The Platform for Autonomy

This Week in The Autonomy Economy, The Road to Autonomy Index returned 4.17%, Uber announced earnings that beat the street, Dara Khosrowshahi further cemented Uber’s role in the autonomous vehicle ecosystem, Kodiak announced a partnership with J.B. Hunt and Cruise continues to make all of the right moves.

Looking back on the early days of the autonomy economy one would not have predicted that Uber would have undergone a massive transformation where the company slimmed down, shed assets and focused on their core strength — being a platform. 

But that is exactly what happened when Mr. Khosrowshahi became CEO of Uber in August 2017. He slimmed down operations, shed non-core assets and launched an advertising business.

This year, Uber is on track to generate more than $1 billion in advertising revenue. Uber’s ad business will become what AWS is to Amazon — a profitable growth engine. When you combine a growing ad business with a growing platform, you have a recipe for success. 

Success is fundamentally built on trust and that is exactly what Cruise is doing in the Cruise 2.0 era. They are making all the right moves as they work towards relaunching commercial operations. 

As Cruise looks to relaunch, CEO Marc Whitten can take inspiration from the Dara playbook at Uber. Prior to Mr. Khosrowshahi’s arrival, Uber was floundering, the company was making enemies and the business had fundamental flaws. Today those flaws no longer exist and Uber is a thriving business. 

Cruise too will become a thriving business as they are making all of the right moves as they have the right leadership team to relaunch and grow the business over the coming decades. 

Last quarter we upgraded Cruise to #2 in the autonomous vehicle category on the AUTONOMY LEADERBOARD.

Without the right leadership team and culture, autonomy companies will fail. With the right leadership team and culture, autonomy companies will thrive. Both Uber and Cruise have the right leadership teams and cultures to scale successful autonomy businesses. 

Amazon, Cruise parent GM, J.B Hunt and Uber are The Road to Autonomy Index component companies

WHAT’S MOVING THE MARKETS | AUTONOMOUS VEHICLES

The Platform for Autonomy

Uber ($UBER) is the platform for autonomy and their messaging to the market is becoming more clear and concise. On Uber’s Q2 2024 earnings call, CEO Dara Khosrowshahi stated the following about Uber’s autonomous plans:

Today, you can order a Waymo on the Uber platform in the Greater Phoenix metropolitan region. Tomorrow, you will be able to order more than just a Waymo, as Uber is currently in late stage discussions to bring more autonomous vehicle partners onto the platform.

Uber’s strategy of being the marketplace for autonomous vehicles will lead to long-term profits. While profits from autonomous vehicles will be minimal for the next five to ten years, Uber’s marketplace will continue to expand over that time as they onboard new autonomous vehicle partners. It’s a strategy that will produce significant long-term profits as autonomous vehicles scale globally. 

When it’s all said and done, commentators on financial news programs will hopefully finally grasp what Uber is building — a platform that will become the Visa/Mastercard of autonomy. For the most part, commentators on TV who speak about autonomy do not fundamentally understand the market, they just commentate on it without rhyme or reason. 

This commentary creates false and misleading narratives in the market about autonomy. The bottom line is, Uber will be the platform that enables autonomy to scale. 

Our take: Uber went back to its roots, shed non-performing assets and became a platform when Dara Khosrowshahi became CEO in August 2017. The strategy of once again becoming a platform is now beginning to pay dividends for Uber, and investors are validating the strategy. 

Uber is currently ranked #1 with a bullish outlook on the AUTONOMY LEADERBOARD in the software platforms category.

Mastercard, Uber, Visa and Waymo parent Alphabet are The Road to Autonomy Index component companies

WHAT’S MOVING THE MARKETS | AUTONOMOUS VEHICLES

Making The Right Moves

Cruise continues to make all of the right decisions and say all the right things. Steve Kenner, Chief Safety Officer, Cruise told the audience at TRB Arts in San Diego on July 30th that Cruise intends to transform into the “role model driver”. 

