Why Apple wants to buy a self-driving startup that ran tests in North Texas

Apple is working on a deal to acquire Drive.ai, a self-driving startup that has performed pilot runs in Frisco and Arlington, according to a report from The Information.

The tech giant is angling for the startup’s engineering talent in an effort to improve its own autonomous driving system. Apple’s autonomous car effort, Project Titan, laid off more than 200 workers in January, according to CNBC.

"One of the largest companies in the world trying to get access to Drive.ai's engineering is validation of the efforts that Frisco and Arlington made to step up and work productively with these companies," said Thomas Bamonte, senior program manager for automated vehicles at the North Central Texas Council of Governments.

Drive.ai was founded in 2015 at Stanford University and uses artificial intelligence and machine learning to communicate with other drivers and pedestrians. It counted more than 100 engineers in February.

The startup began looking for potential buyers back in February, The Information reported at the time.

Drive.ai has raised about $77 million in funding since its founding, and was valued at about $200 million in 2017, according to Pitchbook data.

"We believe the potential acquisition price would be below their last $200M valuation," Gene Munster, a veteran Apple analyst at Loup Ventures, wrote in a research note. "We do not expect a consumer product or service from Apple for 4+ years."

Drive.ai deployed its self-driving passenger vehicles in Frisco in May 2018. The route connected Hall Park, an office park, and The Star, where the Dallas Cowboys are headquartered. It was the first time the technology was used in Texas.

Frisco chose not to continue its relationship with the company after the six-month trial period, noting its high price tag.

Drive.ai moved its test runs to Arlington last fall. Arlington signed a one-year contract for three to five vans to operate in its entertainment district. The number later increased to seven.

Arlington's partnership with the startup officially ended May 31, the city said. Drive.ai reached out to Arlington in early May about ending the program. The city initially paid more than $434,000 for the program, with help from a $343,000 federal grant.

Part of that total has been refunded by Drive.ai, city spokeswoman Susan Shrock said Friday. The service was free to passengers, who took more than 760 trips in the city between August 2018 and May 2019.

In 2017, Gov. Greg Abbott signed into a law a bill that regulated autonomous vehicles for the first time in Texas. The law requires self-driven cars to follow traffic laws and adhere to registration and title laws.

The legislation's lack of discrimination between autonomous and person-driven vehicles was a catalyst for Drive.ai's decision to locate testing in Texas, Bamonte said. Milo, a shuttle service, was tested in Arlington for a year before Drive.ai arrived there.

Bamonte said the prospects are good that Dallas-Fort Worth remains at the forefront of autonomous vehicle development.

"There continues to be strong industry interest in North Texas as a place to develop and deploy autonomous vehicles," he said.

Neither Apple nor Drive.ai has confirmed the deal discussions.