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    Automobile technology sector absorbs Tesla crash impact

    August 3, 2016

    Screen Shot 2016-08-03 at 4.45.25 PM

    The death of a Tesla Model S driver this May involving that vehicle’s computerized self-driving function has sent the auto industry into a period of soul-searching and reflection about just how fast the industry should adopt this new self-driving technology.

    In this post-crash environment, many automakers have been forced to rethink how they present self-driving technology to consumers. Many are concerned that the Tesla accident may slow down the introduction of new vehicle technology that has the potential to save. But Tesla is not the only game in town, and according to a new CB Insights report, there is currently an “explosion of interest in autonomous driving startups” that’s attracting hundreds of millions of dollars of VC investment at a record rate – with no sign of a slowdown in sight.

    Goldman Sachs forecasts the market for advanced driver assistance systems and autonomous vehicles will grow from about $3 billion last year to $96 billion in 2025 and $290 billion in 2035. More than half of that revenue in 20 years, Goldman estimates, will come from radar, cameras and lidar, a sensor that uses lasers – all tools considered essential to building vehicles that can pilot themselves.

    Industry executives and analysts recently told Reuters they expect the Tesla crash will actually spur investment in self-driving vehicle systems that combine multiple of sensors, including lidar.

    “As we move to a higher level of autonomy in vehicles, you’re going to want to have more redundancy,” which radar and lidar can provide, Dan Galves, senior vice president at vision safety system maker Mobileye NV, s said in a recent Reuters interview.

    GM’s March 2016 acquisition of Cruise Automation gave a lot of young self-driving startups in the space a big boost. The $1B+ valuation of this first major self-driving exit raised eyebrows across industries and set a high benchmark for similar companies. According to CB Insights, five self-driving tech startups have raised over $57M since January 2016 across more than eight deals. And with a total of $450M invested across 36 deals to date, auto tech startups are on track for yearly highs in both deals and dollars in 2017.

    CB Insights defines auto tech as the application of software and technology to improve the performance, efficiency, safety, and connectivity of vehicles. Auto tech startups targets range from the development of autonomous urban taxis (nuTonomy) to the creation of self-driving deep learning and AI software (, AdasWorks) and “aftermarket kits” designed to turn existing vehicles into smart, self-driving ones (

    Among the hottest startup technologies are: assisted driving/autonomous software, driver safety tools, connected vehicle/driving data, fleet telematics, vehicle-to-vehicle communications, and auto cybersecurity. CB Insights definition of auto tech excludes powertrains and the industrial aspect of auto manufacturing, e-commerce and on-demand services like Uber.

    Investors backing these companies are a familiar mix of Silicon Valley heavyweights: received a $3.1M seed investment from Andreessen Horowitz in March; while Tim Draper is linked to both Hungary-based AdasWorks and Palo Alto’s Nauto. nuTonomy, one of the most well-capitalized of the group, recently raised $16M in its Series A after a $3.6M seed round. Its backers include a corporate venture arm Samsung Ventures, VC  Highland Capital, and Fontinalis Partners.

    Other high-profile, well-funded startups and their target market include:

    • Zoox – a robotics company that has raised $100 million to develop a fully autonomous electric vehicle along with the supporting ecosystem. Zoox aims to provide the next generation of mobility-as-a-service in urban environments.
    • FiveAI –  New UK startup with $2.7 million in equity funding to help develop an artificial intelligence (AI) system different from Tesla and Google capable of driving a car.
    • Veniam – a provider of mesh networks for automobiles. It’s raised a $22 million Series B round to bring Wi-Fi hotspots to more vehicles.

    For more on the auto tech market see also CB Insights The State of Auto Tech.