Motional and Zoox take different turns in the autonomous vehicle race

SAN FRANCISCO (KGO) — Motional and Zoox, two of the most prominent names in autonomous vehicles, are now on sharply different paths. It’s been a treacherous and expensive road to achieving a driverless tomorrow.

The year was 2016 and the race was on to build a self-driving car. Automakers, tech companies and chip makers were all on the autonomous vehicle bandwagon.

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“GM saw this massive addressable market. They said it would be $1 trillion in the U.S. alone,” Ed Ludlow, the San Francisco-based co-host of Bloomberg Technology, says.

Uber was operating self-driving Volvos. Google’s self-driving project became Waymo. General Motors bought Cruise for $1 billion. Pony AI was founded and then backed by Toyota. Argo AI was created – a venture that Ford and Volkswagen later invested billions. Apple was secretly spending a billion dollars a year on its own autonomous car project.

It seemed the hype was real: either build an autonomous car soon or be left at the starting line.

Getting their start

NuTonomy was also part of that early hype.

Founded in 2013 by MIT research scientist Karl Iagnemma, nuTonomy had big ambitions.

“How do we develop technology that we can rapidly scale and adapt to new cities around the world because our goal is not to deploy in a few cities, our goal is to deploy in many cities worldwide,” Iagnemma, the founder of nuTonomy, the original company later turned into Motional, says.

NuTonomy grew quickly.

In 2016, it launched a limited robotaxi service in Singapore, the first-of-its-kind in the world.

The next year, it began testing autonomous vehicles in Boston.

Then Delphi, one of the world’s largest auto parts suppliers, bought nuTonomy for $450 million and renamed it Aptiv.

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Soon, that entity teamed up with Lyft to offer autonomous rides with a safety driver in Las Vegas.

Then came a $4 billion windfall.

In 2019, Aptiv formed a joint venture with Hyundai Motors to develop autonomous technologies.

Around the same time, Zoox was born in a very different way. While NuTonomy was founded in 2013 by engineering minds at MIT, Zoox was founded in 2014 by an Australian artist-designer Tim Kentley-Klay and his partner, who brought the tech, Jesse Levinson.

Kentley-Klay had no prior experience in cars or artificial intelligence, but the difference between the two budding self-driving companies was that Zoox was first created from an artist/designer’s vision on what a purpose-built, autonomous electric vehicle and ride-hailing service can be, rather than from a science-first approach.

Levinson, who is the son of Apple’s Chairman Arthur Levinson, had previously contributed to Stanford University’s success in the 2007 DARPA Urban Challenge, and brought the necessary technical expertise in self-driving technology. He still remains as Zoox’s CTO to this day. However, the other co-founder Kentley-Klay, the visionary who conceived the brainchild of Zoox, was reportedly suddenly and dramatically pushed out by the board in 2018 for his brash and uncompromising personality.

Zoox was later acquired by Amazon for reportedly over $1 billion in 2020. Although it is now a wholly owned subsidiary of Amazon, it has continued to operate in California as a separate entity to the tech giant.

Motional was born

Aptiv was re-named Motional.

The goal was to start charging for rides by 2022, but that didn’t happen. However, Motional ended the year on an inspirational note.

In 2023, Hyundai and Motional, their joint venture, aimed to launch a fully driverless robotaxi service using the Hyundai IONIQ 5. Motional was testing an autonomous vehicle custom built by Hyundai.

This was part of a broader strategy to introduce Level 4 autonomous vehicles across major U.S. cities, with initial plans for a launch in Las Vegas

All things pointed to 2023 as the magical year.

ABC7 News’ production team visited Motional in Las Vegas as that deadline was approaching in October of 2023. The company was still testing robotaxis on the strip with a safety driver on board.

But the next step was close — getting rid of the safety driver and charging for rides.

“The Hyundai Ioniq 5 robotaxi is outfitted with more than 30 sensors, a combination of radars, cameras and lidars. In the past we had to buy the vehicles… tear them down, rebuild them into autonomous vehicles,” Abe Ghabra, Motional’s Chief Operating Officer (until May 2024), said.

