DC Velocity - September 2018

newsworthy

UBER TECHNOLOGIES INC. IS OUT OF THE AUTON-
omous truck business, at least for the foreseeable future.
But it remains deeply involved in the freight business.

The San Francisco-based ride-hailing firm closed its autonomous truck unit in order to focus the company’s efforts on its self-driving car program, ending a two-year initiative that began in August 2016 when Uber acquired self-driving truck firm Otto for a reported $680 million.

Uber said there was no near-term need to invest time and resources in developing self-driving trucks, and that its Uber Freight brokerage operation, which was unaffected by the news, can stay competitive without the support of autonomous trucks.

Uber did not mention any specific problems making the technology commercially viable. It has been accepted that autonomous cars would be allowed on U.S. roads much sooner than commercial vehicles would because of increased safety concerns surrounding a truck’s immense size and weight. Many observers believed that lawmakers and regulators would never allow the operation of fully autonomous trucks and that the most realistic scenario was an autonomous operation with a human driver accompanying the vehicle.

In Otto, Uber acquired the hardware and software needed to convert commercial motor vehicles to an autonomous operation. However, the company never publicly articulated a long-term vision for the unit. There was speculation that the trucks would eventually be utilized to move loads tendered by the brokerage unit.

In March, an autonomous Uber truck hauled a load about 344 miles between two points in Arizona before the load was transferred to a traditional driver near the California border for the final leg to Southern California. The vehicle was part of the fleet owned by Otto.

An Uber spokeswoman said the company might return
to the autonomous truck segment at some point.

Steve Mitgang, CEO of SmartDrive, a road safety consul-
tancy, said Uber’s withdrawal is a setback but not a death
knell for the development of autonomous truck technolo-
gy. “Uber was obviously a significant player in this space,
but there are a number of other very sizable and reputable
players committing immense resources to make driverless
trucks a reality,” Mitgang said in an e-mail. The absence of
one player “will not likely have a material impact” on the
future of autonomous truck development, he said.

SUBTRACTING AND ADDING

At about the same time, Uber said it would establish its brokerage unit, Uber Freight, as a standalone unit as part of a strategy to double the parent’s investment in the business over the next year. Under the restructuring, Uber Freight will no longer be part of the parent’s Advanced In addition, Uber will close a deal to buy Otto Trucking, one of the two units that Otto has controlled. The unit to be acquired develops technology to support logistics services for companies like Uber Freight, whose mobile app matches driver capacity with shippers’ loads. The other unit, called “Ottomoto,” provided the technology to support autonomous truck operations. That unit was acquired in the deal reached two years ago.

As part of the closing of the Otto Trucking deal, Otto founder Lior Ron will return to run the newly created Uber unit. Ron, who joined Uber after the 2016 acquisition, left the freight unit in March. William Dreigert, who had been interim Uber Freight CEO, will return to the new unit in his former position as head of operations.

The restructuring validates Uber CEO Dara Khosrowshahi’s optimism about the prospects for the Uber Freight business and his decision to prioritize it within the company, the Uber Freight spokeswoman said. The spokeswoman declined to comment on the amount of the doubled investment, nor would she specify how the funds would be used. The parent is still targeting next year for its long-awaited IPO, which is expected to be one of the largest in U.S. history.