A number of automakers have invested in Israeli startups or set up their own development centres in Israel to develop technology for autonomous cars.  Reuters photo by Nir Elias. 

Beijing also a hotspot for development of autonomous cars technology

Engineers who at one time were conscripted into the Israeli military to develop technology for tanks, missiles and computer systems security are now highly sought after by automakers and tech firms as they race to create autonomous cars.

Intel, Samsung, Daimler, Ford GM and German auto supplier Continental have either bought Israeli startups or have set up development centres in Israel.

While inexperience in building cars and distance from auto centres as well as competition from other tech sectors are challenges for investors, Israeli auto tech startups raised almost as much money as similar companies in the United States last year.

Last year Israeli auto tech startups raised $814 million, less than the $1.2 billion raised by US companies, according to data from CB Insights and Start-Up Nation Central.

“A lot of the entrepreneurs are coming out of the Israel Defence Forces and they tend to be older than the traditional Silicon Valley (entrepreneurs),” Ford Executive Chairman Bill Ford Jr. told Reuters.

“They have a lot of judgment and wisdom. Particularly in areas like cybersecurity, there’s tremendous activity coming out of Israel.”

According to Reuters, Israel’s innovation which was often used to create technology for cyber intelligence, wireless sensors, security, location finding and analytics software put companies that hired former Israeli military engineers in a position to challenge Silicon Valley.

Cybersecurity is being developed to ensure autonomous vehicles computers cannot be hacked and radar, sonar, sensors and positioning systems will be deployed to keep the vehicles safely on the road.

Evercore ISI analyst Chris McNally told Reuters that cyber and fraud detection techniques can be found in counterterrorism tools and new developments in optical and sonar software are rooted in missile defense systems.

Testing on an empty highway built by the Israeli government specifically for testing autonomous cars began last month on a Kia Soul equipped with technology from Imagry, a Samsung backed startup.

The small SUV was equipped with cameras, infrared and artificial intelligence.

“Cameras provide the most high resolution information and they are available and commoditized,” Imagry’s chief executive officer (CEO) Adham Ghazali told Reuters. His goal is to produce cheaper technology than lidar which is used by Waymo and GM.

Samsung is also backing another startup company called Innoviz. Omer David Keilaf, CEO of Innoviz, spent seven years in an elite technological unit of the Israeli Defense Forces’ (IDF) Intelligence Corps.

Last month, Innoviz signed a deal with its partner Magna to supply lidar to BMW.

In 2017, Intel spent $15.3 billion on driverless car technology firm Mobileye and moved all its operations in the field to Jerusalem.

“We were not known as a country that provides technology to the automotive industry and suddenly you have more than 500 different startups dealing with … the automotive industry,” Mobileye co-founder Ziv Aviram told Reuters.

And Continental out of Germany, bought cybersecurity company Argus for about $430 million in 2017.  The CEO of Argus, Ofer Ben-Noon, was once a captain in Unit 8200, an Israeli Intelligence Corps unit responsible for collecting signal intelligence (SIGINT) and code decryption.

In 2016, Samsung’s Marman unit bought TowerSec, a cyber company, for $75 million.

According to Reuters, Renault-Nissan-Mitsubishi, VW, Porsche and Honda also have interests in Israel.  “We are going to more here”, Nick Sugimoto, head of Honda Innovations told Reuters.

While the industry has support from the government and private industry, there remain challenges for auto companies working with these startups.

“You don’t have tremendous knowledge about how to take a technology that’s in a nascent state and take it down the path…to automotive grade,” Glen De Vos, chief technology officer of Aptiv told Reuters.  Aptiv is a major automotive supplier developing safety and autonomous driving systems.

De Vos, who is based in Silicon Valley, says the distance can be problematic.  “It’s harder to get there.”

The startups are also having trouble attracting and keeping staff when they have to compete with tech giants like Google or Intel.  According to Israeli government data, there will be a shortage of 10,000 engineers and programmes in the coming decade in the tech sector.

As well, some companies are shifting from other technologies over the autonomous cars.

StoreDot, a company that initially developed a super-fast charger for cellphones has switched to building “flash batteries,” lithium-ion batteries that the company says can charge EVs in a about five minutes.

“Both are big markets but we tend to think the electric vehicle market will be much bigger,” Erez Lorber, chief operating officer of StoreDot told Reuters.

On Tuesday, BP announced an investment of $20 million in StoreDot, a company valued at $750 million by Funderbeam.

The rush to invest in Israeli companies specializing in technology for autonomous vehicles has meant skyrocketing valuations of these companies.  A startup that would have once raised $3 million to $5 million could now now likely get $20 million and set itself up for hundreds of millions in the future.

“There’s always overexcitement as happened with the cybersecurity sector,” Yifat Oron, CEO of Bank Leumi’s tech arm told Reuters. “Maybe it will be corrected a little but we can’t see this happening in the near or mid-term.”

Beijing is also proving to be a hot spot for autonomous cars technology development.  The Chinese government is backing these companies.