Amid economic uncertaintyTight capital markets, cautious investors, and consolidation in the nascent autonomous vehicle industry, Aurora Innovation continues to make progress toward its goal of commercializing autonomous trucks by 2024, setting benchmarks and milestones along the way.
It even managed to rack up a few wins last year, including launching or expanding pilot programs with FedEx, Ryder, Schneider and Uber Freight. Most recently, Aurora announced that its autonomous driving system is “full-featured,” industry jargon meaning the technology has all the capabilities needed to autonomously haul cargo on public roads. And it deployed the first of its “commercial-ready” autonomous shipping terminals in Palmer, Texas—necessary infrastructure if the company’s trucks are to be on the road 24/7.
Three years ago, it wasn’t so clear if Aurora would survive his ambitious and risky moves.
In late 2020, Uber sold its Uber ATG autonomous driving unit to Aurora in a complex deal that would boost the startup’s valuation to $10 billion alongside its autonomy efforts, while also giving Uber a 26-stake. % in the company.
The settlement freed Uber from what had been a troubled development path, including a 2017 lawsuit by Waymo for trade secret theft and patent infringement (which Uber settled in 2018), as well as the fatal 2018 accident involving a Uber ATG autonomous test vehicle. But while Aurora gained talented engineers, it also faced the complicated process of integrating some 1,200 former Uber ATG employees into its operations.
Six months later, Aurora would make another leap: this time into the public markets through a merger with a special-purpose acquisition company, an increasingly fraught path that has stymied many other auto startups. Aurora’s stock has suffered along with other mobility SPACs; its share price debuted on November 4, 2021 at $11.25 per share. Aurora shares have fallen 85% since then and were trading Monday at $1.46 a share.
“I think there’s kind of a better house in a bad neighborhood feeling. That there are many things that may not go so well in this space, right? Some very public failures and backstabbing,” said co-founder and CEO Chris Urmson in a recent interview. “But, you know, I think that’s short term. A short-term issue because as we continue to demonstrate progress and execution and the fact that we made strategic bets years ago that are paying off, right? That we hope that’s recognized and, you know, things will move on.”
Aurora now faces another batch of challenges as it moves toward commercialization, from reassuring shareholders and its growing list of partners to overcoming regulatory hurdles in California and raising more money.
And despite that “full feature” achievement, Aurora still has a lot of testing to do, including ramping up to haul 100 loads a week between Dallas and Houston by the end of this year.
The company has more than 30 trucks on the highway in Texas today hauling goods with more than 50 trips a week. To date, the company’s trucks have traveled more than 400,000 miles and hauled 20 million pounds of cargo for FedEx, Uber Freight, Werner and Schneider.
If all goes to plan, Aurora will roll out its self-driving system called Driver commercially in Texas, with no human supervision on board, by the end of 2024.
According to Urmson, his company’s autonomy technology will solve what he calls a “systemic problem” in the US supply chain: “There aren’t enough people willing to drive trucks. We are missing about 80,000. We expect to be short about 150,000 by the end of the decade.”
The trucking industry also suffers from a whopping 90% turnover rate, and its workers must meet federal limits of 11 hours per day behind the wheel.
Urmson says the Aurora driver should be able to keep a truck moving for about 20 hours on an average day and that, plus the associated fuel savings and reduced insurance costs due to safer driving, theoretically means doubling revenue per truck for a fleet operator.
“Getting from Houston to Los Angeles, for example, takes about three days by truck today, due to the 11-hour service limitation. The Aurora Driver should be able to make that trip in 24 hours,” Urmson said.
Regulatory speed bumps
Those increased efficiencies and subsequent cost reduction are crucial to the attractiveness of Aurora’s technology to the trucking industry. But there’s one ugly fly that buzzes menacingly around the soup: California’s AB-316. If passed, this bill would require human truck operators within the state of California and could initiate similar legislation elsewhere.
While Urmson hopes that California will “see the economic and safety benefits” of autonomous transportation and allow driverless operation, Aurora is prepared for an eventuality where it becomes law: “It will mean helping our customers move cargo between Arizona and the East Coast,” Urmson said.
In other words: there is no business in California. If policies like this gain momentum, that trend could pose a threat to Aurora’s business plan.
