Robotic transportation leapt forward this week.
Uber jumped into autonomous trucking by purchasing autonomous truck startup Otto and announcing it will have self-driving cars transporting passengers in Pittsburgh in the coming weeks.
Ford, meanwhile, said it would have a fully autonomous vehicle in service with a ride hailing service by 2021.
Here’s what analysts at Morgan Stanley Research, the big investment house, are saying about the latest developments in self-driving trucks and cars.
Uber’s acquisition of Otto — reportedly for $680 million — represents a “powerful validation of the potential for intelligent trucks,” said Ravi Shanker, Morgan’s freight transportation analyst.
Shanker believes that advanced technology, including autonomous driving systems, platooning and the eventual electrification of trucking will offer carriers up to a 75 percent reduction in costs. Carriers will be able to run trucks for longer periods without having to park for driver rest periods, providing significant productivity gains.
“The fact that new entrants from Silicon Valley are targeting what has been a historically low-margin, highly fragmented, highly cyclical industry is testament to the transformative power of intelligent trucks in our view and is a parallel to what has been playing out in the passenger car industry in the past few years” Shanker wrote in a report to investors Friday.
One of the factors that gives the deal credibility is that Otto, a San Francisco company with just 90 employees, was co-founded by Anthony Levandowski, Shanker said. Levandowski was formerly part of Google’s autonomous car program and one of the “foremost authorities” on autonomous vehicles, the analyst said.
This interest in the industry by tech companies and new entrants represents a threat to existing trucking carriers, which cannot sit back and wait for the potential benefits to materialize, Shanker said.
There is a low barrier to entry in trucking, Shanker said, and if the existing “carriers are not looking over their shoulders, they could be quickly overtaken.”
Otto, for example, claims to “rethink transportation” by developing self-driving trucks as well as creating a digital load-matching platform for truckers and freight.
Electric car maker Tesla Motors presents another threat. Tesla Chief Executive Elon Musk announced plans for an electric semi-truck last month.
That “could also be coupled with a fleet-management-like service, potentially making Tesla the industry’s first vertically integrated” truck manufacturer and carrier, Shanker said.
“The trucking industry will have to wade through a very challenging macro in the near-term, without taking their eyes off the long-term prize,” he said.
Uber’s deal to jointly invest $300 million with Volvo to develop self-driving technology and to quickly launch rides in autonomous vehicles represents another crucial step forward toward robotic driving, said Adam Jonas, Morgan’s auto industry analyst.
The agreement will start to put the public in self-driving cars, “an important hurdle to winning over the public, local government and regulatory bodies,” Jonas said.
Moreover, the volume of miles Uber piles up daily “offers unique advantages for the required machine learning of an autonomous car development,” he said.
Google has accumulated 1.7 million miles of autonomous driving in its test vehicle program but Uber drivers log approximately 100 million miles per day.
“While practically none of these miles are fully autonomous today,” Jonas wrote in his investor report, “we just point out the scale of experience that can accelerate the development of the AI, mapping and learning for autonomous cars. Uber logs as many miles in 24 minutes as Google's autonomous cars have logged in their existence.”
And just as Shanker sees powerful economic forces pushing the development of self-driving trucks, Jonas sees economic advantages to autonomous ride hailing.
“Roughly one half of the cost of a ride sharing trip is the cost of the human driver,” he said. “One of the keys to expanding affordability, safety, access and utilization of shared mobility services is to substitute the responsibilities of the human operator over time.”
Ford Motor Co. is clearly thinking about this.
Earlier this week Ford Chief Executive Mark Fields said the Dearborn, Mich., automaker will have autonomous cars — without steering wheels or other driver controls — ready for service in five years.
Fields said Ford will double the size of its Palo Alto, Calif., research center and invest in Velodyne, a company that makes the light detection and ranging, or lidar, sensors used by autonomous vehicles to paint a digital picture of their surroundings. Ford also purchased Saips, an Israeli computer vision and machine learning company.
Just about every other automaker is going to make the similar moves over the next year, Jonas said.
The Ford announcements were designed to demonstrate that the automaker is becoming a technology company and attractive provider of engineering employment.
“There is at least a perception in the market that all the cool kids are going to places like Uber, Google, Tesla or China,” Jonas said.