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RUMORS SWIRL AROUND NEW INVESTMENTS IN UBER AND LYFT: Last week, multiple media outlets reported ongoing discussions Uber and Lyft are each having with new investors at a pivotal moment in their competition.
- Japanese tech conglomerate SoftBank, US investment firm Dragoneer, and Chinese ride-hailing giant Didi Chuxing are working on finalizing a major investment in Uber through a new joint venture, Tech Crunch reported. The group - led by SoftBank - is looking to invest as much as $10 billion into Uber, which would be the largest investment in the ride-hailing company to date. The deal would involve both a direct investment in Uber, and a purchase of shares from existing investors and employees. However, SoftBank is reportedly looking to buy shares from investors and employees at a 30% discount from Uber's most recent valuation of $70 billion, according to The Wall Street Journal. It's unclear if investors and employees are willing to part with their shares at that discount. Additionally, existing shareholders have reportedly expressed concern that such a discount could devalue Uber as it gears up for an IPO by 2020. SoftBank has already invested in several other ride-hailing firms, including Didi, as well as Ola and Grab, which compete head-to-head with Uber in India and Southeast Asia, respectively.
- Meanwhile, Lyft is reportedly in talks with Google's parent company Alphabet to inject a $1 billion investment in the ride-hailing player. The investment negotiations follow the announcement earlier this summer that Waymo, Google's self-driving spinoff, would partner with Lyft on developing autonomous technology. Google was also an early investor in Uber, but the two are now in the midst of a drawn-out legal battle.
Uber's recent scandals and leadership troubles have given Lyft's business a significant boost in recent months. Uber's share of the US ride-hailing market fell from 84% at the beginning of this year to 77% at the end of May, according to Second Measure, which analyzes anonymized credit card data. Meanwhile, Lyft booked more total rides in the first half of this year than in all of last year. It also grew its gross bookings by 25% sequentially in Q2, compared to Uber's 17% growth in the quarter.
New funding could help Uber achieve its twin goals of both defending market share and cutting its losses, while Lyft could use a cash injection to press its advantage. The two companies have relied heavily on providing discounts and incentives to attract new riders and drivers, resulting in steep operating losses for both. Uber needs to improve its balance to steer towards a potential IPO, but cutting back on new user discounts could stall growth and further Lyft's momentum. Extra cash could provide a cushion, allowing it to continue attracting new users while it fills out its rather empty c-suite and formulates a strategy for long-term financial health. Lyft, meanwhile, could use new cash to expand geographically and put Uber on the defensive in more markets outside the US. Media outlets reported on Friday that Lyft plans to enter Canada by the end of this year, and is exploring other markets, including Australia and the UK.
BI Intelligence
AUTOLIV'S STRATEGY FOR THE ELECTRIC AND AUTONOMOUS AGE: Auto parts supplier Autoliv is mulling separating its electric and self-driving technology and its core safety businesses into two separate, standalone companies, according to The Wall Street Journal. The firm's core safety business manufacturers parts such as seat belts and airbags, while its electric and self-driving technology arm makes radar and positioning systems for self-driving cars. The Swedish company supplies parts and components to some of the world's largest automakers, including Volkswagen and Ford.
Company executives say the split would leave both groups well-positioned to maximize their revenue potential. CEO Jan Carlson argued that the move would allow the firm's electric and autonomous driving business to innovate and continue to improve its offerings without stealing too many resources from its core safety business. Further, having a business dedicated to electric and self-driving technologies might help the firm to attract top engineers and developers so it can out-innovate, and pull ahead of, competitors.
That'll be valuable as growth in the electric and self-driving car market outpaces Autoliv's core safety parts market in the coming years. While industry experts expect individual car ownership to decline in the coming decades, which would cause car sales to plummet and dent Autoliv's core business, automakers are increasingly adding electric and semi-autonomous vehicles to their lineups. That trend that will only accelerate in the next few years - the head of the German automakers' lobby said last week that automakers and suppliers alone will devote about $47.6 billion for electric vehicles through 2020, and BI Intelligence forecasts that 2.4 million fully autonomous cars will be on US roads in 2025. A standalone company specifically devoted to building these technologies could allow Autoliv to capitalize on this forthcoming growth.
