TECH IN THE NEWS

Tech On Notice — Trump named Google Hawk Andrew Ferguson to replace Lina Khan as FTC Chair, as Google asks the FTC to kill the exclusive Microsoft, OpenAI Azure cloud deal. Trump is due to meet with Google and Amazon CEOs next week.

Inflation — Wednesday’s CPI figures showed prices up 2.7% y-o-y in November and 0.3% m-o-m. CME's FedWatch has pegged another .25 rate cut at 98% when the Fed meets next week. The ECB just cut rates by .25 to 3% on weaker growth.

Musk Flying — Elon Musk's became the first person to surpassed $400B net worth as SpaceX became the world's most valuable startup at $350B, and Tesla stock hit record highs on self-driving optimism. Special funds now offer SpaceX secondaries.

BRICS AI Alliance — Russia’s Vladimir Putin announced plans to develop AI technology with BRICS partners to challenge US dominance. The alliance will include national associations and development institutions from member states.

Android XR Launch — Google unveiled its new Android XR platform to eventually power Astra AI-smart glasses. The platform will debut on Samsung's Project Moohan headset in 2025.

COMPANIES TO WATCH

Apple's AI Chip — Apple is collaborating with Broadcom to develop its first server chip specifically designed for AI processing, aiming to reduce dependence on Nvidia.

Lumen Orbit — The Bellevue-based YC grad startup raised an $11M seed at $40M pmv to build space-based data centers for AI services. NFX led with FUSE, Soma and Andreessen Horowitz and Sequoia. Over 200 VCs showed interest.

Finny — The YC-backed startup is using AI to match financial advisors with prospects. It launched an MVP in May and has now raised a $4.2M seed co-led by Maple and HNVR. Over six months revenue rose 150% p/m, and it hit 40+ clients.

Micron Technology — The memory chip maker was awarded $6.1B in CHIPS Act grants to build several domestic semiconductor facilities in New York and Idaho.

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THE HOTTEST THING IN TECH
A Robotaxi Market Shakeup

The US robotaxi market is undergoing a period of consolidation and recalibration as GM Shutters its Cruise Robotaxi operations and Tesla reaches a record valuation on optimism around self-driving and robotaxis. After years of hype and billions of dollars in investment, we finally have a more supportive administration incoming, leading some analysts to believe robotaxis are closer to becoming a reality.

A Shifting Market

In a surprising move, (even to the Cruise CEO) General Motors announced it would cease funding the robotaxi unit after $10 billion invested and years of R&D. GM is not alone in its retreat, Ford shut down its Argo AI self-driving venture in 2022, and Apple abandoned its car project earlier this year.

Alphabet's Waymo remains committed and currently leads the robotaxi market with services in several US cities, and further expansion plans. Waymo provides 300,000+ rides per month in California, potentially representing a 4% market share in San Fran.

GM and Ford are shifting their focus to integrating self-driving technology into personal vehicles to leverage their existing manufacturing and distribution networks without the risks and costs associated with robotaxis.

However, Tesla is emerging as a potential market leader, as the only US based pure-play automaker remaining in the market. Its ambitious robotaxi service plans will benefit from the void left by Cruise. Tesla is conducting limited testing in SF and aims to launch a full-fledged service by 2027, as well as touting a decentralized robotaxi ownership model that incentivizes Tesla owners to share their cars with the public.

This approach allows Tesla to avoid the tough decision GM and Ford have faced, and to continue focusing on both the consumer and robotaxi markets on one platform. Tesla's extensive data set from its Autopilot and Full Self-Driving features could give it another significant advantage in developing robotaxi technology. However, the company still needs to prove its uniquely mapping and AI-powered different approach to FSD technology can operate safely and reliably without driver supervision.

Changing Market Conditions

As GM discovered, developing and operating a robotaxi fleet is expensive. The tech is complex, requiring significant R&D investment, and the opex of managing a fleet, including maintenance, insurance, and customer service, are substantial. Safety concerns have also led to increased regulatory scrutiny, slowing down deployment and adding to the cost of operations.

However, the incoming Trump regime (with Musk as a key adviser) has already indicated it will take a far more permissive approach to regulation. Trump recently outlined plans to develop a federal framework for self-driving vehicles in the US as China did nationally earlier this year. China is also showing that robotaxis can be cheaper than traditional ones. Baidu leads in driving down the cost of robotaxi journeys, offering them at significantly less than the equivalent human-driven ride. Estimates are Baidu Apollo could be grossing $2.4M to $9.6M p/a and each car is averaging around 20 trips a day, far more than a human driver can due to fatigue.

Future Opportunities

It looks like the market is consolidating into one dominated by large players like Google and Tesla. However, there is still potential for niche players and innovative business models to thrive. Companies like Glydways, a startup backed by Vinod Khosla and Sam Altman are focusing on high-density mass transit solutions using autonomous vehicles. It is currently operating in Atlanta.

Azeem Azhar, founder of the research group Exponential View thinks it’s time to get optimistic about self-driving cars, particularly robotaxis. He cites the significant progress made by companies like Waymo on increasing robotaxi adoption and lowering operating costs. Azhar also emphasizes the improving safety record of self-driving cars and their potential to surpass human drivers in reliability. He ultimately predicts mass AV adoption within the next two decades, driven by advancements in technology, regulatory approvals, and evolving consumer preferences. As a mid-to-long-term play, the market looks ripe and could well be entering a growth period.

“We are becoming more bullish on Tesla’s Robotaxi segment, following President-elect Trump’s plans to potentially develop a federal framework for self-driving vehicles in the United States.”

— Andres Sheppard, Cantor Fitzgerald analyst

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Cool Data — 1. Microsoft unveils zero-water “closed loop” cooling. | 2. Nexalus’ hot-water-based liquid cooling uses less water. | 3. Akash Systems’ Diamond-based semiconductor cooling. | 4. Lumen Orbit to build space AI data centers.