Within mobility tech, much of the discussion understandably revolves around autonomous cars which share AI and machine learning technologies. Self-driving cars have been anticipated for years with constant changes in expected availability in the public sector. The UK is participating in this race, and once the revolutionary transportation movement commercialises, new unicorns will emerge. However, the mass change will take longer than initial investors had forecasted, resulting in a clear demand for patient capital within mobility tech. Prolonged Market Adoption
Around $80 billion was invested globally for the development of all forms of autonomous driving technology between 2014 and 2017; this figure will double by 2022 [1]. Nevertheless, despite substantial increases in funding, investors in automated mobility are beginning to become impatient [2]. Most companies, early-stage startups as well as established leaders, claim they are on the edge of breakthrough technology which will put them ahead of the game with early expectations for transforming transportation. It is known that Elon Musk has made previous radical prediction on the availability of safe self-driving automation ready for 2018 which was far from successful [3].With Road Deaths occurring when the Autopilot feature was activated. New predictions from Tesla and other global competitors such as Toyota, Volvo and Nissan expect completed self-driving vehicles by 2020-2021[4]. However, despite the statements that autonomous cars are safer than those driven by humans, they have simply not participated in the miles needed to provide accurate evidence which creates a psychological delay for market adoption [5]. Realistically, BMW predicts fully driverless vehicles will be operational between 2025 and 2030 with L5 (highest level of automation) not being introduced until 2035 [6].
The main challenge of commercialising on a global scale needs to be addressed and considered by VC’s and investors as this is crucial for expecting significant returns. Building the technology is just the first step, foreseeing a paradigm shift can take far longer than expected with regulative complications and challenging market acceptance and adoption.
Paradigm Shift
Electric vehicles have been a clear example of an industry that has taken longer than expected to have a paradigm shift [7]. The technology is existent but the infrastructure remains unestablished which is problematic for investors as the shift is not finalising due to infrastructural issues preventing a mass-scale distribution. The autonomous sector is less about the infrastructure and more about the psychological hurdle of overcoming the safety of self-driving cars [8].
As illustrated in the following graph, from 2019, PTOLEMUS Consulting Group forecast sales of typical cars will begin to decline while autonomous features increase [9]. With the current level of innovation and funding, autonomous vehicles will result in the fruition of mass-scale production eventually completing a full paradigm shift. Therefore, VCs and investors need to remain patient to see their needed-expected returns.
UK Patient Capital
VC’s and other investors have been investing in autonomous vehicles for over a decade with patient capital being a relevant consideration.
The UK is looking to take its share in the anticipated commercialisation of self-driving vehicles with numerous, advanced, innovative startups like Oxbotica, Wayve and Five AI. The UK can be sure to expect new unicorns to emerge when the market begins adoption. Moreover, its reported that Britain will be in the vanguard, partly because its unitary regulatory system will make adoption much simpler than in the devolved, state-based US system. The SMMT UK motor industry’s associations, believes that the UK is the world’s number one location for mass-market potential of connected and autonomous vehicles as it leads the world in enabling regulation and market attractiveness [10].
Collective Equity Ownership (CEO)
The Autonomous market has received substantial funding with promising innovating movements. Despite the fact mass-scale adjustment will take longer than initial investors anticipated, the change seems to be guaranteed. Therefore, when commercial implementation begins new unicorns will emerge. CEO offers shareholders of private companies in other industries the opportunity to partake in the upsides of mobility tech by joining a collective equity fund.
Due to prolonged market adoption, CEO can also offer the opportunity for founders of these innovating autonomous companies the opportunity to benefit from companies who are creating exits sooner giving access to liquidity throughout their entrepreneurial journey.
References 1 Global Automotive & Transportation Research Team at Frost & Sullivan (2018). Global Autonomous Driving Market Outlook, 2018. Microsoft, p.26.
2 O'Hear, S. (2018). This UK startup thinks it can win the self-driving car race with better machine learning. [Blog] Tech Crunch.
3 Hawkins, A. (2019). Here are Elon Musk’s wildest predictions about Tesla’s self-driving cars. [Blog] The Verge.
4 Walker, J. (2019). The Self-Driving Car Timeline – Predictions from the Top 11 Global Automakers. Emerj.
5 Kalra, N. and Paddock, S. (2016). Driving to safety: How many miles of driving would it take to demonstrate autonomous vehicle reliability? Transportation Research Part A: Policy and Practice, 94, pp.182-193.
6Aizlewood, J. (2019). Why the UK could lead the driverless car revolution. Management Today, Championing British Business.
7 Kuhn, T. (1962). The Structure of Scientific Revolutions. 1st ed. Chicago: University of Chicago Press. 8 Shariff, A., Bonnefon, J.-F. & Rahwan, I. (2017) Psychological roadblocks to the adoption of self-driving vehicles. Nature Human Behaviour 1. 9PTOLEMUS Consulting Group (2017). We expect 60 million cars will be sold with autonomous functions by 2030. The Autonomous Vehicle Global Study.
10SMMT. (2019). SMMT | Connected and Autonomous Vehicles: Winning the Global Market https://www.smmt.co.uk