That could also push other large auto suppliers to follow Autoliv's lead. Many other legacy automotive suppliers - including Bosch, Delphi, and Magna International - are also building technologies for electric and autonomous cars while also remaining committed to building the core legacy components that they've supplied for decades. If Autoliv indeed splits up its business and it proves to be valuable, that could prompt some of these other players to mimic the company's move.
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THE BIGGEST CHALLENGE TO USING DRONES AT CONSTRUCTION SITES: Construction has been one of the foremost industries in adopting commercial drones, with the sector making up a significant portion of commercial drone exemptions granted by the FAA. Drones have helped make construction sites safer by automating dangerous safety inspections, while also delivering real-time imaging that helps managers track a site's progress.
Hensel Phelps, one of the largest construction management companies in the US, has used drones to improve safety and measure progress at several of its construction projects. The company has been using drones for nearly four years to survey its sites and perform safety inspections. Using drones has cut the time it takes to perform safety inspections at Hensel's sites from a week down to a matter of hours. It also takes away much of the risk of a worker getting injured in an accident while performing an inspection, which can be a dangerous task requiring inspectors to climb high scaffolding.
However, regulatory requirements have posed a major challenge from the start, Richard Lopez, a virtual design and construction manager who leads Hensel Phelps' drone program, told BI Intelligence. Putting drones to use at Hensel's sites required gaining pilot certifications and Section 333 exemptions from the FAA. It also required documenting every detail of every drone flight - including flight path, altitude, and duration - in order to show regulators that Hensel Phelps' drones were operating in full compliance with current regulations. The company partnered with Skyward, a commercial drone software and services provider acquired by Verizon earlier this year, to help plan and document all of its drone sorties. This has been vital to Hensel's drone operations - Lopez says the drone program probably would not have won approval without Skyward's tools for logging all of its drone flights.
Despite proper licensing and all of the documentation Hensel and Skyward collect, compliance can still be a time-consuming and frustrating task, Lopez says. Many of Hensel's projects take place in controlled airspace. Getting permission to fly a drone around such projects can take up to 120 days, despite FAA efforts to streamline its approval processes, he reports. Additionally, Lopez says Hensel could derive more benefits from doing more drone flights during the day, but has to limit its flights to before work crews arrive for the day, or after they leave. That's because companies can't fly commercial drones over people under current regulations. While companies hope that the FAA will resolve some of these issues in updated commercial drone regulations the FAA is scheduled to release next year. However, there are growing concerns that the updates may not arrive on schedule, or may not address some of these issues, because of the intervention of law enforcement agencies.
In other news…
- Renault-Nissan announced it will roll out 12 electric cars, 40 cars with autonomous driving technologies, and intends to become a global leader in ride-hailing services powered by autonomous cars by 2022. The company previously said it plans to launch a ride-hailing service rather than partner with an existing service, which is likely why it bought the assets of failed ride-hailing startup Karhoo earlier this year. It's worth noting that these plans are slightly behind many other automakers' - Audi, Daimler, and Honda all plan on bringing at least partially self-driving cars to market in 2020, while Tesla may issue an over-the-air update to make many of its cars fully autonomous as soon as next year.
- Alphabet has spent more than $1.1 billion on self-driving car technologies since it started working on the technologies in 2009, according to court documents filed in its lawsuit against ride-hailing giant Uber. This has vaulted the company's self-driving car project, now a standalone company known as Waymo, ahead of many automakers and arch rival Uber in terms of technological progress. This sheds light on just how expensive it is to build a self-driving system, a potential barrier to startups without the cash to spend that are eyeing the space.
- Mitsubishi is bringing its Fuso eCanter electric delivery trucks to the US for the first time, according to Engadget. The Daimler-owned company will first lease the trucks to UPS and a handful of non-profits in New York City, but plans on making them available to other companies later this year. The trucks can handle a payload of up to 10,000 pounds, but can only travel for 60 miles on a single charge - which makes them ill-suited for long haul trucking, and likely too large for last-mile deliveries. Instead, the trucks are designed for inter-city deliveries of heavy goods, such as between a storage facility and a distribution center. Such local and short-haul trips make up the majority of the US trucking industry.