Is Artificial Intelligence Ushering in the Smart Car Era?

As an artificial intelligence enthusiast, I’m always excited about the advent of the smart autonomous car.

I consider the ESG meme crave around EVs somewhat more suspect. Tesla’s stock is a wealth creator based on social media amplification (where a significant lack of regulation occurs), and is toxic for the stock market bubble. Its market cap is so far above intrinsic value, you might say that Tesla's stock is actually a pyramid scheme. It doesn't matter if you agree with me, mean reversion always occurs.

Not many self-driving companies will cross the finish line and significant consolidation will occur in the space in the 2020s.

That being said, let's focus on Aurora. $AUR's stock is at about $9.90 at the time of writing.

Aurora is also a SPAC and it involves Reid Hoffman. Aurora listed on the Nasdaq after merging with Reinvent Technology Partners Y, a special purpose acquisition company led by LinkedIn co-founder Reid Hoffman and Zynga Inc.’s Mark Pincus. Uber’s failed self-driving unit?was bought by Aurora.

Delays in Tesla’s FSD mode and Waymo’s lack of progress really have halted America’s dream of autonomous taxis and fleets where we won’t have to own our own cars. That means China and a flurry of other startups have an opportunity to catch up including GM’s Cruise. Based on their intelligent pivot to EV and autonomous GM and VM look like very smart companies here.

Uber’s self-driving unit was bound to fail. But let’s also give credit to the original Aurora team here. Aurora, the startup that was founded by the?former head of Google’s self-driving car project, has officially begun trading on the Nasdaq stock exchange under the ticker symbol “AUR.” The ticker is the kicker and it will be very fun to see where it trades.?TuSimple’s stock?has faired pretty well so far.

Aurora announced in July it planned to go public through a merger with a special purpose acquisition company, or SPAC. SPACs did horribly during the growth correction that occurred after February, 2021. This is a highly speculative company to do very well in the huge self-driving autonomous car TAM that should take off in the 2030s.

Additionally Uber invested $400 million in the Silicon Valley startup. So Aurora has raised $1.1 Billion to date. We’ve been wondering if artificial intelligence could bring self-driving cars live for quite a few years and it’s been slow going all around. Now supply chain issues are even slowing the advent of electric vehicles.

In the U.S. Aurora is one of the last horses standing in a period of consolidation around the first wave of self-driving startups. Uber and other major shareholders, including Sequoia Capital, Index Ventures and Aurora’s founders, can’t sell their shares for four years. The history of self-driving cars is happening now, and how the software and self-driving taxi services emerge will be significant winners in a gigantic total addressable market (TAM).

Aurora has manufacturing partnerships with Paccar Inc., Volvo Group and Toyota Motor Corp., and vehicles outfitted with Aurora’s autonomous tech will be in Times Square. This is a good sign, and it could signal that Toyota would eventually acquire Aurora. That would be my bet.

Cofounded by Urmson, the former head of Google’s Self-Driving Car Project (now Waymo), Aurora is also led by Sterling Anderson, a Tesla?veteran, and Drew Bagnell, who previously worked for Uber ATG. Aurora is yet another Moonshot in the industry, they know what they are up against.

Think about it, the company says it expects to lose money until 2027, with the next few years incurring the heaviest losses as it prepares to launch of its self-driving truck and ride-hailing businesses at scale. Aurora has said it wants to sell its hardware and software stack to other companies, rather than operate vehicle fleets itself.

Founded in 2017, Aurora’s executives have deep and diverse experience with autonomous vehicles. Can it succeed where Waymo and others have met difficulties? Can it acquire more self-driving trucking startups?

Can it acquire LiDAR startups? Can it look appealing to Apple or Toyota or another significant buyer, perhaps Amazon??It already had a foothold in the tech space — it’s founders include Reid Hoffman, who founded LinkedIn, co-founded PayPal and was one of the earliest investors in Facebook, as well as Mark Pincus, who founded the social game developer Zynga.

So what’s a realistic valuation? The merger valued the self-driving car developer?at about $13 billion. Uber, by far the largest shareholder, has a stake worth about $3.28 billion. It’s hard to imagine a company that won’t be profitable until maybe 2027 is worth $13 Billion. But valuations don’t correlate with reality on today’s equity markets. Uber lost big on Didi recently, and it’s probable it will lose big here as well. The AI competition from China is just too strong.

Aurora has been developing the hardware and software required to allow vehicles to drive themselves — a package of technologies that it calls the Aurora Driver.?I don’t think it’s at the level of Cruise or Mobileye or of course Waymo, but it certainly has potential. We’ll know more next week how $AUR does.

So what kind of pilots do they have? Aurora’s technology relies on innovations in lidar, which uses lasers to build a three-dimensional image of the surrounding landscape and help perceive and plan around obstacles in the road. Its first commercial pilot, with FedEx Corp., has Aurora-outfitted Paccar trucks delivering packages along FedEx’s Dallas-to-Houston route. The trucks are operating autonomously, with a backup driver behind the wheel as an additional safety measure.

Before starting Aurora, Urmson worked with a founder of Uber’s self-driving car project, Anthony Levandowski, at Alphabet Inc.’s Waymo.?Not surprisingly they did not get along. Aurora could also realistically be acquired by Amazon as they inevitably gobble up Rivian. This was my first prediction all those years ago.

So how might Aurora’s Uber connection actually give them a competitive advantage? It’s really simple. Aurora will have access to Uber’s global ride-hailing and delivery network and a trove of data. Uber agreed to give Aurora insights into its network over the next decade. “Uber ATG gave us a lot,” Volpi told Bloomberg (I read it on BNN).

In the history of AI, more self-driving pilots will roll out in the 2022 to 2030 period before the technology is ready to go mainstream. Aurora expects its business to proceed on two tracks: self-driving trucks, available in 2023; and autonomous passenger vehicles in 2024. Both products will be available to customers via a subscription service.

AI is a much hyped technology but the real-world and unpredictable humans (both drivers and pedestrians) are harder to figure out than we thought.?Building self-driving cars proved to be much more difficult than anyone imagined.?That’s true for several of the world’s most valuable companies, including Alphabet, Amazon.com Inc., Apple Inc. and Tesla Inc. In the history of AI this is still a very exciting period for a transportation renaissance.

If you are interested in my investing insights you can subscribe for free to?StockQuest. My?Buy calls for premium?members?take place twice a month, as well as my?Stock alerts, and that is where my best calls are made with price targets in a swing trade buy the dip strategy that’s scalable to compound brokerage accounts.

As social media turns into mindless legacy feed scrolling and sentiment snippets, I find myself writing more business articles from the perspective of the stock market.