58% Drop In Autonomous Vehicle Dollars

The self-driving vehicle has crashed. Not the car itself, although that happens, but certainly the investment craze that enveloped the venture capital world over the past few years. In 2021, investors poured a record $9.7 billion into autonomous vehicle development. Last year however, that dropped by almost 60% to just $4.1 billion. Overall investment in robotics, which have totaled $90 billion globally over the past five years, is also down, hitting $12 billion in total last year versus $18 billion in a much more optimistic 2021.

The big winner recently: vertical robotics that are purpose-built for specific industries such as warehousing, shipping, health, defense, manufacturing, and construction.

“With the sharp pullback of investments in 2022, AV [autonomous vehicles] was particularly impacted as investors began to question the path to commercialization for many of these companies,” says a new report by F-Prime Capital. “One of the more exciting trends in the industry has been the growth of Vertical Robotics, with the sector defying the overall VC market by growing again in 2022.”

Google’s robotaxi startup Waymo has laid off staff, self-driving tech company Aurora is looking at cash preservation, Ford and VW’s Argo AI is shutting down, and multiple other autonomous vehicle startups and projects are consolidating their positions, partnering to reduce costs and risks, or reducing headcount, the report says.

But vertical robotics investment has jumped from $2.2 billion in 2018 to almost $7 billion last year as investment in logistics, defense, and health/medical robots is growing fast.

Promisingly, 41% of that investment is in series B and C rounds, indicating lower-risk and more-developed products and go-to-market strategies in the space.

Key companies in the space include Zipline in logistics, CMR Surgical in health/medical, former Oculus founder Palmer Freeman Luckey’s Anduril in defense, Bright Machines in manufacturing, and Built Robotics in construction and mining

Despite a pullback in 2022, the report says there is now $15 billion of market cap for publicly-traded robotics companies, including AutoStore, Innoviz, and Precept. There’s also been $20 billion of mergers and acquisitions over the past five years.

The global robotics space sees only 10% of overall venture capital investments in technology, however. Western markets make up 70% of robotics investment, the report says.

“The emergence of autonomous vehicles has been the catalyst for a new generation of engineers and entrepreneurs who are building the next generation of robotics companies, which are solving real-world problems,” Sanjay Aggarwal, a Venture Partner at F-Prime Capital, said in a statement. “The growing number of opportunities, quality of entrepreneurs and market leaders in the industry are making robotics an attractive sector for VC investment.”

While additional investment into self-driving vehicles has dropped, that does not mean the sector isn’t seeing innovation. Existing players such as Tesla with its Full Self Driving and General Motors with its Super Cruise are continuing to innovate and — importantly — gather more data on driver and driverless vehicle operation.

In addition, vertical-specific robotics companies in logistics, agriculture, construction, and mining still need to solve for navigation, obstacle avoidance, and safety while moving, so it’s likely some of the investment categorized as vertical robotics is also being spent on autonomy and self-driving.