“These cars come already outfitted with the sensor suite, the computer stack, and built on Hyundai’s production line, tested, calibrated and shipped to us ready to go,” Ghabra told ABC7 News during an interview in Las Vegas.

Zoox’s unconventional start

To create a self-driving car like no other, the team at Zoox took apart a traditional car and redesigned the vehicle they envisioned from scratch, a vehicle that would not designed around a driver — meaning no steering wheel and no gas or brake pedals.

Unlike Waymo, Cruise and Motional, Zoox does not have its signature vehicle drive around city streets, testing and learning as it goes.

Instead, Zoox retrofitted SUVs to collect data around San Francisco and Las Vegas.

These vehicles won’t ever be deployed as robotaxis. Their signature vehicle stays mostly hidden from the public eye.

Hyundai’s driverless bet

Hyundai was ready for a huge deployment of robotaxis.

It opened a new production facility and research center in Singapore that would manufacture 30,000 of the self-driving Ioniq Fives.

Motional was also testing vehicles in Boston, Pittsburg, Los Angeles and Singapore, but it really embraced Las Vegas and Las Vegas embraced autonomous vehicles.

Why Las Vegas?

In the end, Motional chose Las Vegas to kick off its ride-hailing service in the U.S.

Las Vegas was creating a smart city, and, early on, it installed sensors on the strip to alert autonomous vehicles about road hazards, traffic signals and emergency vehicles.

But Motional was relying less on the infrastructure and more on its software.

“We’re a different company today than we were in 2016. The millions of miles that we’ve collected from driving on public roads, and we use it to iterate the software capabilities and features, and we make our software better,” says Ghabra.

When we visited, Motional had 1,400 employees at its technical center in Las Vegas.

Zoox in Las Vegas

Similarly, Zoox began testing its autonomous vehicles in Las Vegas in 2019 using a fleet of Toyota Highlanders with safety drivers, gathering data for their future commercial operations.

The driverless company then truly began operating its robotaxi service in Las Vegas in June 2023, initially as a testing phase for employees and later expanding to a broader public rollout. Specifically, they started with a one-mile geofenced area near their Las Vegas facility and have since expanded to 5 miles in March 2024.

The service is now available to the public, with Resorts World Las Vegas naming Zoox as its official robotaxi service partner. The service is set to expand to the broader public in Las Vegas in late 2025.

The turning point: Investors’ patience wear thin

As 2024 began, inflation and high interest rates brought about economic reckoning. Tech companies had already slashed 262,000 jobs in 2023.

The era of big spending was over.

“All of a sudden, the industries funding has dried up. I think investors thought that this was gonna be a five-year roadmap early on maybe 2015… 2016. And it’s proven to be a lot harder,” says Pete Bigelow, a senior reporter at Automotive news covering technology and autonomous vehicles.

The industry has spent more than $160bn so far developing autonomous vehicle technology. But none of the AV companies were making a profit.

Investors’ patience was wearing thin.

“You have companies saying, Wait, you want me to invest 10 billion more, and we’re still 5-10 years away from really seeing a profit,” Bigelow says.

High stakes and high failure rate

Argo AI was a cautionary tale.

The robotaxi company was valued at more $7 billion in 2020.

“Argo AI was a startup backed by Ford and Volkswagen. It collapsed. It ran out of cash. Ford pulled the plug because they basically said that the timeline or horizon to get there on the technology was too distant and it was going to cost too much money,” says Ludlow.

Uber had already sold off its self-driving car unit.

Pony AI paused its U.S. operations after an accident in California. It has since renewed testing but mostly focused on China.

Cruise suspended its operations after one of its autonomous vehicles dragged a woman 20 feet.

It eventually cut a fourth of its staff.

Waymo spent $8 billion to get its robotaxi business going.

There were warning signs for Motional, too.

In December of 2022, it cut 10% of its workforce.

Then, in January of 2024, as expectations grew, Aptiv slammed on the brakes.

In an investors’ earnings call, Aptiv chairman Kevin Clark said the company would stop financing Motional.

