And that was the analyst’s conclusion even before COVID-19 hit and people were ordered to stay home to prevent its spread. Even as restrictions ease, many former users of ridesharing might be reluctant to share a cab any time soon, whether it has a driver or not. So, autonomous delivery vehicles it is!
Driverless Delivery Vans Face Fewer Hurdles, Less Cost
There are lower technological hurdles and better economics behind driverless delivery vans. Removing the passenger from the equation will only speed up adoption of robo-delivery vans, said Langan who gave an overview of his study in a webinar for the Society of Automotive Analysts. He released his findings on the day that VW closed its deal to invest $2.6 billion in Argo AI, joining Ford in funding Argo’s development of self-driving technology. Argo will take over VW’s self-driving unit in Europe.
Bottom line: Driverless delivery trucks could tap into a $1.5 trillion market opportunity and make it easier to deliver packages than by using people.
The delivery market is already substantial. Commercial vehicles account for only 15 percent of vehicles on the road but 25 percent of miles driven—close to 1 trillion miles today. More importantly, autonomous-vehicle (AV) delivery economics are significantly better than AV rideshare. Despite industry hype, getting the cost of AV rideshare below personal car ownership is surprisingly difficult.
Everybody’s Delivering Something
The industry knows this. While Cruise and GM showed the Origin as a six-person pod, they said there will also be a parcel delivery version. Cruise partnered with DoorDash to test food delivery in January 2019.
Argo’s early testing in this arena has been delivering Domino’s pizza. But Ford has pushed back its plans to launch its self-driving services to 2022, a year later than planned.
Waymo is the leader in the field, has the highest valuation, and logged an impressive amount of test miles, while striking deals with FCA and Jaguar Land Rover for fleet vehicles. Langan ranks GM and Cruise second, followed by the Ford/VW/Argo AI tridium. There are 66 companies with licenses for autonomous testing in California but only half reported miles driven last year and only the leaders clocked more than 10,000 miles in 2019.
No Worries About Messy Passengers
But the potential for delivery goes far beyond pizza. It is a massive ecosystem that needs to get parts from suppliers to assembly plants, then the finished goods must go to distribution centers, then to the retailer, and finally to a household. And all this can be done in a vehicle with no need for driver comforts, seatbelts or airbags. There are no concerns about messy passengers, it is easier to share goods in the same vehicle than it is to pool people, and parcel delivery is more flexible and less time-sensitive than an impatient human standing on the road waiting for a ride
Langan disagrees with industry estimates that autonomous rideshare costs will be 30 cents per mile (high compared to personal vehicles, etc. ). Still, the vehicles are more expensive than personal vehicles and robotaxis need supervisors and other logistics, which can be costly. He does not see a profitable business case. Delivery AVs have a 24 percent decline in costs, giving them the more feasible business case.
And Langan said he expects AV companies will continue to develop technology. Highway driving is easiest to master: the vehicle stays in its lane and follows the car in front, without having to worry about pedestrians or bicycles or garbage trucks. In city driving, geofenced areas are easiest and it is easier still for delivery vans that take the same route each day, although pedestrians and bicyclists become issues, as do challenges such as determining how those vans get loaded, how packages or goods go from the curb to someone’s front door or into their building lobby, who receives the delivery and how items might be secured from potential thieves. But, hey, there’s time to sort all that out, given autonomous vehicles’ continued development and likely distance from prime time.