Volvo solves autonomous revenue riddle with package deals

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Wed, 2019-07-10 22:11

STOCKHOLM: Swedish truckmaker AB 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 $150 billion 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’ autonomous solutions
director, told Reuters in an interview.
The truck maker said last month 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 tonne
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 that it would deploy its
self-driving trucks to haul mail between U.S. Postal Service
facilities in Phoenix and Dallas in the southwestern United
States.
Sweden’s Einride is testing its cabinless trucks to haul freight
between a warehouse and a terminal on public roads in Sweden.
TEAMING UP
Carmakers BMW and Daimler this month teamed up to spread the costs
of developing automated driving technology as cooperation 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 and failed to
merge.
Automakers’ investment in autonomous transportation comes as
traditional sales are dented by the economic uncertainty caused by
the U.S.-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 this year and
its trucks order intake has fallen for two consecutive quarters
this year, missing forecasts.
Volvo, which produces trucks under the Mack, Renault and UD Trucks
brands, is facing a push to cooperate with others from China’s
Geely, which became a top shareholder in both Volvo and its main
rival Daimler last year.
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 cooperation
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.

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Source: FS – All-News-Economy
Volvo solves autonomous revenue riddle with package deals