UPS Joins Self-Driving Race By Investing In Autonomous Tech Startup TuSimple

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A self-driving TuSimple truck on the road in Arizona.

TuSimple

UPS is jumping into the self-driving vehicle world by investing in TuSimple, a fast-moving developer of robot truck technology that the Atlanta-based shipping giant sees as offering opportunities to boost its on-road safety and efficiency. 

The investment, the first by a major fleet operator into an autonomous truck company, closed this week and gives UPS a minority stake in the San Diego-based startup that also has operations in China. Neither company is disclosing the amount. The new funds follow a $95 million round announced in February that pushed TuSimple’s valuation to $1 billion. It will be used for “our general development efforts to a commercial Level-4 truck solution,” TuSimple CFO Cheng Lu says.

UPS’ first foray into autonomous technology ties it to a company that’s generated revenue for the past year hauling goods with a growing fleet of artificial intelligence-enabled semis in Arizona that are outfitted with computers, digital cameras, radar, laser lidar sensors and proprietary software. Founded by Caltech-trained neuroscientist Xiaodi Hou, who’s also president and CTO, TuSimple is racing to commercialize its technology ahead of competitors that include Alphabet’s Waymo and Silicon Valley startups Embark, Kodiak and Starsky Robotics.

There’s pressure for UPS to deploy advanced technology as the shipping business evolves. Amazon, a big source of UPS’ revenue, this year invested in Aurora, a self-driving startup led by the former head of the Google Self-Driving Car Project that also wants to use its system for delivery vehicles. Companies such as SoftBank-backed Nuro are developing small robotic delivery vehicles a fraction of the size of TuSimple's semis and Waymo recently expanded testing of its automated trucks in Phoenix. It has said logistics will be a big source of future revenue.

The funding deal is also the first by the newly christened UPS Ventures, the delivery company’s Silicon Valley-based investment arm, which had operated as UPS Strategic Enterprise Fund since 1997. 

“We work very closely with our business units when it comes to innovative tech like this,” says Todd Lewis, managing partner for UPS Ventures. “We launched our testing with them a few months back.”

The UPS tie-up comes after TuSimple completed tests with the U.S. Postal Service in May—hauling mail between Phoenix and Dallas—though it began operating daily revenue-generating loads for UPS between Tucson and Phoenix months before that, says Chuck Price, TuSimple’s chief product officer. Neither company previously disclosed that business relationship, and Price wouldn’t share financial terms.

(For more, see Robo-Rigs: The Scientist, The Unicorn And The $700 Billion Race To Create Self-Driving Semi-Trucks from the March 31, 2019, issue of Forbes Magazine.)

Closely held TuSimple is expanding to a 50-truck fleet in Arizona, where it has an engineering base in Tucson. Currently, all TuSimple trucks operate with two technicians in the cab though it aims to operate “driver out” within two years. 

Although Waymo operates a modest robo-taxi service in suburban Phoenix, and companies including GM’s Cruise, Uber and Lyft all plan on-demand autonomous ride services, perfecting the technology to do that in tricky urban settings is taking longer than some advocates anticipated. By contrast, opportunities for AI-enabled trucks operating mainly on less complex highways—especially on long-haul routes where there’s a driver shortage—appear to be on a faster path to commercialization.

In addition to potential cost-savings operating a long-haul truck without a human at the wheel, TuSimple argues that its system can cut operating costs by up to 30% , owing to fuel savings and reduced wear-and-tear on tires, brakes and other components owing to the more precise acceleration and braking its system can provide. 

When UPS connected with TuSimple last year, “the UPS executive expressed skepticism in autonomy being this far along. He said the official UPS belief was that it was at least 15 years out; not even close,” Price says. After that executive and a UPS team “experienced our vehicle and dug into our plans, and saw what we were doing (in Tucson), he changed his mind. He said ‘I was a skeptic. I’m now a believer.’”

Previous investors in TuSimple include Nvidia, Chinese tech firm Sina Corp., Hong Kong’s Composite Capital and U.K. venture firm ZP Capital.

