Ref: 220-22-04.1

April 2022

Autonomous Vehicle

Have we reached peak
AV Start-up?
10-minute Insight
A number of start-ups have recently closed, been absorbed
into suppliers or acquired outright.
Despite there still being a long way to go before L4 autonomy
becomes widely adopted, the rapidly escalating deployment
cost is making this an expensive race, which in turn could
eventually limit opportunities for AV start-ups and entrench
the position of early leaders.
This insight explores whether we have already reached‘Peak AV Start-up’ or whether the industry is
experiencing a temporary Pandemic-related slump.

Target audience
Investors / Strategy

Focus market(s)USA EU China

C-Level1

What is happening?
Number of new
AV start-ups
140

Average AV fundraising ($ Million)

Number ofL4 pilots
120

90

M&A Activity(Transactions)

Key takeaway
The AV ecosystem is consolidating
and stabilizing as fewer players arebreaking into the space.

35

80120

• LocalMotors shut its doors earlier thisyear and Optimus Ride was absorbed
by Magna – each of these had aunique dynamic, but they also point
to a growing trend.

30

100
70

100

25806080• The # of new AV start-ups launchingeach year has reduced considerably, atrend that precedes (but is likely tohave been accelerated by) the COVIDPandemic. This in turn is leading to aplateauing of new L4 pilots.

20

50
60
40

60

40

15

• Those that are still operating pilots
are having to raise larger sums frominvestors – each milestone in the L4
race is a costly one, culminating in
multi-Billion dollar rounds.

30

40

1020
20

20

51002017

2019

2021

02017

2019

2021

Source: Analysis of Crunchbase database and SBD’s own database of L4 Pilots, Q1 202202017201920210201720192021• SBD believes a pressure to ‘rush andraise’ combined with a realizationthat L4 is taking longer tocommercialize, is leading to aramping up of M&A and closures.
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Why does it matter?
Level 4 Autonomous Vehicle Parc Forecast

Key takeaway

Robotaxis

AV Trucks

EuropeAV Last Mile
DeliveryAV Public Transport
AV Last Mile
Delivery
Robotaxis

USA

AV PublicTransport

AV Trucks

AV Last Mile
Delivery
Robotaxis

Source: SBD’s Automotive L4 Autonomous Vehicles (Ref 811-21)China

AV Public
Transport
AV Trucks

After years of bullish predictions
from many across the industry(echoed by the Media), many are
beginning to now realize that it willtake a long time before L4 autonomy
becomes widely available andcommercially successful.
• SBD forecasts that the L4 vehicle parcin major markets is unlikely to exceed
1 million – significantly lower thanmany start-ups had been promising
their investors.
• This realization is leading investors to
ask tougher questions, making it
harder for early-stage AV start-ups toreach their next level of fund-raisingand deterring new entrants.
• If this is indeed a peak (rather than alull), this means that the current
front-runners are unlikely to be
dislodged by scrappy newcomers,
making it easier for them to endure
the longer path towards
commercialization.

3

Where next?
Key takeaway

1

Expect to see even more M&A andclosures over the coming years –particularly of earlier-stage start-ups.

MarketConsolidationBig
investment

FutureOutlook

Focus

Legislation
getting
ready23

3-5yrsAV start-ups will begin to focus on nichesegments (either by geography or usecase) as catering for everyone
everywhere will no longer be feasible.

4Governments are racing to update roadand homologation rules. Legislation will nolonger be a barrier for success.

5Although by 2030 SBD forecasts that onlya modest number of L4 vehicles will be on
the roads, from 2030 onwards the rampup is expected to accelerate significantly.

Time toscale up

1-3yrs

Big players will continue to invest big
to further push out competition andwin a competitive advantage.

As the market for L4 automation
takes longer to scale, slower-moving
companies will have an opportunity
to acquire capabilities they haven’t
yet been able to build in-house.
• Market consolidation is inevitable, but
unusual at such an early stage of a
new market segment.
• Many AV Start-ups will continue tooperate, most likely by focusing on
specific niches, regions or specificlayers of the AV stack.
• For tier-one suppliers and OEMs, early
consolidation is an opportunity to playcatch-up through selective M&A –piecing together capabilities and IP
across different regions to help stay inthe race.
• For current leaders in the AV space,consolidation is likely to provide someextra breathing space as well as boost
their own valuations (as investor
confidence in new entrants falls andthe focus shifts to existing leaders)

>5yrs
4

Who to watch out for?
Key takeaway

Headquarter

EasyMile

FiveAI

Oxbotica

AImotive

May Mobility

Sensible 4

Idriverplus

FranceUKUK

HungaryUSA

Finland

China

FoundedDate2014

2015

2014

2015

2017

2017

2015

Funding
Status

Early Stage
VentureEarly Stage
VentureEarly Stage
VentureLate Stage
Venture—Early Stage
VentureLate Stage
VentureLastFunding Type

Series B

Series B

Series B

Grant

Corporate
Round

Series A

Series C#of Employees

101-250

101-250

101-250

101-250

101-250

51-10051-100

RevenueRange$1M to $10M

$1M to $10M

$1M to $10M

$1M to $10M

$1M to $10M

$1M to $10M

Less than $1M

FundingRounds

4364823Total
Funding€77.1M$78.7M$89.5M$67.7M$166.6M$7M$14.7M# of Lead
Investors

3554723# ofInvestors

77131121

2

6

Source: Analysis of Crunchbase database, Q1 2022

SBD has identified seven AV startups that are all advanced enough tohave operational L4 pilots, but thatare not yet at the stage of scaling up
or commercializing their services.
• All of these companies have strong
technical USPs and in a morecommercially-advanced L4 market
would likely survive independently byfocusing on specific segments orregions.
• All are revenue-generating today, butlargely survive from early-stage
projects fees rather than ongoing
license fees.
• These companies are likely tocontinue seeking out the investment
they need to scale-up and remain
independent, but as investors begin
to question the speed at which L4
automation can be commercialized,
these companies may be start
looking for strategic buyers.
• Update: since last reviewed, FiveAI
was acquired by Bosch (Link)
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How should you react?

Authors

1
2
3

Focus
For AV start-ups that are lagging in thescaling-up/commercialization of L4 services, itwill become more important to now focus oneither vertical offerings (e.g. a specific L4
segment in a specific region) or horizontal
offerings (e.g. a specific part of the L4 stack).

Edward PaezSpecialistRelated SBD Reports
Ref: 811
L4
AutonomousVehicles: Are
we there yet?

Capitalize
Various established OEMs and Tier-one
suppliers have taken a ‘partner-to-learn’approach to L4 autonomy, seeking out
regional start-ups to build up pilots. Now may
be the time to shift towards a ‘partner-toacquire’ model.

Patience
Success relies on demonstrating technicalprowess in the short-term while having thepatience (and deep pockets) required to wait
until AV services become commercially viable.

Andrew Hart
CEO

Ref:202
Start-up
Tracker

Related SBD Consultancy▪ M&A Scouting▪ M&A Due Diligence▪ Technology Forecasting▪ Strategic Advisory

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