With Valentine’s Day around the corner, there’s a trend of breakups within the car tech world that we haven’t seen for a long time. Even businesses that were once thick as thieves are now taking a hard look at their partnerships. They’re feeling the heat from rising interest rates, a rough market, and how long it’s taking to bring fancy new tech to market.
- Aptiv and Motional: Aptiv is a big deal in the auto parts scene, but they’ve decided they won’t pour any more cash into Motional, the robot-taxi business they kicked off with Hyundai in 2020. With losses stacking up as they wait to roll out their driverless cars, Aptiv’s head honcho Kevin Clark has said they need to pull back on their stake to ease up on money woes.
- Volvo and Polestar: Then there’s Volvo tossing the financial load for the electric hotshot Polestar over to their Chinese folks at Geely. This switcheroo happened just as Polestar was cutting about 15% of its team—450 people—blaming it on the sting of the current market.
- GM and Cruise: Not to be outdone, GM grabbed some headlines too by slashing what they’re putting into Cruise—their self-driving car offshoot—by a cool $1 billion. Despite taking this big step back, GM’s sticking with Cruise and is eyeing a ‘refocus and relaunch’ down the road, even while dealing with government investigations into some iffy safety stuff.
All this shuffling of funds and cold feet is a sign of bigger troubles in the car tech biz. High borrowing costs and waning enthusiasm for electric rides have got carmakers rethinking where they’re gambling their dollars. Plus, getting those self-driving vehicles up to speed has been riddled with tech snags and safety scrapes.
This has left companies itching to push the envelope in this area to rethink their game plans. Just take a look at other players like Argo.ai and Zoox—they’ve run into similar money hiccups or day-to-day drama. It points to a wider pattern of second-guessing going on among the automotive old guard. Both car manufacturers and tech giants, even the forward-thinking Tesla, are feeling the pressure of changes in the industry.
The years between 2015 and 2019 were a high point for partnerships between car and technology companies. They teamed up or bought each other out to split the hefty bills that come with creating electric and self-driving cars. But now, sky-high interest rates and a shaky economy are making these companies think twice about their team-ups.
As companies navigate these tumultuous waters, the future of many promising ventures remains uncertain. The industry may see more splits as firms strive to adapt to the evolving economic and technological landscape.
Impact on Motional
For Motional, Aptiv’s decision to withdraw funding represents a significant challenge. The company, which has been developing robotaxis based on Hyundai platforms, will now need to seek additional partners to sustain its operations. This development underscores the difficulties faced by companies in commercializing autonomous driving technology, despite substantial investments and initial progress.
The Broader Industry
This shift isn’t just hitting a few firms; it’s rocking the whole car-making world. These businesses need to deal with tough tech problems, new rules, and what buyers want, all at once. Some might steer through the storm successfully, but others could falter, leading to more mergers or a change in plans.
The recent breakup fever in the car-tech industry is more than a series of isolated incidents. This is just one sign of the big issues car makers and tech businesses are wrestling with as they try to move car-tech forward in tricky financial times. The road ahead will likely bring new partnerships, different from those of the golden era, as these players learn from today’s tough lessons.