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UPS is jumping into the self-driving vehicle world by investing in TuSimple, a fast-moving developer of robot truck technology that the Atlanta-based shipping giant sees as offering opportunities to boost its on-road safety and efficiency. 

The investment, the first by a major fleet operator into an autonomous truck company, closed this week and gives UPS a minority stake in the San Diego-based startup that also has operations in China. Neither company is disclosing the amount. The new funds follow a $95 million round announced in February that pushed TuSimple’s valuation to $1 billion. It will be used for “our general development efforts to a commercial Level-4 truck solution,” TuSimple CFO Cheng Lu says.

UPS’ first foray into autonomous technology ties it to a company that’s generated revenue for the past year hauling goods with a growing fleet of artificial intelligence-enabled semis in Arizona that are outfitted with computers, digital cameras, radar, laser lidar sensors and proprietary software. Founded by Caltech-trained neuroscientist Xiaodi Hou, who’s also president and CTO, TuSimple is racing to commercialize its technology ahead of competitors that include Alphabet’s Waymo and Silicon Valley startups Embark, Kodiak and Starsky Robotics.

There’s pressure for UPS to deploy advanced technology as the shipping business evolves. Amazon, a big source of UPS’ revenue, this year invested in Aurora, a self-driving startup led by the former head of the Google Self-Driving Car Project that also wants to use its system for delivery vehicles. Companies such as SoftBank-backed Nuro are developing small robotic delivery vehicles a fraction of the size of TuSimple's semis and Waymo recently expanded testing of its automated trucks in Phoenix. It has said logistics will be a big source of future revenue.

The funding deal is also the first by the newly christened UPS Ventures, the delivery company’s Silicon Valley-based investment arm, which had operated as UPS Strategic Enterprise Fund since 1997. 

“We work very closely with our business units when it comes to innovative tech like this,” says Todd Lewis, managing partner for UPS Ventures. “We launched our testing with them a few months back.”

The UPS tie-up comes after TuSimple completed tests with the U.S. Postal Service in May—hauling mail between Phoenix and Dallas—though it began operating daily revenue-generating loads for UPS between Tucson and Phoenix months before that, says Chuck Price, TuSimple’s chief product officer. Neither company previously disclosed that business relationship, and Price wouldn’t share financial terms.

(For more, see Robo-Rigs: The Scientist, The Unicorn And The $700 Billion Race To Create Self-Driving Semi-Trucks from the March 31, 2019, issue of Forbes Magazine.)

Closely held TuSimple is expanding to a 50-truck fleet in Arizona, where it has an engineering base in Tucson. Currently, all TuSimple trucks operate with two technicians in the cab though it aims to operate “driver out” within two years. 

Although Waymo operates a modest robo-taxi service in suburban Phoenix, and companies including GM’s Cruise, Uber and Lyft all plan on-demand autonomous ride services, perfecting the technology to do that in tricky urban settings is taking longer than some advocates anticipated. By contrast, opportunities for AI-enabled trucks operating mainly on less complex highways—especially on long-haul routes where there’s a driver shortage—appear to be on a faster path to commercialization.

In addition to potential cost-savings operating a long-haul truck without a human at the wheel, TuSimple argues that its system can cut operating costs by up to 30% , owing to fuel savings and reduced wear-and-tear on tires, brakes and other components owing to the more precise acceleration and braking its system can provide. 

When UPS connected with TuSimple last year, “the UPS executive expressed skepticism in autonomy being this far along. He said the official UPS belief was that it was at least 15 years out; not even close,” Price says. After that executive and a UPS team “experienced our vehicle and dug into our plans, and saw what we were doing (in Tucson), he changed his mind. He said ‘I was a skeptic. I’m now a believer.’”

Previous investors in TuSimple include Nvidia, Chinese tech firm Sina Corp., Hong Kong’s Composite Capital and U.K. venture firm ZP Capital.

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From Los Angeles, the U.S. capital of cars and congestion, I try to make sense of technology-driven changes reshaping transportation, cities and how we get around. I've ...