The company does not want to just be a “better-than-average driver”, they want to be the role model driver. This is commendable and it is the right decision. This approach will allow GM and Cruise to usher in a future with both robotaxis and personally owned autonomous vehicles. 

To achieve this, Cruise is establishing specific benchmarks that underpin their "role model" aspiration and they are hiring an independent 3rd party to conduct a safety review before they remove human safety drivers from the cars.

Cruise is making all of the right moves and hiring Mr. Kenner as Chief Safety Officer on February 12th was one of those moves. Mr. Kenner together with the newly installed leadership team of Marc Whitten, Craig Glidden and the rehiring of Rob Grant will pay long-term dividends for both Cruise and GM.

Remember this is not a race. The winners today, might not be the winners tomorrow. The companies that make the right long-term decisions and implement strategies that enable long-term economic growth will be successful. 

One of Cruise’s biggest long-term competitive advantages is GM. With GM, Cruise has the opportunity launch a commercial robotaxi service, license their autonomous driving technology and co-develop a series of personally owned autonomous vehicles. 

Regardless of the path chosen, GM is well positioned to benefit from the future of autonomy. GM leadership made the hard decisions when they chose to reboot Cruise and usher in the Cruise 2.0 era. The Cruise 2.0 era and the decisions made to get there will pay long-term dividends for both GM/Cruise and their shareholders. 

Our take: The Cruise 2.0 era is going to be exciting.

Cruise is currently ranked #2 with a positive outlook on the AUTONOMY LEADERBOARD in the autonomous vehicle category.

Cruise parent GM is a The Road to Autonomy Index component company

WHAT’S MOVING THE MARKETS | AUTONOMOUS TRUCKS

50,000 Autonomous Long-Haul Miles and Counting

On August 7th, Kodiak, in partnership with J.B Hunt and Bridgestone, announced that they have successfully completed 50,000 autonomous long-haul trucking miles between South Carolina and Dallas. 

The run is a 750-mile hub-to-hub route that takes 16 hours to successfully complete. When Kodiak is able to operate this route and others like it without a safety operator, the economics of autonomous trucking will truly shine.

Our take: Kodiak is a diversified business that continues to grow as they scale their on-road operations in parallel with their off-road and defense businesses.

Kodiak is currently ranked #1 with a bullish outlook on the AUTONOMY LEADERBOARD in the autonomous trucking and defense categories.

J.B. Hunt is a The Road to Autonomy Index component company

WHAT’S MOVING THE MARKETS | AUTONOMOUS VEHICLES

Morgan Stanley Summer Interns Unsure About Robotaxis

Morgan Stanley released their 6th annual What's Trending in Disruption? Ask the Interns survey on August 4th. Overall, there were no real surprises in the report based on consumer trends, but the “Which robotaxi service would you be most likely to use?” questions and subsequent results stood out to us.

The results are as follows:

• 31% | Tesla (Down 7% year-over-year)

• 19% | None, I wouldn't use a Robotaxi (Up 7% year-over-year)

• 19% | Uber/Aurora

• 10% | Apple

• 10% | Alphabet/Waymo

• 9% | Traditional Car Company

• 1% | GM/Cruise

There is a disconnect between the market and what Morgan Stanley interns interpret as the market. Tesla has yet to introduce a robotaxi service, Aurora is currently focused on their autonomous trucking business, Apple sunsetted their autonomous vehicle program, Waymo is the current market leader with the largest fleet in operation (over 1,000 robotaxis in 2 States), traditional car companies outside of GM are clueless when it comes to robotaxis and Cruise is in the process of re-ramping up operations.

Where the disconnect comes from is uncertain, but it is beyond obvious that the Morgan Stanley summer interns clearly do not understand the robotaxi market. 

Could this disconnect extend to the broader Morgan Stanley operation? Anything is possible, but we are flabbergasted as to how big of a disconnect there is between the market and how Morgan Stanley interns perceive it. 

Our take: This is not a positive reflection on Morgan Stanley and it raises questions as to where the summer interns are getting their data, market intelligence and what is shaping their opinions on the market.

