Microsoft is reportedly considering investing $10 million in autonomous vehicle startup Gatik, a move in line with its strategy of supporting companies in the industry rather than launching its own competing product set from scratch.
In this case, Reuters reported that Microsoft is in advanced talks with the self-driving vehicle biz to make the investment, citing people familiar with the discussions.
The $10 million would be part of an investment round that would push Gatik’s value to more than $700 million, with the California-based company agreeing to use Microsoft’s Azure cloud and edge platform in developing autonomous technology for delivery trucks.
The sources noted that the details of the agreement could change.
Gatik, founded in 2017, has already raised $121.6 million over four rounds, including $85 million in August 2021 from a group of 10 investors led by Koch Disruptive Technologies, according to Crunchbase.
A Microsoft spokesperson told The Register the company “doesn’t comment on rumors or speculation.” Gatik has yet to respond to a request for comment. We will update the story when the company responds.
Gatik runs a fleet of light- to medium-duty trucks, focusing on short-haul deliveries between businesses in the retail industry. The trucks run 12 hours a day over routes that have fixed pickup and drop-off points.
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It says it has multiple Fortune 500 companies as customers in both the US and Canada, including Walmart, and in 2021 partnered with Isuzu North America to develop autonomous medium-duty trucks.
There has been a lot of effort behind the self-driving vehicle push in recent years and a host of related technologies being shown off at this week’s CES 2023 show in Las Vegas, though reports say the hype has been tempered by the reality of the challenges in and cost of R&D and safety concerns surrounding the technology.
Tech companies like Google, through its Waymo business, have poured billions of dollars into self-driving technology and Amazon in 2020 bought autonomous vehicle startup Zoox for more than $1.2 billion.
However, in October 2022, Argo AI – a company backed by Ford and Volkswagen – shut down after the two automotive giants decided to shift their financial resources elsewhere, such as to advanced driver assistance systems (ADAS).
In a report about 2022 automotive trends, Gartner analysts noted that the expense involved with proving the effectiveness and safety as well as real-world and simulated testing is making commercialization at scale difficult. Still, they predicted that by 2030, there will be four times the number of Level 4 autonomous robotaxis around the world than there were taxis last year.
“The very high R&D costs involved for robotaxis or Level 4 trucks hinder speed of adoption in terms of coverage, but also in delivering ROI,” Jonathan Davenport, research director at Gartner, wrote. “This is ironic given that one of the main advantages associated with autonomous drive is reducing operational costs of transportation.”
In a blog post in 2019, Microsoft laid out a strategy that steered away from buying self-driving technologies or building its own cars. Instead, the goal is to sell companies in the industry its Azure cloud as well as AI, edge, and Internet of Things services.
The company also has a program to help smaller businesses and startups in the space.
“We partner across the industry,” Sanjay Ravi, general manager of the automotive, mobility, and transportation industry, wrote in the post, noting partnerships with such companies as VW, Audi, LG Electronics, and Linker Networks. “We are not in the business of making vehicles or delivering end mobility as a service offerings.”
In 2021, Microsoft joined GM, Honda, and others in a $2 billion equity investment in Cruise, an autonomous-vehicle subsidiary of GM. Cruise is using Azure services in developing its technologies.
Such investments give Microsoft standing in the self-driving car space, but also brings in business for itself. As part of the investment agreement, Azure became GM’s preferred public cloud provider. ®
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