Ford Motor Co. CEO Mark Fields predicted in 2015 that fully autonomous vehicles would be on the market within five years, one of many predictions that driverless cars were just around the corner.
But investor patience has been wearing thin for self-driving technology, which is taking longer and costing more to get right than was anticipated. It has taken out one Pittsburgh startup and gutted a second.
Lawrenceville-based Locomation Inc. entered a holding pattern last week, with most of its non-engineering employees let go on Friday “in the face of economic headwinds,” co-founder and CEO Cetin Mericli said in an email.
Driverless car company Argo AI, which was headquartered in the Strip District, closed in October after its two biggest investors pulled out, displacing about 1,600 workers, including 679 in Allegheny and Westmoreland counties.
A Locomation employee, who asked not to be publicly identified because he was not authorized to speak for the company, said the staff was told that investment income had dried up, forcing the layoffs.
Denver-based Blackhorn Ventures was Locomation’s biggest investor, generating $34 million of the total $57 million raised for the company since 2021. Blackhorn CEO Philip O’Connor did not return calls seeking comment Friday.
The two companies illustrate how investment in U.S. mobility technology has evaporated.
For the third quarter of 2022, $5.5 billion was invested in the sector, down 55% from the previous quarter and 79% lower than the same period a year ago, according to PitchBook, a Seattle-based company that tracks investments.
Turning back the revenue spigot for startups has meant lean days for entrepreneurs.
“It’s been very difficult for a startup in the last three or four months, both here and nationally,” said Matthew Johnson-Roberson, director of Carnegie Mellon University’s Robotics Institute, which recently expanded on Murray Avenue in Squirrel Hill’s business district. “There’s just been this big pullback.”
Robotics is a growing part of the Pittsburgh-area economy, with more than 100 companies supporting 15,000 jobs and drawing $3.4 billion in venture capital and private equity since 2012, according to the Pittsburgh Robotics Network. Driverless vehicles are a small part of the sector, which has been dented recently by the layoffs at Locomation and the shuttering of Argo AI.
Two years after Ford’s CEO predicted that driverless cars would already be on the road, the company offered a new assessment of the market.
“It’s become very clear that profitable, fully autonomous vehicles at scale are still a long way off,” John Lawler, Ford’s chief financial officer, told investors in October after the company ended its investment in Argo AI.
Nevertheless, the vision of driverless cars and trucks is tantalizing: In 2020, 38,824 people were killed in crashes, with 94% due to human error, according to the National Highway Traffic Safety Administration. It is estimated that self-driving cars could reduce crashes by 90%.
But driving is already fairly safe, when the total number of miles Americans spend behind the wheel each year is taken into account. The estimated fatality rate for the first nine months of 2022 fell to just 1.30 deaths per 100 million vehicle miles traveled down from the projected rate of 1.32 fatalities during the same time in 2021, according to NHTSA.
Americans drive an average of 14,263 miles a year, according to the Federal Highway Administration.
Meanwhile, driverless car engineers have been focusing on getting computers to react to road scenarios that are nearly infinite in number in order to make driving safer than if a human was steering. That has proven to be difficult.
Computer-driven cars have to anticipate both the deer that leaps into the roadway and the deer that often follow in the first one’s path.
Locomation utilizes a different approach for freight haulers, using a human operator to drive one rig while a second truck follows closely behind, guided by cameras, sensors and other gear, while its driver sleeps. Mr. Mericli said Friday that the company continues to test the truck-platooning concept on 200-mile runs.
The shrinking of Pittsburgh’s driverless car industry has left Strip District-based Aurora Innovation Inc., which employs 1,600, as the biggest company of its kind in the city. Progress in commercialization of its driverless truck technology has been modest.
Among the tasks the company mastered in 2022 was getting rigs to navigate around road debris and accommodate pedestrians and vehicles on the shoulder, according to a report to shareholders. In the first quarter, the company aims to have the rig “understand” when it has been involved in a crash and respond appropriately.
The company reported an operating loss of $1.8 billion for 2022, its first year as a publicly traded company, with commercialization of its self-driving technology scheduled for late 2024. In the past year, Aurora’s stock price fell 68% to $1.48 from $4.63.
Aurora officials declined to comment Friday.
“It would be no surprise that it’s taking longer than people thought,” said Philip Koopman, author, expert in autonomous vehicle safety and associate professor of electrical and computer engineering at CMU. “This is the right time to find other places to put our bets, to make sure our region’s economy is diversified.”
He added, “There are a lot of robots that aren’t self-driving cars.”
And the region is poised to do just that.
In September, the Pittsburgh region received a $62.7 million grant from the Build Back Better Regional Challenge to promote the use of artificial intelligence and robotics. Last week CMU, with the Rales Foundation, created a $150 million endowment to improve the diversity of graduate students who choose careers in science, technology, engineering and math.
Moreover, North Shore small business accelerator Innovation Works recently announced the creation of the Robotics Factory, which aims to help get new companies off the ground that use autonomy, machine learning and artificial intelligence.
In April, the Robotics Factory and Pittsburgh Robotics Network will sponsor a two-day Aviation & Robotics Summit for aviation leaders interested in adopting robotics’ technologies.
CMU Robotics Institute Director Mr. Johnson-Roberson wasn’t worried about the slowdown at Locomation, saying the university graduates hundreds of roboticists every year, some of whom will go on to form startup companies.
“Pittsburgh is a place where people are really used to ups and downs,” CMU’s Mr. Johnson-Roberson said. “If you go out to the San Francisco Bay area, home of Silicon Valley, failure is seen as a badge of honor. We need to look at it the same way.”
Kris B. Mamula: kmamula@post-gazette.com
First Published: February 26, 2023, 11:00 a.m.
Updated: February 26, 2023, 1:03 p.m.