自律走行車スタートアップの株を欲しがるのは誰か？

The answer to the question, posed by the title of this blog, is: quite a few automobile manufacturers, VCs, other investors, and at least one automobile supplier. Most recently Alphabet captured headlines by revealing a $2.25 billion investment in its autonomous vehicle subsidiary Waymo, by a blue chip list of institutional and other investors.

But that was only the most recent, and not even the largest, investment in an automobile manufacturer's autonomous unit (see chart below). In July 2019 Volkswagen invested $2.6 billion in Argo AI (Ford's autonomous vehicle unit); and in October 2018, Honda invested $750 million in Cruise (GM's autonomous vehicle unit) with a pledge of another $2 billion over the next 12 years. And if you want to count outright acquisitions of companies with technology that enables autonomous (and semi-autonomous) vehicles, Intel's August 2017 acquisition of Mobileye for $14.7 billion takes home first place.

So what is going on? The obvious answer is that achieving Level 5 full automation (and maybe even Level 4 high automation) is too difficult with too many timing and execution risks for even the largest technology and automotive companies to take on by themselves.

• In one sense, the investing auto manufacturers are hedging the multiple risks their industry faces: the shared economy, worrisome demographics for people without drivers licenses, the anticipated shifts to electric vehicles . . . and autonomous vehicles
• In addition, the technological challenges of making autonomous vehicles are greater than were anticipated just a few years ago. So broadening and deepening the pool of capital available to meet those challenges makes financial sense. (See my earlier blog from August last year: "Celent Has Re-Rethought the End of Auto Insurance."
• As regards to the VCs and other investors: they are doing what VCs do, making a series bets in the expectation that some will turn out to be the next Google, Facebook, or . . .

Implications for Auto Insurers

This impressive series of investments clearly signals that any significant presence in the fleet on the road of fully autonomous and semi-autonomous vehicles is slowly receding into the future. The key word is significant. Truly autonomous vehicles constituting 1% of the fleet on the road will not impact insurers' top or bottom lines, nor will 5%, nor will likely 10%. So what percent will impact insurers' financial results? My guestimate is around 20% to 25%.

And when will that threshold be reached? Not this year, not in 2025. My crystal ball says between 2030 and 2035

Good news for insurers. Plenty of time to focus on monetizing data from connected cars (and homes and commercial property and workers); and to look at adjacent businesses to establish non-risk related revenues and profits.