Uber is starting its autonomous vehicle tests with the Volvo XC90 in the US, and those two companies announced plans for future vehicle development in the autonomous space. Additionally, Uber announced that it has purchased Otto, a start-up focused on developing autonomous drive for commercial vehicles.
Significance: Uber has announced several major moves toward mobility as service, including a significant, long-term partnership with Volvo and the acquisition of an automated technology CV start-up called Otto. Volvo and Uber will continue to develop autonomous technology under a USD300-million project; ultimately, Volvo will provide autonomous cars for Uber service.
Implications: Uber had signalled its intent to enter the autonomous vehicle space several times, looking to develop its ride hailing service into a more robust mobility service. Autonomy enables the company to take the driver out of the equation, reducing cost and eliminating some of the safety and security criticisms in its earlier days.
Outlook: The relationship with Volvo should benefit both Uber and Volvo, and is likely to help speed up autonomous development for both. Uber's purchase of Otto signals the company's interest in exploring mobility of goods as well as people – a logical evolution.
Volvo and Uber have announced plans to "join forces to develop autonomous cars," according to a statement from Volvo. Further details were filtered out through various media interviews that Uber's CEO Travis Kalanick, along with Uber's plans for its recently acquired commercial truck automated technology company, Otto.
According to a Volvo statement, the two companies have agreed to establish a joint project to develop new base vehicles that will be able to "incorporate the latest developments in AD [automated driving] technologies, up to and including fully autonomous driverless cars." The vehicle will be manufactured by Volvo, and then purchased from Volvo by Uber. Although the split between the companies was not disclosed, the total contribution to the project between the two is USD300 million. The statement did not give a timeframe for when the vehicles would come to market, but media reports have cited sources indicating that it will arrive by 2021.
As well as selling cars to Uber, Volvo will use the same base vehicle for the next stage of its Volvo autonomous car strategies. According to the statement, Uber will add its own self-developed autonomous driving systems to the Volvo base vehicle. Volvo will use the same base vehicle to create a Volvo autonomous car, but will use Volvo's autonomous technology. This new base vehicle will be developed on Volvo Cars' Scalable Production Architecture (SPA) – this is currently used on the XC90, S90 and V90. Volvo notes that the architecture was prepared from the beginning for the latest autonomous drive technologies and next-generation electrification and connectivity developments – which Volvo notes attracted Uber to their project. Engineers from both companies will work in close collaboration; Volvo notes that the project will add to the scalability of the SPA platform, including all necessary safety, redundancy and new features required to have autonomous vehicles on the road.
Of the alliance, Hakan Samuelsson, president and CEO of Volvo Cars said in the statement, "This alliance places Volvo at the heart of the current technological revolution in the automotive industry." Uber's CEO said, "By combining the capabilities of Uber and Volvo we will get to the future faster, together."
Separate from the formal announcement, Kalanick spoke with Bloomberg and Reuters about other developments for Uber. Speaking to Bloomberg, Kalanick discussed plans to begin allowing Uber users to summon self-driving cars from their phones by the end of August 2016. These vehicles will be Volvo XC90s, equipped with Uber's current level of autonomous vehicle development. Volvo provided photographs of the vehicles, which clearly have sensors on the roof executed in a far more elegant manner than the current Google test Lexus and Toyota products, or than Ford's test fleet of autonomous Ford Fusions.
The Uber test fleet will operate in Pittsburgh (Pennsylvania, United States), where the company has set up its research and development operations for autonomous driving. For now, these vehicles will be supervised by humans in the driver's seat. Along with the LiDAR sensors, the vehicles use cameras, lasers, radar and GPS receivers. Bloomberg reports that Volvo has delivered a "handful" of the XC90s for the project, with 100 due by the end of 2016.
For the Pittsburgh test, customers will be paired with driverless cars at random. Those getting the driverless cars will have a free trip for now. Kalanick believes that prices in the long run – when its vehicles do not need drivers who are paid for their service – will fall to the point that the per-mile cost of travel will be cheaper in an Uber than in a private car, even for a long trip in a rural area.
Regarding the acquisition of Otto, that company's technology so far is focused on an automated driver assist that can steer a big rig on the highway, theoretically allowing a long-haul truck driver to perhaps nap in certain situations; the system is not fully autonomous at the moment. Bloomberg reports that Uber is interested in using elements of the technology for its robot livery cabs and to start an Uber-like service for long-haul trucking in the US. Otto's founding members came from Google, reportedly because they were interested in deploying technology early. While Uber confirmed the Otto deal, it declined to disclose terms. An interesting element of the deal is reported to be that Otto employees would receive 20% of any profits Uber earns from building an autonomous trucking business.
