Shulou(Shulou.com)11/24 Report--

The self-driving industry is in the cold again, and Aurora, a star listed company in the US stock market, can no longer stand it.

According to foreign media reports, Aurora's CEO Chris Urmson (former Google Waymo CTO) recently revealed in internal documents that the company is suffering from a serious crisis. The company will save money by laying off staff, cutting executives' salaries, selling assets, reducing benefits, and even considering selling the company to cash-rich tech giants such as Apple and Microsoft.

Since its backdoor listing last year, its share price has fallen from a peak of $17.77 (122.65 yuan) shortly after the listing to $1.83 this summer. Its closing price on Friday was $2.43 a share, down 80% so far. The project for self-driving trucks, which should have been launched, has also been postponed to 2024.

Self-driving companies are extremely expensive and unprofitable, and in the current economic environment, various investment institutions are unable to continue to give them blood transfusions. This is true of Aurora as a star listed company, and it will be a tight life in the last year or two compared to other companies in the industry.

01. Aurora co-founder and CEO Chris Urmson, who led Google's autopilot program, sent a memo titled "read before board discussion" on Aug. 3, but presumably because of negligence, the memo, which should have been sent to the board, was sent to all employees. The memo outlines the company's sale plans and possible cost-cutting measures.

Co-founder and CEO Chris Urmson of ▲ Aurora

A spokesman for Aurora confirmed the authenticity of the reported memo on Friday and issued the following statement: "given the current macro environment, every company should evaluate its options and long-term strategy. We believe that such a consideration is a positive sign and a sign of good corporate governance."

When Aurora successfully went public in a backdoor listing at the end of last year, Aurora was in high spirits and said in its prospectus that it would be "divided into three parts" with Waymo and Cruise in the era of self-driving. But the reality is grim, with their share price peaking at $17.77 (122.65 yuan) shortly after listing and falling to $1.83 (12.63 yuan) earlier this summer. It was trading at $2.43 a share in after-hours trading on Friday, with a market capitalization of about $2.9 billion.

Although the share price has risen 32% in the past two days on the news of the sale, the company's share price has fallen 81% this year by Thursday's close. Last month, the company said it would cut costs and delay the delivery of "scalable" driverless truck technology until 2024.

Another strategic option suggested by Urmson in the memo is to consider buying companies in the industry for 150 million (1.035 billion yuan) to $300 million (2.071 billion yuan) in cash and aggressively cutting costs to boost Aurora's balance sheet.

Urmson also offered possible personnel measures, including a hiring freeze, layoffs, aggressive management of underperforming employees, and a deeper restructuring of the company. He also listed cash-saving measures, such as canceling his own equity grant, liquidating corporate donations and suspending lunch.

While the company's leadership is "reluctant to sell at this time," Urmson writes, that could change if persuasive strategic buyers offer competitive offers.

"given our current share price, we should be an attractive target for any company that wants to own self-driving technology," Urmson wrote. "there are only a few potential customers: Apple, Microsoft or other potential first-tier car companies."

02. Burning money + jumping tickets Aurora has a very difficult time in Aurora this year. So far, Aurora has burned about $230 million (1.587 billion yuan) in cash, but the goal of self-driving vans on the road has been postponed to 2024.

▲ Aurora autopilot

"it is not expected that there will be enough traditional financing opportunities to renew the life of the company in the next six months," Urmson wrote. "although we still have plenty of cash, it is important that we try our best to extend the operating time of the company."

Urmson also said that even Aurora could take the company private, as long as it found a partner who could provide $1.5 billion (10.353 billion yuan) in financing. Aurora could also sell its lidar business for 500 million (3.451 billion yuan) to $1 billion (6.902 billion yuan), he said.

The company is also not expected to re-sign its cloud computing contract in the near future, the largest expense after employee costs. The company should consider increasing the annual attrition rate to 10 per cent, which means 150 layoffs by 2022.

Urmson said he could also give up his own non-cash incentives to save $2.4 million (16.5645 million yuan), or cut employees' catering services and save $21 million (140 million yuan). The company is also considering selling a building or its autopilot test road, or issuing discounted shares internally, a move that will raise $25 million (170 million yuan).

03. Life for self-driving companies is not easy again. In 2015-2016, the fastest growing period of self-driving, investors were very generous about this "technology to change human travel", often blowing up tens of millions of dollars in financing. But a huge amount of money went in, but very little was gained.

Google's Waymo can be said to be the "number one" of automated driving, with a peak valuation of $175 billion (1.2 trillion yuan). Now it has only $30 billion (207.056 billion yuan) left.

Cruise, which was originally scheduled to launch its commercial operation in 2019, finally launched its commercial unmanned taxi project this year after the departure of senior executive Ammann and doubts about its commercial landing. But then frequent security incidents and an anonymous letter from employees still put a question mark on their profitability.

Events suggest that autopilot still has a long way to go, but the capital cannot afford to wait, and autopilot companies that rely on capital blood transfusions are likely to have a hard time in the future. However, autopilot is still a revolutionary technology that can change human life, and the giants will not give up, nor will the government. The flow of capital in and out may also help add some momentum to the industry, but before real commercialization, financing difficulties, money burning, less-than-expected commercialization and false propaganda may become the label of all autonomous driving companies.

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