“Commercialization of the technology, i.e., the cost related to delivering the tech principally in and around hardware, really makes it challenging from an adoption standpoint, in the mobility on demand market. And as a result, kind of pushes out ultimately the revenue stream and the earnings stream for the business, and pushes out to a point where relative to other options or opportunities that we have to invest in that will deliver profitable growth, we had to make decisions….. when we look at ongoing funding of the technology and when it actually gets adopted in the mobility on demand market, it’s just pushed too far out to make financial sense for us, given the other opportunities that we have in front of us,” says Kevin Clark, then the Chair and CEO of Aptiv in an earnings call.

Hanging by a thread

While Motional sought new investors, Hyundai pumped another billion dollars into Motional.

Then a few days later, a bombshell announcement by Motional CEO Karl Iagnemma.

“Large-scale driverless deployment will not happen overnight. AVs remain a goal for the future, not the present,”Iagnemma says.

And Motional suspended its robotaxi service.

How it ends for Motional

It’s a new focus for Motional. Like other automakers that had to pull the plug on their robotaxi ambitions (GM, for example) and alter the course on what they want to achieve with their driverless technology, the focus has shifted to bring a return to the investment much quickly, and that meant a push to integrate the driverless technology it developed into consumer vehicles.

“The technology has value because you can basically package it as a software, as a piece of value added to charge the consumer a bit of money for Advanced Driver Assistance tools,” says Ludlow.

“If we’re talking about a robotaxi here with no driver, you know, I think you’re probably talking $30,000 to $50,000 per vehicle, in self-driving equipment alone, before you get to the cost of the vehicle. When you look at something like some of the advanced driver assist systems that are on cars being sold today. You look at companies like Mercedes Benz and they’re charging about $15,000,” says Bigelow.

Motional is still an active company, but it has scaled back its immediate commercialization efforts to focus on further developing its core driverless technology, now primarily under Hyundai’s ownership.

But its restructuring came with a 40% cut in staff. Hundreds of vehicle operators, testers, remote assistance workers and data analysts were laid off.

So was Chief Operating Officer Abe Ghabra. Three of the four people we interviewed were gone.

Motional’s Vice President of Commercialization remained.

“And a lot of companies in the space are taking a long view…. they are envisioning a future where you have more and more integration into passenger cars and personally own cars,” says Akshay Jaising, Motional VP of Commercialization.

“But because they’re taking a long view, they’re willing to make the sustained investments required to mature the technology to that level. And I think that’s healthy for the industry, because it’s allowing us to make meaningful progress,” says Jaising.

Where is Zoox heading

From the beginning, Zoox has sought to change the conversation around robotaxis.

After the board’s surprise firing of Zoox founder/CEO Kentley-Klay in 2018 — just a month after the Zoox board closed a massive $500 million fundraise at a $3.2 billion post-money valuation — Zoox hired Aicha Evans as its CEO in 2019. A year later, it was bought by Amazon for $1.2 billion.

The focus has since remained the unidirectional vehicle – which it first unveiled in 2020.

In 2002, Zoox needed a boost to catch up to Waymo and Cruise, which were testing retrofitted vehicles in San Francisco. It hired one of Meta’s top engineers to speed up software development.

“We’ve made really interesting architectural improvements that have sped up our ability to learn. Our ability to train at high speed has dramatically improved,” Bryan O’Sullivan/Zoox Senior VP of Software told us.

The Zoox vehicle became the first purpose-built, fully autonomous vehicle to receive federal certification. Then a historic moment.

In 2023, both California and Nevada approved Zoox for use in public roads. The first vehicle ever to get approval that didn’t have a steering wheel or was designed to have a driver at all on board.

Today, Zoox is still ramping up its robotaxi operations. They are preparing for a commercial launch for public, paid rides in Las Vegas in late 2025, with San Francisco to follow. Zoox has also opened a new production facility in Hayward, California, to manufacture their purpose-built robotaxis.

From a concept for tomorrow to the reality of today. Take a journey through innovation, failed attempts and rise of “A Driverless Tomorrow.” You can watch the full ABC7 Originals series here or wherever you stream ABC7.