Self-driving car startups are turning to state-owned investors for capital as the pandemic accelerates the adoption of autonomous transportation technologies. Altogether, state-owned investors have deployed more than US$3.5 billion of capital into autonomous transportation solutions, from robotaxis to food delivery.

At the weekend, Pony.ai  announced it had raised US$100 million in an extension of its US$267 million series C round which was led by Canadian public pension fund OTPP in November. Brunei Investment Agency (BIA) joined the extension, which brought the company’s total raised to over US$1 billion with a valuation of US$5.3 billion; a 77% increase over last February. Based in Guangzhou, China and Fremont, California, Pony.ai has an autonomous vehicle testing license in Beijing and a robo-taxi operations permit from the California Public Utilities Commission. Pony.ai has a growing number of rivals in the self-driving tech segment, which state-owned investors are investing in.

The SoftBank Vision Fund (SVF) – backed by PIF and Mubadala – has served as the heavyweight investor in the sector. In 2018, the tech venture capital juggernaut invested US$2.25 billion for a 19.6% stake in GM’s self-driving car unit Cruise, based in San Francisco, which was given a road testing permit by the California Department of Motor Vehicles in October. In March 2019, SVF went on to invest US$940 million in autonomous delivery startup Nuro, which aims to deliver freshly cooked food to people’s homes.

With a head start and backing from Google’s owner Alphabet, Waymo is in pole position and has served as a catalyst for a multitude of separate startups and ideas. Abu Dhabi sovereign fund Mubadala and Canadian public pension fund CPP were part of a consortium that invested US$2.25 billion last March. Its self-driving ride-hailing service, called Waymo One, serves thousands of customers in Arizona and has provided “thousands of fully driver-less rides in a high-speed mixed usage market area larger than San Francisco." The firm intends to further develop AI in the transformation of mobility and transportation as its scales up its business, in partnership with Volvo.

In 2018, CPP Investments also invested US$50 million in the Series B Preferred Share financing of Zoox, which also focuses on developing autonomous vehicles, including building and operating a fleet of specially designed robo-taxis. In the same year,

COVID-19 is hastening rapid technological change, providing state-owned investors with long-term horizons plenty of opportunities in disruptive technologies that promise to bring seismic changes to industrial sectors and, in turn, wider society.

Autonomous robotaxis ensure reduced exposure to the virus as well as enabling the continuous operation of fleets, thereby radically reducing downtime and therefore costs. However, autonomous vehicle providers must address safety concerns and the high cost of parts such as sensors.