowing demand in the core business crimps earnings. The structure of Cruise ownership may change and the unit could be sold or spun off as an independent company, or GM may buy back the SoftBank stake.
Honda and SoftBank investments in GM Cruise value the GM self-driving vehicle unit at $19 billion.
Fiat Chrysler lets Waymo figure out self-driving
Fiat Chrysler's electrified and autonomous-vehicle plans are less aspirational than most other automakers, as the company is content to avoid the assumption of costs or commitment to unproven or unprofitable technology. Fiat Chrysler is providing Chrysler Pacifica minivans to Waymo's self-driving fleet. In turn, the automaker established a partnership and will be able to offer Waymo's more intensive Level 4 self-driving capabilities on some of its premium Alfa Romeo and Maserati vehicles by 2023.
Fiat Chrysler's early positioning as a vehicle provider to Waymo absorbs Pacifica minivan supply near term and gives it an inside track with a self-driving technology supplier in the long run. Waymo, which has no ability to manufacture vehicles, can focus on achieving Level 5 capabilities and developing the ride-share model.
Tesla autopilot progress slows, bigger issues abound
Tesla considers the adoption of an autonomous ride-share business model a critical pivot for automakers once fully driverless capabilities actually exist. It behooves the company to continue pursuing that goal, given the concept put forth in its recent technology investor day accounts for a significant portion of the equity valuation. With so many production, sales, delivery and financial concerns, progress reports about Tesla's Autopilot system have been pushed to the background. Tesla expects to have a fleet of robotaxis on the road in 2020 where regulatory approval allows.
Several high-profile crashes and deaths, and the inability to deliver on the fully self-driving cross-country promise that was originally scheduled to happen in 2017, have tempered perception and expectations of the system's capabilities.
