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Autonomous Vehicles: Fact vs. Fiction at CES 2019

Robot dogs from Continental prove that autonomous vehicle hype has gone too far. At CES 2019, Continental announced a way to automate last mile-delivery without requiring a human. This is where the robot dogs come in. The company’s official statement was, “With the help of robot delivery, Continental’s vision for seamless mobility can extend right to your doorstep. Our vision of cascaded robot delivery leverages a driverless vehicle to carry delivery robots, creating an efficient transport team.”

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Virtual Representation of Autonomous Vehicles with AI Robots. Source: Continental

The problem with robot dogs, and many other AV gimmicks, is that the industry is not talking truthfully about what where we are with AV and what it will take to put an advanced AVs on the road. This is harmful to consumers who mistakenly believe autonomous vehicles are available for purchase and already on the road today. In fact, 71% of respondents around the world believe they can buy an AV – yet there is not one AV on the market. The top three brands that consumers mistakenly believe distribute self-driving cars include Tesla (40%), BMW (27%), and Audi (21%). It’s also harmful to investors who expect AV technologies to be profitable in the near term of two to three years.

CES is one of the world’s major marketing events where autonomous vehicles were first hyped. The main stage, the keynotes, the sessions, the booths, the competition between rival companies – all of it pushed for bigger and better car demos. Which is why CES is the perfect platform for the announcement of PAVE, which stands for The Partners for Automated Vehicle Education. PAVE is a new coalition that will help educate the public and policymakers about the potential of automated vehicles. Audi, Aurora, Cruise, GM, Mobileye, Nvidia, Toyota, Waymo and Zoox have joined the coalition, which has a central focus on education and safety – and also a focus on more credible information. As stated by Mark Del Rosso, President of Audi America, “Traditional automakers and newcomers are investing billions of dollars in the technology that will make automated vehicles possible. PAVE recognizes the need to invest in public information – in making sure consumers and policymakers understand what’s real, what’s possible, and what is rumor or speculation.”

Just the Facts: Level 2 Automation at CES 2019

Level 2 automation is a reference to the six levels of autonomous vehicles published by SAE International, and adopted as the industry standard for discussing the various stages and evolution of autonomous vehicles. Level 0 is no automation and Level 5 is full automation without a human driver and does not have brakes or a steering wheel. We are at Level 2 right now and the industry is experiencing notable delays in deploying Level 3.

(NOTE:  I’ve published extensively on an autonomous vehicle bubble due to investors pouring money into AV technologies that won’t commercially deploy for many years. You can access the analysis on GM here, the analysis on Tesla here and the analysis on how autonomous vehicles are creating a bubble here).

Below are a couple of the more important (and realistic) announcements from CES that will deploy in the very near future.

Nvidia

Nvidia placed emphasis on gaming this year at its Sunday CES press conference with the announcement of the RTX 2060, whereas it has been Nvidia’s tradition to focus on autonomous vehicles (and data center technologies) at the CES press conference. One day later, on Monday at CES, Nvidia launched DRIVE AutoPilot, which will improve advanced driver assistance features, such as enabling lane changes, pedestrian and cyclist detection, parking assist, and personal mapping. This improved automation strengthens the Level 2 vehicles we see on the road today.

Intel

Intel had a showy display that included a Gotham City themed BMW X5 equipped with large screen TVs, projectors, sensors and haptic feedback. Visual distractions aside, the real news from Intel at CES is the company’s ongoing focus on China. Intel did not officially state they are redirecting their efforts from the United States to China, however, the announcements speak for themselves:

  • Mobileye, Beijing Public Transport Corp. and Beijing Beytai Collaborate to Bring Autonomy to China’s Public Transportation
  • 2019 CES: Great Wall Motors, Mobileye Join Forces to Deliver ADAS and Autonomous Driving Solutions in China and Beyond
  • Intel and Alibaba Team on New AI-Powered 3D Athlete Tracking Technology Aimed at the Olympic Games Tokyo 2020

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This is in addition to a hard-to-miss announcement back in July that Baidu was partnering with Mobileye on their Apollo vehicle. At CES 2019, Baidu had on display the successful implementation of Mobileye’s Responsibility Sensitivity Safety (RSS) in the simulation engine of Apollo (I personally tried out the simulator).

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Baidu Spokesperson at CES discussing Data-Centric Innovation

It’s important to note that China is not immune to the issues the industry faces in advancing from Level 2 automation to Level 3 automation. China, too, is idling at Level 2 (apologies for the pun). For instance, Great Wall Motors released a statement at CES 2019 that “GWM hope to integrate Mobileye’s solutions into its vehicles. Starting with L0-L2+ within the next three to five years, the companies are also exploring opportunities for Mobileye’s Level 3 products.”

