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Autonomous Delivery Startup Nuro Acquires Equity Stake in Self-driving Truck Startup Ike

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【Summary】California-based autonomous delivery startup Nuro announced on Wednesday that it acquired an equity stake in autonomous truck developer Ike. Ike is focused on developing Class-8 self-driving trucks for the shipping industry, so any tie up will likely include the further development of driverless trucks.

Eric Walz    Dec 23, 2020 4:45 PM PT
Autonomous Delivery Startup Nuro Acquires Equity Stake in Self-driving Truck Startup Ike
Nuro's compact delivery vehicle.

As automakers, tech companies and startups compete to develop self-driving cars, other companies are developing autonomous vehicles designed to carry cargo instead of people. But without a regulatory framework for the deployment of self-driving vehicles carrying humans, the first autonomous vehicles deployed at scale will likely carry groceries, meals or freight.

One company working on the technology is Silicon Valley-based startup Nuro. The company developed a compact autonomous delivery vehicle to carry goods, such as restaurant meals or last-mile deliveries. With its focus on cargo delivery, Nuro announced on Wednesday that it acquired an equity stake in autonomous truck developer Ike.

Ike is focused on developing Class-8 self-driving trucks for the shipping industry, so any tie up will likely include the further development of driverless trucks. 

Ike is building technology to automate the highway transportation portion of freight delivery. Traveling to and from distribution points would still rely on skilled drivers. However Ike would automate just the highway leg of each trip once the trucks leave the depot.

"We look forward to all we'll be able to accomplish together, knowing that our horizon of possible applications has been expanded with the addition of the Ike team and their expertise. And we are thrilled to have them join us in our collective mission," Nuro co-founder and President Dave Ferguson wrote in a blog post.

Ferguson said the decision to acquire an equity stake in Ike was a result of a meeting between the co-founders of each company two and half years ago. 

He and Nuro CEO Jiajun Zhu said they met with Ike's CEO Alden Woodrow, CTO Jur van den Berg and Chief Engineer Nancy Sun to discuss their vision for the potential of self-driving technology that can be deployed in years, rather than decades.

Ferguson said there was a shared vision among the group to develop self-driving technology for moving goods rather than people. Leaders at the two companies also believed in the importance of building the right team to get it done. This led to Nuro licensing its software stack in exchange for an equity stake in Ike.

Ferguson said the two companies have maintained a close relationship ever since, including serving as advisors to one another. Ferguson said his personal connection with Ike CTO Jur dates back over 15 years to when they were PhD students. 

Over the past several years, the Nuro team looked on as Ike developed one of the most rigorous approaches to self-driving development. This safety-first approach, along with the ability to integrate some of Ike's core technology, including Ike's world-class virtual simulation tool, is what led to Nuro acquiring a minority stake in the autonomous trucking startup, Ferguson wrote in his blog post.

"We look forward to all we'll be able to accomplish together, knowing that our horizon of possible applications has been expanded with the addition of the Ike team and their expertise. And we are thrilled to have them join us in our collective mission," Ferguson wrote.

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Silicon Valley-based Nuro, founded in 2016, is one several new startups working on autonomous, last-mile delivery services using tiny vehicles that can navigate without human intervention. 

The company developed a small, fully-electric autonomous delivery vehicle called the R2. The R2 is designed to carry groceries, hot meals, last-mile package deliveries and other goods. 

The R2 delivery vehicle is limited to speeds of 25mph and has a specially designed pedestrian-protecting front end and is programmed with software to make it as safe as possible around pedestrians and other vehicles. It's also more maneuverable in tight places than a full-size vehicle.

Since the R2 is not designed to carry people, it can be engineered and built from the ground up more quickly, Nuro said. 

There are no controls for a driver, such as a steering wheel or pedals. The R2 driverless vehicles do not require seat belts (or seats), airbags, windows or other features required on passenger vehicles. 

Nuro said the vehicle's software is programmed to prioritize humans over its cargo at all times for an added layer of safety.

Nuro Received the First Ever Autonomous Vehicle Deployment Permit From the CA DMV 

Also on Wednesday, Nuro said its received the first ever Autonomous Vehicle Deployment Permit from the CA Department of Motors Vehicles, granting the company permission to launch a commercial autonomous delivery service in California—the first ever in the state.

Nuro will begin delivery service in San Mateo and Santa Clara counties in the new year. For testing purposes, the service will start using a limited number of self-driving Toyota Priuses. Nuro will gradually transition to its full fleet of both autonomous Priuses and R2 vehicles over time.

In April, Nuro announced its was granted a permit from the state of California to deploy autonomous test vehicles on public roads in Silicon Valley without a human backup driver. Nuro received only the second permit issued in California.

The other company with the permit is Alphabet's autonomous driving division Waymo, which spun out of Google's early self-driving car project. 

"The California DMV is a leader in safety standards, and we appreciate their collaboration and safety-first approach to AV regulation," said Ferguson. "Since founding Nuro over four years ago, we've been working towards the day we could launch a delivery service in our home state. Now that we have the permit, we are thrilled to be able to do so, providing our fellow Californians a convenient and affordable way to access the food, beverages, prescription medicines, and other products they need."

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Nuro is also one of the most well funded Silicon Valley startups.

In early November, Nuro announced its raised $500 million in new funding, giving the company a valuation of over $5 billion, as the industry inches closer to commercializing autonomous delivery services.

The $500 million Series C funding round was led by funds and accounts advised by T. Rowe Price Associates, Inc., with participation from new investors including Fidelity Management & Research Company, LLC. and Baillie Gifford. Existing investor SoftBank also participated in the round.

In April 2018, Nuro's launched its first self-driving delivery pilot with grocery chain Kroger. Nuro launched a second grocery delivery pilot in Dec. 2019 with U.S. retailer Walmart.

Nuro also worked with pizza chain Domino's delivering pizza using autonomous vehicles for customers in Houston. The company said that partnering with Domino's marks an important next step in its journey to become the autonomous delivery partner of choice for companies of all kinds.

Now that Nuro has acquired an equity stake in Ike, its delivery partners might include companies that ship goods using Class-8 trucks.

Nuro previously said it envisions "A future where everything comes to you, on-demand, for free."

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