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Self-driving tech startup values crash 81% in 2 years

LiDAR companies lead the pack, with valuations plummeting up to 99% since IPO

It's not a great time for self-driving tech startups. The ones that managed an IPO in the past two years have lost a combined 81 percent of their market value, dropping from a total of nearly $51 billion offering time to a mere $9 billion this month.

Crunchbase, which tracks startup valuations and investments, said in its report on the market that self-driving technology companies experienced a funding boom in 2020 and 2021, "but investors' love affair with the space didn't last."

Several of the companies revved fast with vast reserves of funding from well-known investors but pedigree and investors can't save new companies from market forces.

For perspective, the S&P 500 index is up more than six percent since October 2020, and Facebook and Snap – two tech stocks that have spectacularly nosedived lately – are down 50 and 62 percent, respectively.

Crunchbase used Embark Technology as something of an example of the self-driving dip. The startup sells software for autonomous semi trucks. Tiger Global and Sequoia Capital were counted among its early backers when the company privately raised $117 million. An additional $614 million made as part of its IPO took Embark to a valuation of $5.2 billion when it went public.

"Just a year after its debut, Embark is valued at less than the cash reserves it had at the end of its last quarter. Shares are down a whopping 97 percent from their debut price," the report noted. 

As to whether poor profits were a factor in the sudden loss of valuation and investor flight, the overview noted that possibility can be immediately discounted. "No one is dumping shares in these companies because profits are down. They never had profits in the first place," said report author Joanna Glasner.

The biggest loser is … LiDAR

None of the companies on Crunchbase's list are faring well – the best off among them lost 50 percent of its valuation – but a bunch with the largest losses have a common theme. Three are involved in developing light detection and ranging (LiDAR) technology for self-driving cars.

Quanergy, the overall largest loser, has dumped 99 percent of its stock value and declined from an IPO valuation of $1.1 billion to a mere $16 million. Crunchbase noted that Quanergy completed a reverse stock split to consolidate some value "only to see further valuation declines." 

The reason for LiDAR's decline in the self-driving vehicle tech sphere isn't immediately clear, and Crunchbase didn't respond to our questions. One possible reason could be that LiDAR, in its current iteration, simply isn't suited to use in self-driving cars – Elon Musk has thought so for years. 

In 2019, Musk described LiDAR as "stupid, expensive and unecessary" and predicted it would be dumped by self-driving companies in the near future. Nissan has also expressed reservations about LiDAR in self-driving cars, at least in their current iteration, due to high costs and limited capabilities.

Former Tesla chief AI scientist Andrej Karpathy said in 2021 that LiDAR creates complications by requiring pre-mapping of a route and the need to insert lane and traffic light information on top of the LiDAR map to create an accurate picture of the world. 

"It's unscalable to collect, build, and maintain these high-definition LiDAR maps. It would be extremely difficult to keep this infrastructure up to date," Karpathy said in 2021. Tesla reportedly had a contract with LiDAR company Luminar (also on Crunchbase's list, lost 65 percent) as recently as 2021, but newer Tesla vehicles are said to rely on the company's own computer vision system. 

LiDAR hardware has also been a bottleneck for autonomous vehicles, with the costs of some units running as high as $85,000 in the case of LiDAR boxes manufactured by Velodyne Lidar, another of the companies listed in Crunchbase's report.

Velodyne has lost 95 percent of its valuation since its IPO, Crunchbase reported. In 2017, a spokesperson for then-private Velodyne told The Register that he wasn't comfortable disclosing the prices for the company's LiDAR units (the $85k figure came from a Velodyne client), but said the prices would decrease once large volume shipments began. 

Five years on, it's looking like Musk's prediction is the one beginning to bear fruit. ®

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