Carriers and other stakeholders have helped fuel autonomous technology — even as the developing space continues to face regulatory challenges and undergo further testing and pilots to prove itself.
Despite the uncertainties, the potential upside of the technology has brought major carriers to the scene, where driverless trucks could bring long-term savings and boost fleet utilization. Trucking firms have partnered with self-driving companies that are seeking to turn testing into reality.
But it's something that Tom Narayan, RBC Capital’s Global Autos lead equity analyst, likened to a moonshot investment.
Investment skyrockets, plunges as carriers aid efforts
U.S. Xpress Enterprises knows from experience.
In 2020, the carrier invested $5 million in the self-driving tech company TuSimple. Following an IPO, the investment nearly tripled in value, and U.S. Xpress’ stock in the startup was later worth more than quadruple its original value for a brief time.
But after a nosedive in value in 2022, the stock lingered around $2 and $1 per share in 2023, even becoming less than that for a few days in May. U.S. Xpress reported last month the fair market value of the investment was $500,000.
Still, the successful implement of autonomous trucking could radically transform an industry that frequently wrestles with turnover, driver regulations such as Hours of Service and more.
“Autonomous driving technologies could reduce the total cost of ownership (TCO) of long-haul trucking by more than 30% through labor savings and driving efficiency gains,” according to a joint report by the Boston Consulting Group and self-driving firm Kodiak Robotics published last year. “Because trucks would no longer have to sit idle while their drivers rest due to shift limits, vehicle utilization could more than double, dramatically increasing productivity.”
These types of investments also allow carriers and OEMs to not miss out, where competitors could benefit from the potential gains.
“If they can see under the hood and see how it works, you know, they're there. They're working closely with these partners,” said Narayan, RBC Capital's Global Autos lead equity analyst. “It's in their best interests.”
Self-driving tech companies hit financial hardships
While the amount of capital might be paltry to longstanding businesses like OEMs, the investments help fuel startup ideas and are incredibly valuable for smaller tech companies, Narayan said. Often it’s not the idea that brings a startup to demise but its level of funding.
But multiple firms have found themselves in need of cash and needing to restructure or exit the market. That comes as profits have faltered in recent quarters from a boon in demand and moved away from low interest rates during the pandemic.
In a similar move, platooning tech developer Locomation sold most of its assets this year, including intellectual property, software and vehicles.
While the sale of Pittsburgh-based Locomation was unfortunate to see for partnering carrier Oklahoma-based Stevens Trucking, Chief Strategy Officer Cole Stevens said the carrier remains undeterred from its larger goals.
“We never have all of our eggs in one basket,” Stevens wrote. “We will definitely continue our journey down the AV path.”