Baidu and Mobileye have both made promises to deliver Level 3 by 2019 and Level 4 autonomy by 2021. These dates were announced in 2017 but there has been no recent updates as to the estimated delivery for L3 – including at CES this year.

Mercedes Benz

The best AV investments over the next three to five years will come from companies who are taking baby steps towards a better and safer driving experience. Mercedes-Benz is one company making the most of Level 2 partial automation by announcing a new CLA class. The CLA class is a more tech-driven option with augmented reality for navigation, and an Interior Assistant that understands indirect voice commands and operational gestures. (Read my analysis on how we have reached a tipping point for AI-powered assistants here). An example of this is when a driver reaches over in the seat, and lights automatically illuminate the area. You can also set a command such as “navigate me home” or ask the voice assistant something complicated like “find child-friendly Asian restaurants nearby with 4-star rating which are neither Chinese nor Japanese,” which was one example given in the demo.

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New Autonomous Vehicle Mercedes Benz CLA class. Source: TechCrunch

Takeaway:

Nvidia and Intel had a different tone at CES this year in regards to autonomous vehicles. Nvidia’s launch of DRIVE AutoPilot is a smart strategy to boost sales in the short term while the AV future of Level 3 or Level 4 sorts itself out. The Mercedes CLA class is another great example of a strong Level 2 automation strategy. Intel is clearly betting on China, especially Baidu, although China is not immune to the difficulties of how to get a machine to react like a human. Notably, there was no Level 3 follow up from Baidu at this year’s CES despite promises for arrival in 2019 (although the year is young).

Regardless of make or model, AVs are stuck at Level 2, and there are too high of expectations as to when advanced AV will turn a profit. Therefore, the AV market will struggle as the delivery of reliable and safe automation continues to see delays. Nvidia, Intel and Mercedes are a few companies preparing for the slow down, and I’m betting we will see others do the same this year.

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Published inArtificial IntelligenceAutonomous VehiclesFinancial MarketsTech Stocks

3 Comments

  1. Eric Eric

    “there are too high of expectations as to when advanced AV will turn a profit” “the AV market will struggle as the delivery of reliable and safe automation continues to see delays.”

    I wouldn’t necessarily call it a delay, more like on schedule, imo. This is an extraordinarily hard problem, so engineering it takes time. It’s just the hype that needs resetting.

    I lay a large set of AV hype responsibility on the media for the constant need of a new story; unfortunately because AVs have seemed more tangible with the recent advancements in Machine Learning, there is ascending momentum in stories to grab attention. The established suppliers and manufacturers for the most part have been responsible about time lines. I think the Teir1s with a few notable exceptions [Ford] have been fairly conservative.

    Another problem is a plethora of startups itching to get some press — of course the best way to do this is through over zealous claims that grab headlines. Then there are regions (Singapore or Nevada ) who, for a variety of reasons, may relax regulation to gain a positive perception and allow early testing with a more hands-off regulatory approach.

    The Automotive industry is the epitome of a consumer business. But their products can kill. So they have to be rigorous and slow moving in their R&D process. Anyone who observes the industry understand that.

    Of course there are development companies who promote engineering milestones (Waymo) when they shouldn’t. And chip/technology companies (Mobleye and Nvidia) who are eager to be perceived as AV leadership. But we need to internalize it will take years after these tech companies reach a Level X solution for that to show up in an actual car you can buy.

    As far as investing and “turning a profit” goes, I think with today’s environment of algorithmic trading, if one waits for a clear winner to emerge it may be too late to invest, most of the gain will already have occured. I personally have taken small investments in many of the companies mentioned hoping one or two of them will be clear winners in the AV space. It’s going to be interesting, but I am in no hurry to cash out either.

    Props here for your attempt at resetting expectations.

    • beth.technology beth.technology

      Hi Eric, Thanks for the thoughtful comment and feedback. Regarding this part of your comment, when do you think investors will see a return on AV? Just curious and appreciate the conversation. Thanks! Beth “As far as investing and “turning a profit” goes, I think with today’s environment of algorithmic trading, if one waits for a clear winner to emerge it may be too late to invest, most of the gain will already have occured. I personally have taken small investments in many of the companies mentioned hoping one or two of them will be clear winners in the AV space. It’s going to be interesting, but I am in no hurry to cash out either”

      • Eric Eric

        I was speaking about individual investors opposed to VCs. Google and NVDA are my picks here, with NVDA the bigger potential due to smaller market cap and a better go to market strategy than Waymo. My sense is 2020 will start to see meaningful roll out and ramp with more substantial earnings contribution maybe 3 yrs later (L3 is where things get interesting). Some of this is already priced into shares today however. But I do see the market as much larger than just automotive; agriculture, delivery and materials handling for example will also be ramping in similar time. I would imagine there is some private equity activity in that time frame as well that will help drive investor “awareness”/hype too.

        Curious about your views as well. cheers

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