The Hype Surrounding Autonomous Trucks and Flying Taxis

You've seen it before: claims that some new whiz-bang technology will shake up the world at some point in the future... If done right, it will spawn headlines, excitement, and enthusiasm. If the company is public, its stock might even spike. If it isn't, investment bankers are likely to urge it to cash in with […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] The Hype Surrounding Autonomous Trucks and Flying Taxis By Herb Greenberg You've seen it before: claims that some new whiz-bang technology will shake up the world at some point in the future... If done right, it will spawn headlines, excitement, and enthusiasm. If the company is public, its stock might even spike. If it isn't, investment bankers are likely to urge it to cash in with an initial public offering ("IPO"). Except... quite a bit falls into the category better known as "vaporware" – products that overpromise or deliver well after when their promoters say it will. (And that's assuming they deliver at all.) Perhaps the highest-profile – certainly in recent years – was Theranos, which was striking deals to roll out its finger-prick blood-testing equipment, even though it didn't work. The company went bust and its controversial founder Elizabeth Holmes is now on trial for fraud. But there are plenty of others – some nowhere near as egregious, but equally guilty of making wildly unrealistic forecasts regarding unproven technology. Consider [this]( September 2016 presentation by Lyft (LYFT) president and co-founder John Zimmer... It claimed that "within five years, a fully autonomous fleet of cars will provide most Lyft rides across the country." Just one month earlier, Uber (UBER) co-founder and then-CEO Travis Kalanick [declared]( that autonomous cards were "existential" to its future. Oops! Not only did 2021 come and go without Lyft having an autonomous fleet, but both companies have since sold off their self-driving subsidiaries. That raises the question of whether the hype surrounding autonomous trucks and flying taxis is headed for the same fate... Or at least, the claims on when it will happen are. For the lead players in both spaces, 2024 seems to be the year it's all supposed to happen – or start to happen. (Except one on the trucking side that is targeting 2023.) But the story is the illusion that it will happen in just a few years... with autonomous trucks crisscrossing the country... and flying taxis bringing The Jetsons to life. My colleague Whitney Tilson has famously gone on the record that electric and self-driving cars are going to rule the road sooner rather than later... He believes that Transportation-as-a-Service ("TaaS") is going to have far-reaching effects, completely changing the way that we eat, shop, work, and travel. But rather than telling his Empire Stock Investor readers to invest in pre-revenue, publicly traded startups that are operating on nothing but an idea, Whitney has recommended "picks and shovels" ways to profit off this trend... companies like chipmaker Nvidia (NVDA), which is up 199% since his initial recommendation less than two years ago. Whitney and the rest of the Empire team believe that this technology shows incredible promise... But at the same time, we all fully realize that, like we saw with the dot-com bubble, many of the companies in this space won't even exist in five years. And of those that do survive and even thrive, the hype surrounding the timing of when they'll be rolled out is likely to be just that... hype. Let's take a look at the companies trying to put self-driving trucks on the road, for instance... A handful of companies are vying to be able to claim title as first to have their unmanned self-driving trucks on the road. Among them, TuSimple (TSP) won the go-public race with an IPO last year. Two others, Aurora Innovations and Embark (NGAB), are expected to emerge from special purpose acquisition company ("SPAC") purgatory in the next two weeks. Another, Plus.ai (HCIC), is still stuck in there somewhere. The biggest, Waymo, is part of Google's Alphabet (GOOGL) empire, so it doesn't have a standalone stock to promote... and therefore is quieter. As the only public player so far, much of the attention has been on TuSimple, which started in China before miraculously (almost like – presto!) turning itself into a U.S. company. (The U.S. government is currently reviewing whether it poses a security threat.) TuSimple's claim is that its fully autonomous trucks will be manufactured in conjunction with Navistar "at scale" – ready for an "autonomous freight network" it is rolling out across the country by 2024. Sounds good on paper, but TuSimple has a history of being overzealous with its financial projections... The company has missed the mark multiple times on various forecasts. For example, [according]( to tech website The Information, fundraising documents in 2016 claimed that revenues would hit $1 billion (with a "b") by this year. Reality... the company is now guiding for a mere $5 million to $7 million (with an "m"). Consensus is $6.5 million. TuSimple has been just as unrealistic forecasting when its trucks would be unmanned in commercial operations. Consider one top executive's 2017 [claim]( that "within the next year" there would be "real trucks in real fleets hauling real freight" using its autonomous technology. (Didn't happen.) Or the same executive's early 2019 [claim]( that the company would be able to "take the driver out of the cab on trucks" by the end of 2020 or early 2021. A month later, one co-founder [said]( something similar, before [repeating]( the same target a month later in the Chinese press. (Didn't happen.) Now, the company is saying a drive-out "pilot" or "demonstration" should happen by the end of this year, with the caveat that "the supply chain" could trip it up. What's the real story? The real story is that regardless of whatever dates TuSimple or its soon-to-be-public peers dangle in front of