• Mike V.

Weekend Reading


Reuters: A Self-Driving Dream Team Gets $530 Million From Sequoia, Amazon


The self-driving startup Aurora Innovation Inc. has raised $530 million from a group of investors led by Sequoia Capital, Silicon Valley’s storied venture capital firm, that includes financial backing from Amazon and T. Rowe Price. This second round of funding for Aurora values the company at more than $2.5 billion. The stature of its founders has allowed Aurora to attract top talent, with more than 250 people split between the San Francisco Bay Area and Pittsburgh, as well as interest from investors and partners. The startup has remained fiercely independent, cultivating partnerships with Hyundai Motor Co., Volkswagen AG and Byton Ltd. while designing a suite of software, hardware and data services designed to support a range of automakers and transportation networks. In a recent blog post, Aurora alluded to working with a fourth automaker but has not yet disclosed who it is.


The large investment by a group led by Sequoia, with T. Rowe Price and Amazon involved, will count as a vote of confidence in a competition between driverless efforts that’s largely measured in funding and alliances. “Over the last couple of years, we’ve met with more than 15 of the top autonomous vehicle companies from around the world,” said Sequoia’s Carl Eschenbach in an interview. “This is the dream team of self-driving vehicles. Aurora has the best team across the industry and the best shot of being the most disruptive force going forward.” “This is really about accelerating and delivering on our mission, which is to deliver self-driving technology safely, quickly and broadly,” Urmson said in an interview. “We’ve been incredibly fortunate that there is a lot of interest in Aurora, and we have been able to pick who is the most strategic for us.” In California, which has become the global center of autonomous-vehicle research, at least 62 companies have permits to test cars from the state Department of Motor Vehicles. But the crowded field is largely dominated by the top five companies with significant backing and funding: Alphabet Inc.’s Waymo unit, General Motors Co.’s Cruise unit, Zoox, Aurora and Ford Motor Co.-backed Argo AI.


Bloomberg: Steps To Electric Pickup Trucks


Plug-in pickup trucks look to be the next frontier in the budding electric vehicle industry as startup Rivian Automotive is said to be in talks with General Motors Co. and Amazon. With consumer preference shifting to larger vehicles and trucks typically the most profitable models in the lineup for established automakers, analysts say the move to develop electric trucks was almost a given. “Electric pickups make sense for a number of reasons,” Morgan Stanley analyst Adam Jonas. He highlighted the benefits of high torque for towing and hauling, the ability to charge electric tools and a higher price point allow companies to pass on bigger costs. Jonas estimates that the full-sized pickup truck segment accounts for well over 100% of global automotive profit for GM and Ford Motor Co., and the majority of Fiat Chrysler global profit. “While we believe electric vehicle pickups are not the near-term future for GM (demand isn’t there at a profitable price point), it is their long-term future,” Evercore analyst. Earlier this week, Jonas had flagged Rivian as potential serious competition for Tesla Inc., which is expected to unveil an all-electric pickup truck as soon as this summer.


WSJ: Car Dealers Overflowing With Inventory


Dealers are starting 2019 with a growing surplus of inventory of unsold vehicles, which will likely pressure them to cut output: there were 3.95 million vehicles in lots at the end of January, a 4% increase from December and up nearly 3% from last January. Seasonality exists in the industry and the winter is traditionally slower for automotive sales, the inventory build up could be problematic because dealers are starting the year with more unsold inventory than they had when auto sales peaked three years ago. Back then, 17.55 million cars were sold and now, while the latest estimates expect less than 17 million vehicles to be sold in 2019. Auto companies were also relying on fleet sales. Fleet sales and rental car sales are some of the last channels that auto companies have to try and juice results. Mark Wakefield, a co-head for the automotive practice at distressed consulting firm AlixPartners called this move a "short term band-aid". Manufacturers continue to try to avoid heavy discounting to sell vehicles: the industry spent about $3720 per vehicle in January to incentivize sales, which was down $140 from the prior year's record incentives. In order to avoid offering discounts, automakers are going to have to trim production. There are 48 new model launches planned for the US this year, which is up from 46 last year and 36 five years ago. Dealers believe that manufacturers are simply being too optimistic about the upcoming year. David Rosenberg, chief executive for New England dealership chain Prime Automotive Group said: "There is an oversupply of new products, but not everyone is going to achieve their sales targets. We’ve carried too much inventory because we’ve been conditioned at artificial rates."



FT: China bulks up on gold


China has added to its gold reserves again. At the end of January its holdings stood at 59.94m ounces, up from 59.56m a month earlier, according to figures released by the People’s Bank of China. It marks the second month in a row that China, the world’s biggest consumer and producer of gold, has added to its hoard of the precious metal. Before its purchase in December, the last time China bought gold was in 2016. Over the past year, central banks emerged as big buyers of gold, with purchases up almost 75%. They acquired $27bn worth of bullion — the most in almost half a century — in 2018 as countries including Russia, Turkey and Kazakhstan shifted reserves away from the US dollar. Analysts reckon 2019 could be another big year for central bank gold purchases. “We expect elevated geopolitical tensions and less pressure on emerging market currencies to keep gold purchases at 650 tonnes in 2019,” Goldman Sachs said. “Between 2009 and 2015 China has bought on average 100 tonnes of gold per year. Tensions between the US and China could remain high in the coming years. In the experience of Turkey and Russia, both countries increased their gold purchases following rising tensions with the US.” News of China’s gold buying came as Matteo Salvini, Italy’s deputy prime minister and leader of the League party, raised the possibility of wresting control of Italy’s sizeable gold reserves away from the country’s central bank.


The Bank of Italy has the third-largest central bank holding of gold reserves in the world after the US and Germany, owning 2,452 tonnes at the end of the third quarter of last year.


Reuters: Facebook broke rules, should be regulated: UK lawmakers


Facebook intentionally breached data privacy and competition law and should, along with other big tech companies, be subject to a new regulator to protect democracy and citizens’ rights, British lawmakers said. In a damning report that singled out Facebook CEO Mark Zuckerberg for what it said was a failure of leadership and personal responsibility, the British parliament’s Digital, Culture, Media and Sport Committee said tech firms had proved ineffective in stopping harmful content on their platforms. “We need a radical shift in the balance of power between the platforms and the people,” committee chairman Damian Collins said. Collins said the age of inadequate self-regulation must end, following an 18-month investigation that concluded Facebook had “intentionally and knowingly violated both data privacy and anti-competition laws.” “The rights of the citizen need to be established in statute, by requiring the tech companies to adhere to a code of conduct written into law by Parliament, and overseen by an independent regulator,” he said. Lawmakers in Europe and the United States are scrambling to get to grips with the risks posed by big tech companies regulating the platforms used by billions of people. Germany has been at the forefront of the backlash against Facebook, fueled by last year’s Cambridge Analytica scandal in which tens of millions of Facebook profiles were harvested without their users’ consent. Earlier this month, it ordered Facebook to curb its data collection practices in the country. He refused to appear three times before British lawmakers, a stance that showed “contempt” toward parliament and the members of nine legislatures from around the world, the committee said. “We believe that in its evidence to the committee Facebook has often deliberately sought to frustrate our work, by giving incomplete, disingenuous and at times misleading answers to our questions,” Collins said. “Mark Zuckerberg continually fails to show the levels of leadership and personal responsibility that should be expected from someone who sits at the top of one of the world’s biggest companies.” Companies like Facebook were also using their size to bully smaller firms that relied on social media platforms to reach customers, it added.

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