After some preliminary bullish bulletins and inflated expectations relating to rollout timing, autonomous truck gamers have modified their view over the previous few years on possible mid-term achievements. Slower-than-expected know-how progress and questions of safety have delayed business launches. In the end, nevertheless, the business has come a good distance, and plenty of autonomous truck start-ups are near growing and implementing the complete set of capabilities that the autonomous driver requires or are at present fixing the final remaining challenges. The business is now working to show the security capabilities of their know-how and, if all runs easily, driver out operations could be anticipated in 2024.

Whereas driver out is a crucial milestone, it merely marks the start line of the market adoption curve. The general alternative of autonomous trucking is large. The US trucking market is estimated to be price US$800bn. Roland Berger estimates that by the center of the subsequent decade, 20-30% of the on-road freight quantity could be dealt with by autonomous vehicles. The pace of adoption, nevertheless, can be decided by each technological developments and shopper behaviour. Operational challenges and the chance adversity inherent to the trucking business can decelerate adoption regardless of the numerous worth proposition supplied by autonomy. Moreover, whereas there are a number of pilot programmes ongoing the place carriers have partnered with autonomous truck start-ups to deploy the know-how in actual world functions, significant revenues for start-up gamers are probably nonetheless a number of years out.

Investor curiosity cools and extra gamers drop out

The overall calm down of investments within the tech sector over the previous months has additionally affected autonomous truck start-ups. In a excessive rate of interest setting, buyers are shying away from pre-revenue firms, particularly these whose business timelines proceed to be delayed. Determine 1 exhibits the market capitalisation of chosen, publicly traded autonomous truck gamers. TUSimple, Aurora and Embark misplaced over 90% of their market cap since starting of 2022.

Autonomous truck start-ups want vital funding to assist the event of their new know-how. Roland Berger estimates that the event and testing of a Degree 4 autonomous driver system prices about US$2bn. This quantity stays considerably greater than the funding that any autonomous truck start-up has raised thus far. Drying up funding inflows will result in additional shakeout of gamers. Whereas early-stage gamers have failed previously, the business is now starting to see extra superior gamers like Embark winding down operations and promoting their property.

Buyers divert their consideration to confined space functions

Whereas it appears like autonomous truck start-ups are dealing with mounting challenges, there’s a silver lining in all of this. Automation of confined space functions comparable to yard tractors or mining vehicles remains to be attracting buyers. US start-up Outrider develops self-driving yard vehicles that may robotically join and disconnect from trailers. Outrider was capable of safe funding earlier this yr regardless of common discount of funding inflows to the autonomous over-the-road (OTR) truck area.

The general market potential for automated yard tractors is way decrease than for OTR vehicles. In response to Roland Berger estimates, annual gross sales within the yard tractor phase vary between 6,000 and eight,000 vehicles, in comparison with 150,000 vehicles within the OTR phase. Nevertheless, the chance profile of a enterprise making an attempt to automate yard tractors is rather more favoruable than that of a participant aiming to automate the extra complicated use case of unconfined space trucking. The capabilities that an autonomous driver must have when it comes to sensing, route planning, and determination making are rather more restricted in confined areas. Common pace is decrease, decreasing the necessity for long-range notion, and plenty of complicated driving duties which are tough to automate, comparable to high-speed merges onto a freeway, don’t exist. Moreover, yard tractors are working in environments comparable to port terminals which are already extremely automated. Consequently, required investments in growing know-how are decrease, whereas the saving alternatives, that primarily come from eliminating the human driver, are comparable. As an business, confined-area autonomy focuses on comparable know-how whereas total decreasing a lot of the dangers confronted by the OTR trucking business. This may be seen as excessive worth proposition for buyers who proceed to take a position on this area regardless of the present financial headwinds right this moment.

Concerning the authors: Walter Rentzsch is Director and Wilfried Aulbur is Senior Associate at Roland Berger