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It’s Raining Autonomous Truck Partnerships, Hallelujah

There have been many high-profile announcements of partnerships between OEMs and AV developers in recent weeks. But what do these various partnerships actually mean for the players involved, and how might it affect the way the autonomous trucking future plays out?   

It’s been a busy few weeks for companies working on autonomous highway operations. Waymo’s truck initiative, Via, demonstrated their capability to operate in high speeds on highways to a select audience in late March. The invited journalists got to see a baby blue Peterbilt truck drive autonomously down 15 miles of high-way outside of Phoenix, Arizona. The same day, Embark released a video of how one of their trucks (also very blue) managed to identify that the lane was closed due to maintenance work and consequently, planned and carried out a change of lanes. Not to be outdone, Plus (formerly announced their partnership with truck maker IVECO last week to develop automated trucks together for global deployment.

Now hot off the press this week we have the new joint venture announced between Volvo Autonomous Solutions and Aurora where the intention is to deliver Transport-as-a-Service in hub-to-hub operations. The color of the trucks is yet unknown. However, for a bit of background, in 2018 the two companies had a first shot at autonomous trucking and came up with the Pistachio, a very green truck. The partnership came to an end since both companies needed to spend more time on their respective products. Since then Aurora have acquired Blackmore, a leading Lidar developer, and Volvo regrouped and formed Autonomous Solutions to align their business offer with their evolving proposition in safety. So today’s joint venture seems to be a bit of a fresh start, with both companies coming back to the table with increased capabilities, rather than just pouring old wine into new bottles.

Regarding Aurora, their CEO Chris Urmson is now chair of the World Economic Forum’s Global AV Council. In this capacity he hosted a cross-sectorial panel and concluded afterwards that autonomous highway trucking will result in safer traffic, a claim supported by Bosch, without laying off any personnel. The latter claim was taken from a recent report from the US Department of Transportation which states that “employment levels for long-haul truck drivers can largely be offset with natural occupational turnover” and that “automating long-haul trucking will also create short-haul, local delivery jobs”. From a Swedish perspective a similar conclusion was drawn in that there is a need to employ 50,000 new drivers in Sweden and these will be hard to find. Overall, taking the highway into the future seems like a promising prospect.

The competitive landscape of AV truck partnerships:

By now we should be used to reading that such-and-such autonomous stack developer has partnered with this-and-that truck OEM. But apart from broad statements about collaboration, joint development and integration, important details about such partnerships are usually missing from most coverage. Details such as the respective roles and responsibilities of each party, exclusivity arrangements, period of time the partnership is valid for, and perhaps most interestingly, how the potential benefits are to be divided between the parties. Of course, it’s also unrealistic to expect this level of detail to be made public, as they are likely to be considered commercially sensitive. But a closer survey of coverage of the different partnerships mentioned reveals a few illuminating themes:

Most ‘partnerships’ do not appear to be exclusive in nature

Aurora has partnered with both Paccar and Volvo in the US market, representing over 50% of the Class 8 truck market share in the US. While Waymo’s only OEM partnership appears to be with Daimler (and its umbrella of truck brands under ownership), Daimler itself has a majority stake in another autonomous developer Torc. Daimler Truck’s chairman even publicly stated that its new partnership with Waymo is part of their “dual strategy approach” by working with two partners to bring customers different options. Embark may be the only exception here, in that rather than partnering with OEMs, they have chosen to partner directly with carriers and companies with their own large trucking fleets. Whereas TuSimple is partnering with both OEMs (Traton Group and Navistar) and a multitude of carriers.

Specific activities carried out

Aurora probably describes the activities covered in its partnerships in the most detail, stating that its collaboration with PACCAR essentially:

  • Brings their engineering teams together around an accelerated development program to create truly driverless-capable trucks, starting with the Peterbilt 579 and the Kenworth T68
  • Brings together the broader PACCAR and Aurora organizations in the creation of an expansive commercialization plan for the deployment of these trucks at scale over the next several years.

This may suggest that not only is Aurora adapting its software stack to integrate with PACCAR’s vehicle models, but PACCAR could also be adapting their vehicle design to better integrate with Aurora.

Embark also spells out what roles its partners will play in their partnership:

“Carriers, including Werner, will work with Embark to test and refine remote vehicle monitoring, vehicle maintenance procedures, teleoperations, AV dispatching rules, and transfer hub logistics… Anheuser-Busch and other shippers are providing end-customer input on integrating and scaling autonomous trucks in their supply chains. Truck manufacturers, real estate developers and maintenance providers are helping determine what nationwide network of autonomous freight lanes would require.”

Business plans

In most partnerships, the benefit to OEMs appear to be that will be able to sell ‘autonomous ready’ trucks to customers at a premium, including stealing market share from their competitors that are not able to offer this capability built-in. For the autonomous stack developers, their (potentially much bigger) slice of the pie comes in the form of either usage or subscription fees directly to the fleet owners. TuSimple goes as far to say that “Users will pay TuSimple a per-mile, usage-based fee… with an expected payback in less than a year on the additional upfront cost of buying the truck.” Embark also plans to charge a per-mile fee to fleet owners.

In the other cases such as Waymo’s partnership with Daimler, and Aurora’s partnership with PACCAR and Volvo, it is not clear if a similar business model is envisioned. An alternative approach could be for Waymo and Aurora to license their AV technology directly to the OEMs, who would then be responsible for capturing the value from their customers. However, this seems unlikely given that fleet owners using the autonomous functions would want a direct line of communication and relationship with the AV developers in the event of any issues.

Implications for the future jobs landscape:

The shift towards autonomous trucks promises a more sustainable transport system on the highways, from a social, economical and environmental aspect. Cheaper and more reliable operations between hubs will reduce costs and (relative) fuel emissions without causing unemployment and social tensions. In fact, due to automation the net wage per worker and year will increase by $200 or more, according to the report from the US Department of Transportation. The report also raises concerns about the new jobs that are projected to come about. A comparison is that as “the number of postal workers has decreased, the number of package delivery workers has increased due to e-commerce”. In the long run there is a “concern that the new jobs that replace the lost driving jobs might be lower paying, or require skills or geographic locations that are not good matches for the individuals who are left without a driving job”.

The challenge lies in how the shift will affect urban areas. The former highway truckers will find new jobs within urban logistics, which will boom due to rising demands on transportation between hubs and the start/end address (the comparison with fewer letters but more packages is not a bad match). This raises questions about managing congestion, increased air pollution (since even electrified vehicles tear up micro-particles) and the likelihood of more accidents as well as the social aspects of the new jobs. If the net increase is $200 per worker, how is that divided within the work force? If we are to use high-capacity vehicles in cities to reduce the number of operations that will also have an immediate effect on the number of job opportunities. If we instead use off-peak hours for deliveries to avoid congestion it will have an impact on how we transfer goods between customer and driver in a reasonable way. And so on.

Written by Håkan Burden & Bobby Chen,
RISE Mobility & Systems (Mobilitet i transformation) / (Elektromobilitet)