Volvo earns from driverless technology package deals
Truck maker tests the Volvo Vera with existing customers and bundles extras in the package
Stockholm — Swedish truckmaker Volvo’s first commercial autonomous truck deal shows how it is bundling services to generate revenue from a technology that is years away from wide deployment.
Driverless transportation has been hailed as a transformative revenue opportunity, with the Boston Consulting Group expecting connected high-tech vehicles to generate about $150bn of new profits for the auto sector by 2035.
But regulatory, technological and infrastructure roadblocks stand in the way of deploying fully autonomous vehicles on public roads and the journey is proving long and costly.
Volvo, the world’s second-biggest truckmaker behind Daimler, has decided for now to only deploy driverless trucks in pilots for customers, aiming to perform specific jobs on a limited, repetitive and controlled route, often on enclosed customer sites.
“There’s a lot of uncertainties and that’s why we believe the right way to develop autonomous is with commercial pilots where we partner up with customers, go for real implementations and learn from that,” Sasko Cuklev, Volvo Trucks’s autonomous solutions director, said.
The truck maker said in June that its first commercial autonomous transport package will involve seven trucks transporting limestone for Norway’s Broennoey Kalk AS from a mine to a nearby port, starting this winter.
“We are in the early stages when it comes to implementing autonomous solutions, so we’re trying to learn and we’re open to different setups. But in general, it is more and more talk about services and solutions that is coming into play,” Cuklev said.
The deal with Broennoey bundles together the provision of the autonomous trucks with a virtual driver, control tower system, maintenance, repair and insurance, with Volvo paid per ton transported.
“We see autonomous as more of a complement to today’s business and limited to dedicated specific applications where it really makes sense,” Cuklev said.
He said Volvo was targeting autonomous vehicles for mining operations and hub-to-hub transport on a highway road, or regional hauling over shorter distances such as between ports and warehouses, using its cabinless truck Vera.
Volvo’s Vera and some other commercial vehicles from rivals are experimenting with using self-driving trucks on public roads, often limiting speeds, picking less busy industrial roads or having people in the cabin in case the technology fails.
Nvidia-backed startup TuSimple said in May it would deploy its self-driving trucks to haul mail between US Postal Service facilities in Phoenix and Dallas in the southwestern U S.
Sweden’s Einride is testing its cabinless trucks to haul freight between a warehouse and a terminal on public roads in Sweden.
Carmakers BMW and Daimler teamed up in July to spread the costs of developing automated driving technology as co-operation within the industry becomes more widespread.
Volkswagen and Ford are in the final stage of talks on a strategic alliance to jointly develop self-driving and electric cars, while Renault and Fiat Chrysler Automobiles attempted but failed to merge.
Automakers’s investment in autonomous transportation comes as traditional sales are dented by the economic uncertainty caused by the US-China trade war, with analysts worried that truck cycles might have peaked and margins might fall.
Volvo has forecast lower demand in China and Europe in 2019 and its trucks order intake has fallen for two consecutive quarters , missing forecasts.
Volvo, which produces trucks under the Mack, Renault and UD Trucks brands, is facing a push to co-operate with others from China’s Geely, which became a top shareholder in both Volvo and its main rival Daimler in 2018.
Cuklev declined to comment on the subject, but highlighted the example of Volvo’s recent tie-up with Nvidia to develop artificial intelligence for self-driving trucks as the type of co-operation that Volvo was keen on.
“When it comes to automation we’re open to looking into different partnerships in the entire autonomous area,” Cuklev said.