Episode 167 | Autonomous Trucking is a Big Business Opportunity

The Road to Autonomy

Lee White, Founder & President, LM White Consulting joined Grayson Brulte on The Road to Autonomy podcast to discuss why autonomous trucking is a big business opportunity and what the economics of that business will look like when autonomous trucks are operating commercially.

The conversation begins with Lee discussing the current state of the autonomous trucking industry.

We are on track, we are on plan, we are moving forward. – Lee White

The autonomous trucking industry is healthy and the health of the industry is being validated with the continued investments from institutional investors such as T. Rowe Price and Softbank. While economically healthy, the industry is currently under strain from the perceived notion that autonomous trucks and autonomous vehicles are one in the same.

The consistently for the AV trucking operations is a very positive advantage over robo-taxis, and I think the trucking group has to begin to separate itself from this clumping everything together. – Lee White

To truly demonstrate the benefits of autonomous trucking, the industry has to take a hold of the narrative and demonstrate to the public, policymakers, investors and the traditional trucking industry the true benefits of autonomy. Autonomous trucks will lead to lower cost goods (helping to reduce inflation), more productivity, and more robust and secure supply chain.

Daimler Truck is taking the lead on messaging to investors and Wall Street. During their Capital Market Day 2023, Daimler Truck announced that autonomous trucking would be one of the key pillars of their business. By 2027, autonomous trucking will begin to unlock a new high-margin business. By 2030, Daimler Truck is projecting revenue north of €3 billion with EBIT potential north of €1 billion.

To unlock this business Daimler Truck is investing responsibly and managing their capital expenditures. For the first nine months of 2023, Daimler Truck has invested €155 million in “other business activities and corporate items which comprised primarily of operational expenses related to their autonomous driving business”. Up from €139 million for the nine months of 2022, an increase of €16 million year-over-year.

This is a responsible investing strategy that is both prudent and sustainable for Daimler Truck long-term. It’s one that more companies developing autonomous trucks should follow. The model for developing and commercializing autonomous trucks varies widely.

Volvo is taking a slightly different path to autonomous trucking through their transport-as-a-service model where they will own and operate the autonomous trucks.

[Volvo] wants to sell you you transportation as service and that becomes how they sell trucks now. It’s like the airline industry, you don’t buy an airplane engine anymore from GE or Rolls-Royce, you buy time, you get run hours. If that’s the new model, that will be very successful. – Lee White

As we head into the holiday season with a slowing economy and consumers deprioritizing spending on physical goods and prioritizing spending on experiences, the freight industry will have to adapt to the changing consumer spending patterns. The slowdown in the freight market has been ongoing for sometime and YELLOW, a 100 year-old LTL carrier was a casualty of market conditions and union negotiations, as the company filed for voluntary Chapter 11 petitions on August 6th, 2023.

97% of all trucking companies have 20 or less trucks. There is going to be a lot of them that are right on the edge. – Lee White

Wrapping up the conversation, Lee and Grayson discuss the impact that California’s zero-emissions trucks regulation will have on the trucking market.

Recorded on Thursday, November 9, 2023

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