Sizzle/Fizzle

Valuations Sizzle, Canada Fizzles And Autonomous Vehicles Get Rolling Again

Sizzle of the Week: Autonomous Driving Gets Back in the Saddle

It had been a rough few week for the much buzzed-about autonomous vehicles of the future. Just last week, it found itself sitting prominently in the Fizzle side of this column after emerging reports that consumers tend to view the self-driving future with more fear than enthusiasm these days.

According to a report by AAA, 73 percent of Americans report feeling less than safe with self-driving technology on the road, up from 67 percent last year ago.

“While autonomous vehicles are being tested, there’s always a chance that they will fail or encounter a situation that challenges even the most advanced system,” Megan Foster, AAA’s director of federal affairs, said of consumer concerns in tandem with the report release.

But a week in payments and commerce can make a big difference – and after the roadblocks of last week, it looks like autonomous vehicles are getting back into gear this week.

The big news came care of GM and SoftBank, in the form of a massive investment on SoftBank’s part in GM’s self-driving automotive ambitions. Care of its $100 billion Vision Fund, SoftBank will be pouring $2.25 billion in investment dollars into GM’s self-driving unit, Cruise. It is one of the fund’s largest investments in self-driving technology to date, and brings the total valuation of Cruise to $11.5 billion.

GM’s CEO, Mary Barra, said the vehicle manufacturer is on track to start rolling out Cruise AVs for commercial ridesharing fleets in the next year, and that it believes the services market tied to those autonomous vehicles is a massive opportunity. According to reports from The Wall Street Journal, GM executives expect services tied to driverless vehicles to eventually become a multitrillion-dollar market, which could one day eclipse the value of their core car-making proposition.

What exact services to offer remains a bit of an open question, as GM at times has indicated it plans to directly pursue areas like ridesharing and commercial delivery, and at other times indicating it plans to work with players already established in those spaces.

On an analyst call Thursday, GM president Dan Ammann said SoftBank’s extensive ride-hailing portfolio brings “a unique set of relationships and an ecosystem to the table.” Barra echoed that sentiment, noting in the announcement of the investment that SoftBank-funded firms in the ridesharing space represent a massive opportunity for GM and its tech.

Softbank has invested a lot in ridesharing platforms over the last several years: Uber, Didi, Ola and Grab have all had SoftBank investments in recent memory.

On top of the new funds it has just announced, GM further plans to invest $1.1 billion in Cruise.

Once the deal is formally concluded, SoftBank will own an approximately 20 percent stake and will have one of six seats on the board. SoftBank’s initial investment will be $900 million, with another $1.35 billion to be paid out when Cruise vehicles are ready for deployment.

Starting in the second quarter, GM will report Cruise financials on a standalone basis.

And while GM/SoftBank got a lot of attention, it was only one big piece of news out of the segment this week. As they were announcing their pair-up, Alphabet-owned Waymo announced plans to purchase 62,000 minivans from Fiat Chrysler Automobiles. The buy, according to WSJ reporting, will also commence the beginning of a working partnership between Waymo and Fiat Chrysler to begin moving toward marketing self-driving cars directly to consumers.

“Waymo’s goal from day one has been to build the world’s most experienced driver, and give people access to self-driving technology that will make our roads safer,” John Krafcik, Waymo’s chief executive, said in a written statement.

Terms of the deal are undisclosed, though one source noted that if all vehicles are purchased, the total amount of the deal could be in excess of $2 billion.

Waymo has planned to acquire thousands of vehicles to build out a robot taxi fleet it intends to launch this year. That fleet will contain 20,000 Jaguar vehicles purchased earlier this year – but not until the year 2020.

And Chrysler was not Waymo’s only big news this week. Reports out of CNBC indicated that, after months of a grueling and at times ugly legal battle, Waymo and Uber may be on the verge of making up – and working together.

According to Uber CEO Dara Khosrowshahi, Uber is in talks with Waymo to add its self-driving cars to the Uber platform.

“You build relationships slowly but surely,” he said. “I have a long relationship with Google and I think we have a trust level and we’re having discussions with Waymo. If something happens, great, [but] if not, we can live with that too.”

But autonomous driving has a lot more miles to go, as high-profile accidents have clearly done some work to damage consumer trust this year.

But setbacks aside, it seems development is not only rolling forward, but the competitors are dropping billions of dollars to try get themselves across the finish line, and into the market, first.

Can’t call a winner in the pack yet – but we do know a sizzle of the week when we see one.

Sizzle

Gaming is PayPal’s pal: Gaming accounts for $12 billion of PayPal volume worldwide, and that is up 23 percent year on year. It turns out that play, done digitally, can pay dividends – literally. The vendors from which the players chose range far and wide, across online and brick-and-mortar conduits, such as GameStop.

Valuations: They’re back and they’re high, depending on the firm. Ant becomes a unicorn on steroids with a $150 billion valuation, with a $10 billion investment from Alibaba. The funding comes ahead of a widely anticipated IPO, with the latest valuation jump coming on top of the $60 billion seen in 2016.

QR Codes: They’re gaining traction, as EMVCo debuts QR Payment Mark, and in India, the Confederation of All India Traders has said that it will launch a nationwide campaign for BharatQR.

Fizzle

SMB Underwriting: It fizzled at the end of last year, with only 40 percent of smaller firms seeking financing, and that’s down 45 percent from the year before. And among the 8,100 firms surveyed across 12 regional Fed Reserve Banks, as many as 64 percent said they had faced at least some form of financial difficulty during the third to fourth quarter of the year.

Truck Driver Shortage: The old song from the 1970s sings about “great big convoys” – but that can happen only if there are drivers in place. The driver shortage is making prices surge across the board, and still there are 50,000 positions unfilled behind the wheel.

O, Canada’s Data Breaches: Bank of Montreal and CIBC were hit by cyberattacks that pilfered the data of roughly 90,000 customers. The Bank of Montreal was contacted by hackers who stated they have financial and other data on customers.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

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