AUTONOMY LEADERBOARD RANKINGS

• Tesla is currently ranked #1 with a bullish outlook in the personally owned autonomous vehicle category.

• Uber is currently ranked #1 with a bullish outlook in the software platforms category.

• Aurora is currently ranked #1 with a bullish outlook in the autonomous trucking category.

• Waymo is currently ranked #1 with a bullish outlook in the autonomous vehicle category.

• Cruise is currently ranked #2 with a positive outlook in the autonomous vehicle category.

Apple, Cruise parent GM, Tesla, Uber and Waymo parent Alphabet are The Road to Autonomy Index component companies

PIQUING OUR INTEREST

Strong Customer Acceptance On Caterpillar’s ($CAT) Q2 2024 earnings call, Jim Umpleby, Chairman & CEO said CAT continues to see strong customer acceptance of their autonomous solutions.

SoftBank Investments Turn Positive SoftBank Group ($9984 • TYO) booked a $12.9 million investment gain on its Vision Fund in Q2 2024. On the earnings call Yoshimitsu Goto, CFO mentioned the company’s desire to continue to invest in autonomous driving, logistics automation and robotics. The investment gain comes on the heels of SoftBank’s $1.9 billion in FY24 Q1 investments including their $1 billion investment in Wayve.

Slowing Demand for LiDAR On August 6th Luminar ($LAZR) reported revenue of $16.5mm vs. consensus of $20.4mm. Weaker-than-expected second-quarter numbers, a significant balance sheet restructuring and a capital raise sent the stock tumbling 37.36%.

Robotaxi Deployments are Accelerating in China Commercial robotaxis and testing is currently being conducted in at least 19 Chinese cities according to Reuters.

Riding into an IPO WeRide is seeking to raise as much as $400 million in a U.S. initial public offering and concurrent private placement.

Autonomous Vehicles are Downside Risks for Allstate and Progressive In an August 5th AI Revolution: Stock & ETF Beneficiaries Industry Overview report, Bank of America highlighted the revenue risks posed by autonomous vehicles to both Allstate and Progressive’s businesses long-term. Traditional auto insurance companies will face significant headwinds as robotaxis scale and OEMs introduce personally owned autonomous vehicles with insurance bundled into the product/service.

SOCIAL BUZZ | AUTONOMOUS VEHICLES

Waymo Continues to Expand in California

Waymo continues to expand service in the California market. The expansion comes as we have estimated Waymo is now generating more than $2 million a month in revenue. 

Waymo is becoming a business. A business that is on the road to becoming profitable as ridership is only projected to increase over the coming years. 

Our take: While the market is large, doubling and tripling down on California is a risky decision because of the regulatory and political environments.

Waymo is currently ranked #1 with a bullish outlook on AUTONOMY LEADERBOARD in the autonomous vehicle category.

Waymo parent Alphabet is a The Road to Autonomy Index component company

SOCIAL BUZZ | AUTONOMOUS VEHICLES

Accelerating Autonomy

Nuro is on a national tour to expand their data collection operations. The recent moves made by Nuro are a bullish sign for the company as they appear to be in the midst of a major reboot.

Our take: We are curious as to what the reboot will look like and if it will involve licensing the Nuro autonomous driving stack.

THE ROAD TO AUTONOMY INDEX WEEKLY PERFORMANCE

The Road to Autonomy Index® is a high-definition lens into the emerging world of autonomous vehicles and trucks. It is the world’s first and only pure-play index designed to measure the performance of the autonomous vehicle/truck market.

For the week of August 5th, The Road to Autonomy Index returned 4.17%, the S&P 500 declined 0.04% and the NASDAQ 100 returned 0.39%. The Road to Autonomy Index outperformed the S&P 500 by 4.21% and outperformed the NASDAQ 100 by 3.78%.

Year to Date (YTD), The Road to Autonomy Index has returned 6.33%

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The Road to Autonomy Index Component Companies

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