investors, the only thing that matters is when there will truly be autonomous trucks. And for investment purposes, that means nobody in the truck. TuSimple has already shown how difficult long-term forecasting of anything disruptive and technological can be. Big, fully loaded tractor trailers take it to another level. So much needs to happen first. There are federal rules, state rules and interstate complications. TuSimple warns of as much in its SEC filings... Certain U.S. states have legal restrictions on autonomous driving vehicles, and many other states are considering them. This patchwork increases the legal complexity for our purpose-built autonomous trucks. Then there are the little things you don't think about, which is where the private companies like Waymo come in... Since they don't have a stock to hype, they can be more realistic. Waymo, for its part, has been at autonomous trucking longer than anybody, and it still isn't releasing a date for commercial rollout... or anything remotely like it. According to a recent [story]( in Forbes... [That's] owing to tricky rules on top of technical challenges... Such as... how a truck will know whether a scale is open or closed... or it's being chased by a state trooper... or, as Waymo's head of commercialization for trucking told Forbes... At the federal level there are some unique requirements that are really written for human-driven trucks today. For example, deploying emergency road flares on the road while you're pulled over on a shoulder. When will that be solved? Waymo isn't saying because... it probably doesn't know. Turning to flying taxis... It's easy to lose count of the companies in the flying taxi (aka urban air mobility) market because there are quite a few – public and private. It seems like there's a new one popping up every week. What they share: They're electric and they take off and land vertically – like a helicopter, except with multiple propellers, and most seem to have wings. (You will also sometimes see them referred to as eVTOLs, for "electric vertical take-off landing.") The other thing they share? Almost all of those that trade publicly in the U.S. point to 2024 as the date their commercial service takes off. Among them, Joby Aviation (JOBY) seems to be in the lead. Others that rank high in stock promotion include Archer Aviation (ACHR), Blade Air Mobility (BLDE), and Lilium (LILM). There just seems to be one, small catch... None yet have full certification from the Federal Aviation Administration ("FAA") or the European equivalent. Archer takes it a step further, conceding in its U.S. Securities & Exchange commission ("SEC") filings... Our current eVTOL aircraft prototype (the Maker aircraft) has not yet flown and is not scheduled to conduct its first test flight until later this year. That's right: It hasn't flown... hasn't even had a test flight... yet it will be carrying passengers in three years. And while each company says it has filed for certification with the FAA, none has received anything more than the agency's initial approval, which consists of a list of requirements to get full certification. --------------------------------------------------------------- Recommended Links: ['My business partner almost quit his job to buy this stock']( "This could be the most profitable stock I've ever uncovered in my career," Enrique Abeyta says. 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A comprehensive [study]( on the future of the air taxi market by Morgan Stanley (MS) makes one other point that tends to get left out by the promoters... The regulatory requirements for aviation is one of the most underestimated risks. And it's not just getting the aircraft certified by the FAA (or, if in Europe, EASA)... Morgan Stanley includes a laundry list, starting with challenges involving airspace and air traffic control... Think about it... Are the skies really ready for an onslaught of air taxis hop-scotching over your house... on its way from the city to the beach? Or to downtown. Or the airport... or wherever. That's a special concern in urban areas, which is a primary and initial target for air taxis. Then there's noise. Sure, eVTOLs are said to be quiet – Joby likes to say the sound of its aircraft blend into the background, like the sound of the surf or wind – but... do they really? Especially if there's more than one? And what about state and local zoning for the "vertiports" these are supposed to use for takeoff and landing? Then... pilots must be certified. (Of course, most of these are designed to ultimately be autonomous, so there's that.) And good luck if between here and there there's an accident. My point is... 2024 is a nice target, but that's all it is – a target. It's far enough away for the companies and their fans to talk away hard problems, but close enough to generate excitement. The truth is that autonomous trucking has been "three years away" for the better part of a decade. Its day, in one form or another, will come. So will air taxies – just don't hold your breath for 2024. All of this is just another reminder of the absurdity of long-term targets of unproven technology, or anything for that matter... and why performing your due diligence in these emerging technologies is critical. (Also... if you've been living under a rock for the past two years and you've managed to somehow miss Whitney's TaaS presentation the first, second, or third time, you can watch it [right here]( As always, feel free to reach out via e-mail by [clicking here](mailto:feedback@empirefinancialresearch.com?subject=Feedback%20for%20Herb). And if you're on Twitter, feel free to follow me there at [@herbgreenberg](. My DMs are open. I look forward to hearing from you. Regards, Herb Greenberg October 29, 2021 If someone forwarded you this e-mail and you would like to be added to my e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2021 Empire Financial Research. All rights reserved. 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