Kalanick said part of his interest in Otto and rapidly advancing the autonomous driving technology is driven by Google's plans to get into ride-sharing. "The minute it was clear to us that our friends in Mountain View were going to be getting in the ride-sharing space, we needed to make sure there is an alternative [self-driving car]. Because if there is not, we're not going to have any business… [developing an autonomous vehicle] is basically existential for us," he told Bloomberg.
As demonstrated by the arrangement with Volvo, Kalanick told the news outlet that Uber has no intention of producing vehicles. It prefers to make deals with automakers and build autonomous kits for different models. This also suggests that Uber's interest is in providing transportation, and that there is not near-term interest in being a provider of privately owned autonomous cars.
While Google has logged many more millions of miles test-driving autonomous cars than Uber, Kalanick expects Uber can use the data collected from its app to quickly improve self-driving mapping and navigation systems. Where Google has to do its own driving and data collection, Uber has data from drivers and riders logging about 100 million miles per day. "Nobody has set up software that can reliably drive a car safety without a human. We are focusing on that," Kalanick said.
Uber's current test-car setup is for a driver to be with his fingers on the wheel, ready to take over. A co-pilot takes notes from the front passenger seat. Everything that happens is recorded by cameras inside and outside the vehicle. The test cars are equipped with tablet computers in the back to explain the situation to the passenger. "The goal is to wean us off having drivers in the car, so we don't want the public talking to our safety drivers," Uber engineering director Raffi Krikorian told Bloomberg. Krikorian also said that while the existing Uber test fleet has not had any accidents yet, it will happen. "We're interacting with reality every day. It's coming."
Outlook and implications
The relationship with Volvo should benefit both Uber and Volvo, and is likely to help speed up autonomous development for both. Uber's purchase of Otto signals the company's interest in exploring mobility of goods as well as people – a logical evolution. Most significantly, Uber's recent announcements underscore the aggressiveness in which the company is attacking autonomous development, and the scope of where it intends to play in the mobility space. While Volvo can be a very strong partner for Uber, the subsequent news of the Otto acquisition indicates that Uber's interests include mobility of goods as well as people.
The Volvo relationship also, as the statement noted, ushers in a new type of relationship between automakers and technology companies; it is also in some contrast to Ford's announcement of going ahead with developing an autonomous vehicle by 2021 without having fully identified the business model that will support it. Volvo is a promising fit for Uber, given Volvo's history with ADAS and autonomous research, premium positioning in the market with upscale products, smaller size and nimble behaviour, and potential downstream access to the China market, via Volvo's parent Geely. On the downside, Volvo products are relatively expensive. Although Uber loses the cost of a driver, the vehicle cost goes up. Uber's CEO comments indicate that he believes this solution will still be cheaper per mile than a privately owned car, eventually – but that statement does allow for the fact that a more luxurious or well-appointed autonomous Uber would bear a higher fare than a less expensive car. Additionally, Uber's intent to work with other automakers (it is already using Ford Fusions for test cars) suggests its future autonomous ride-hailing fleet may include vehicles with a variety of sizes and amenities.
Volvo gets to share some of the cost of developing systems it is already working on, as well as leveraging Uber's aggressive approach and partnership to help speed its own development and time to market. As Uber will then use Volvo cars in service, Volvo gets some vehicle sales – and the chance to expose its cars to people who may use Uber but also own a private car. Volvo's image for providing technology and cutting-edge mobility services is enhanced, and it's image for technology and safety was already strong to begin with. This move is consistent with what the Volvo brand, and its focus on safety and environmental concerns, would be expected to do and aligns nicely for them. They were first to market with the automatic braking and have been aggressive in developing technology aimed at reducing accidents, and bullish on automated tech.
The acquisition of Otto signals the commercial side of Uber's plans. Although the topic of ride-hailing and autonomous vehicles has been at the forefront, the opportunity for reducing the costs of moving goods and improving the safety of these vehicles on the road is significant – in the medium term, perhaps more significant than the potential for moving people. However, the Otto technology as it stands is not fully autonomous and will need further development to reach that benchmark.
Additionally, that these programmes are advancing so rapidly puts pressure on the regulatory agencies and environment to define its autonomous rules and restrictions as soon as possible.
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