“It certainly would be if we ended up with some kind of checkerboard in the United States,” Urmson said. “But I think in practice that’s unlikely.”
The Uber ATG boost
For now, Aurora’s main goals are to validate the functionality of its controller within the state of Texas and to do everything possible to reduce costs. Urmson told TechCrunch that the ATG acquisition has helped on both fronts.
With ATG, Aurora went from 600 to 1,800 employees “overnight,” and Urmson says they are still operating with around 1,700. While some Uber ATG employees chose to leave after the deal closed, Urmson he said none were fired: “Those who want to be here are, and that’s really all we can hope for, right?”
At this point, the teams are well integrated, according to Urmson, but it was a somewhat painful process.
“We were very deferential to the culture of both sides. And I think that just created confusion,” Urmson said, with conflicting lines of information and duplicate efforts. “Like any organization, there are pockets of challenges, but I think, again, those people who were united in the mission of let’s get the cars on the road, let’s do something that’s going to change the world, they’re a great fit.”
The deal with Uber ATG also helped Aurora become more efficient and reduce costs with the goal of expanding the company’s runway in the run-up to commercialization. For example, Urmson said ATG’s cloud computing batch processing was much more efficient than the way Aurora previously handled distributed tasks. “As you can imagine, for all of our ML (machine learning) stuff, all of our testing and simulation, there’s a lot of cloud orchestration that happens,” Urmson said.
With ATG’s batch process, Aurora’s distributed systems team was able to take disparate cloud requests and bundle them into fewer, larger requests, saving time and reducing costs. “That’s been really powerful and it’s at the heart of what we use today,” Urmson said, estimating that the cost savings there alone are in the “tens of millions of dollars.”
On the functional side, ATG’s offline Simultaneous Localization and Mapping (SLAM) procedure makes Aurora generate high-resolution maps more efficiently. ATG’s sample-based motion planning has been integrated to assist the Aurora driver in emergency or near-collision situations. The behavior of the Aurora Driver in construction zones is also derived from the ATG algorithms.
All of this is included in the release of Aurora Driver Beta 6.0, which “introduced the final driving capabilities needed to commercially transport cargo without vehicle operators,” according to Aurora. That commercial launch, Urmson says, is still on target for next year, and those cost-cutting measures have ensured that Aurora will have enough cash to see the company through mid-2024.
More Cash, More Track
Aurora is now focused on turning all of those pilot programs into long-term customers. The company will hold its first customer summit in late April in Dallas, an event that will bring together its pilot customers and partners to discuss next steps toward commercial launch, according to the company.
However, there is still another increase in the plans. On April 6, Aurora submitted a proposed mixed platform offering to raise $350 million.
“We have not been shy about the fact that we may need to raise additional capital in the future,” an Aurora spokesperson told TechCrunch when asked about the filing. “This is a standard presentation that gives Aurora the flexibility to raise funds at a future date, but it is not a sign that we intend to raise funds imminently.”
Meanwhile, Urmson said he is focused on de-risking the business.
“We are going to wait for the right time and the right partners. What we see is that, as a company, we look at these milestones and our execution against them, and we see them as important times to de-risk our business,” Urmson said.
Reducing risk and inspiring confidence is now key, particularly in the wake of widespread industry-wide consolidation that has drawn caution from some investors.
The abrupt termination of Argo AI last year has left many questioning the future of autonomy as a business. Meanwhile, Alphabet’s self-driving unit Waymo reportedly wrapped up its own trucking effort, Waymo Via, in January. (Urmson previously led Google’s former self-driving project.)
“I think one of the first really big decisions we made as a company was to be independent,” Urmson said, referring to the funding of Argo AI by Ford and Volkswagen. “As a company, we are on a mission to deliver the benefits of autonomous driving technology safely, quickly and widely,” he said. “We work with amazing partners, but for none of them is that their mission.”
For Urmson, that mismatch between Argo’s quest for autonomy and its corporate parents’ need for profitability was what ultimately sealed Argo’s fate during difficult economic times.
Until things get better, Urmson continues to stress the importance of frugality in his team: “In each of our hands, we have a section that we call ‘Every Little Thing Matters’ and we highlight places where teams across the company have saved thousands to millions of dollars for not doing something or for finding a less expensive way to do it. I think it’s a muscle that will serve us well, even when economic times improve.”