Zoox Will Coast Off Self-Driving Competitors as Much as Owner Amazon

(Bloomberg) --

I’m often asked which company is “winning” the self-driving vehicle race, a question that doesn’t have a straightforward answer. Safety advocates rightly take issue with self-driving technology being framed as a competitive race — the goal should be fewer road deaths and not an economic victory.

The question is also tricky because it’s unlikely there will be a singular winner. Just as a rising tide lifts all boats, developments in the autonomous vehicle industry rarely benefit just one company. By the time AVs are commonplace on city streets, it won’t be just one company providing services to consumers.

Part of the reason for this is that regulators and the market won’t allow for a single winner. The ride-hailing industry provides a recent example of limits to market share a transportation company can hope to claim. As I’ve written previously, Didi’s dominant market position in China has attracted increased government scrutiny and investment has flooded into rivals and upstarts.

The less-well-understood reason there won’t be a singular winner in the AV space is that developers will struggle to succeed if all their rivals fail. For all the progress that’s been made in the self-driving space, there’s still much improvement required. One example: lidar sensors used by most AV developers remain too expensive for widespread deployment on robotaxis. Producing such sensors will become cheaper as self-driving companies achieve scale and improve their products.

This came up in a recent conversation I had with Zoox CFO Ilan Hart. Zoox is a company that’s not only developing AVs aimed at transporting passengers, but also building custom vehicles from the ground up.

While other prominent AV developers are working with automakers to match their AV systems with vehicles, Zoox is working directly with the auto-parts makers that supply components to vehicle manufacturers. Zoox can draw on the expertise of its owner Amazon for assistance in fleet management, digital platforms and other areas that will be useful for operating a robotaxi fleet. But it also will benefit from strides other AV developers make in shaping regulations for deploying vehicles without steering wheels, and building a customer base for AV products from parts suppliers including Continental, Autoliv, Bosch and Hella.

Hart agrees AVs won’t be a winner-takes-all scenario and points to a competitive market being particularly helpful toward bringing lidar costs down.

As I’ve mentioned before in this newsletter, the California Department of Motor Vehicles releases annual statistics on AV testing in the state. The most recent numbers show that there are fewer developers on the roads, but those that are testing are driving further distances in more vehicles. There were as many as 23 monthly active autonomous vehicle developers in California in 2021, down from as many as 29 in 2019. While this number will likely continue to decline over time, I expect this number will always be more than one.

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