Flashy startups have been promising fully autonomous self-driving cars for nearly a decade now. But while driverless cars may dominate headlines, they’re not yet being sold at dealerships. Despite the billions of dollars that have been invested, self-driving technology can’t seem to shift out of first gear.
Due to a lack of meaningful progress and hefty losses in the self-driving sector, investors are starting to grow impatient. Some have even urged legacy automakers to scale down their investments in self-driving tech.
Pumping the Brakes
Ford (F) and Volkswagen (VWAGY) are both examples of automakers that are scaling down their self-driving development efforts. In October, both companies hit the brakes on their joint investment in Argo AI — a self-driving startup they’d poured billions into over the past decade.
Some self-driving startups, like Nuro, are taking it upon themselves to start scaling back. Nuro announced that it will be laying off 20% of its workforce in the face of a recession. In that vein, the Children’s Investment Fund Management recently sent a letter to Alphabet (GOOGL) urging it to rethink spending on its in-house self-driving project Waymo.
For self-driving cars, the road ahead has several obstacles. Most notably, autonomous driving technology is miles away from perfection. While some companies may be making good progress, the true eureka moment has yet to arrive.
It’s also true that, even when they’re ready to go, self-driving cars will be subjected to intense regulatory scrutiny. This elephant in the room means that driverless cars will likely have to face years of red tape in order to become street legal. With so much uncertainty in the industry, investors feel that the time has come to make a U-turn on self-driving cars, until the technology proves it can go the distance.
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