A leak from within Microsoft has confidentially revealed to Reuters that the company is set to invest $10 million dollars into a California-based autonomous driving start-up.
Gatik, the start-up in question, are developing autonomous trucks optimised for business-to-business logistics short and medium-haul logistics for the retail industry. Microsoft’s $10 million investment is part of the start-up's most recent funding round which values them at $700 million.
In exchange for the investment, Gatik will utilise Microsoft’s cloud and edge computing platform Azure to help develop their autonomous vehicles and run logistics once operational.
Microsoft and Gatik declined to comment when approached by Reuters.
The investment is another sign that autonomous driving has the potential to fundamentally alter the trucking sector.
This isn’t Microsoft’s first venture into the autonomous sector. In January 2021 they invested in General Motors-owned Cruise which is focusing on robo-taxis. The company is valued at $30 billion.
Gatik already operates full driverless commercial delivery services for Walmart and Loblaw Companies Ltd. For these companies, short-haul deliveries in Arkansas and Ontario have already been changed by the technology and with lower long-term operational costs it is hoped the industry can become more efficient and cost-friendly.
The investment confirms that Microsoft is unlikely to launch its own competing brand in the sector. Instead, this investment confirms the strategy - initially laid out in 2019 - to support the growth of start-ups within the industry. In this way, Microsoft both invests in autonomous trucking and creates widespread usage of their Azure cloud computing services, integrating them into the industry.
Sanjay Ravi General Manager of Automotive, Mobility & Transportation at Microsoft emphasised back in 2019 that “we are not in the business of making vehicles” but rather that they aim to “partner across the industry.”
It is yet another sign that big businesses are betting on the value of autonomous trucking. Autonomation has the ability to solve some major challenges in the industry.
Most pressingly, there are significant labor shortages affecting delivery at present. It is estimated the industry is 80,000 drivers short of requirements and this number could rise to 160,000 by 2030 according to estimates. In the EU the situation is worse, with an estimated shortage of 400,000 drivers.
In the short-term autonomous vehicles are still expected to require drivers to operate the final stages of a journey, especially in built-up areas. At present, drivers can be away for weeks at a time as they complete cross-country trips. Long-haul autonomous journeys with drivers taking over in the final stages could make the system more efficient and increase the quality of life for drivers. Long term, automation offers the prospect of 600-to-1,200-mile journeys non-stop, a journey longer than any human driver could ever legally complete. This could save both time and money.
Further, by some estimates, the total cost of ownership for long-haul trucking could drop by up to 30% due to efficiency and labour savings. It is little surprise then that Google, through Waymo, has put billions into self-driving technology while Amazon recently purchased the start-up Zoox for $1.2 billion.
However, do not expect Microsoft’s investment to precipitate an immediate transformation of the industry. There are still significant challenges to be overcome.
These challenges were underlined by the exit of two major players in 2022. Ford and VW have abandoned their pursuit of self-driving taxis, arguing it is simply too challenging to create commercially viable self-driving taxis. Executives went so far as to say it would be harder to make the project viable than to put a man on the moon. Instead, they’re focusing their attention on advanced driver assistance systems to be integrated into their main product development lines.
The tests required to prove the effectiveness and safety of the system ultimately increase costs to the point where commercialisation at scale becomes an economic challenge.
While operational costs are expected to be low once the initial breakthroughs are made, the research and development costs in the industry remain incredibly high and are likely to delay an immediate transformation in the US logistics industry.