How to Lease an Autonomous Delivery Van

Something happened on the way to robotaxis taking over the world. The timeline to transport people without a human driver, particularly outside of geo-fenced, low-speed environments, has seemingly elongated. This interminably complex endeavor involves layers of caution as regulators, legislators, manufacturers, and technologists work together to make sure human cargo — and humans in these vehicles’ paths — are protected.

On the other hand, cargo-only deliveries reduce in-vehicle human safety concerns and are a more palatable first step on the path to full autonomy. “Every new means of transport started with freight,” said Daniel Laury, CEO of Udelv, an autonomous delivery service. “It’s always been safer to move goods than people.”

Laury delivered these remarks at the Autonomous Vehicles Silicon Valley Conference, which convened Feb. 26-28 at the Pullman Hotel, San Francisco Bay. 

The government recognizes this paradigm: This year, autonomous robotics company Nuro received USDOT regulatory exemption for R2, its Zero Occupant Vehicle (ZOV), a new designation of driverless vehicle that is purpose-built to transport cargo only. 

Emily Weslosky, lead product manager at Nuro, relayed this news at the conference while updating Nuro’s plans. Just when you think the autonomous vehicle market has stalled, it hasn’t. 

Nuro has been making deliveries in retrofitted Toyota Priuses (with safety operators) since Dec. 2018 for Kroger, and later for Domino’s and Walmart using R2 and a chase car. At two-thirds the size of a compact car, R2 is capped at 25 mph. In its second generation, R2 has updated sensors and cameras, a temperature-controlled cargo area, and a newly designed front panel that absorbs energy in the event of a crash. 

Udelv displayed at the conference its second-generation autonomous delivery vehicle, Newton, a converted Ford Transit Connect van. Udelv has been performing autonomous last-mile deliveries since 2018 with versions of Newton, which the company hails as “the world’s first public road-enabled Class 1 autonomous delivery van (ADV).” 

Newton can drive up to 60 mph. The van’s cargo area, which holds a payload of up to 800 lbs., is fitted with a modular, sliding cargo compartment system that can accommodate up to 32 customer orders per cycle. Each compartment is loaded at the store or warehouse with individual orders and opened at customers’ locations via an app.  

Lessons Learned

In 2018, Udelv completed 1,379 autonomous deliveries (with a safety driver) for a variety of merchants, mostly for grocers, a bread company, a florist, auto parts, and a pharmacy. 

By 2019, the deliveries swelled to 7,000, but they were concentrated with Walmart grocery deliveries in Surprise, Ariz. and XL Auto Parts in Houston. Laury said the fixed routes, from warehouse to stores and expedited “hot-shot” runs to mechanics, worked well. 

In the process, Laury conveyed the lessons the company learned: 

Highway driving would greatly improve efficiency, as surface streets were often slower and more complicated in many cases. For deliveries using electric vehicles, a range of 200 miles a day is optimal, with sufficient opportunities for rapid recharging during the day. To accommodate multiple types of cargo, a vehicle with a 6,000-lb. GVWR is necessary. 

The cargo area should be flexible to handle liquids and refrigerated products, with adaptive shelving for different size loads, which Newton’s cargo area can accommodate. Udelv’s cargo area has a unique iris opening and closing system activated by customers. 

The system should have Uber- or Lyft-like server communication with a friendly user interface. This would help to satisfy many customer (and merchant) needs: exact delivery times on a 24-hour clock with a 15-minute delivery window, doorstep theft mitigation, flexibility to reschedule, and ability to choose the delivery location.  

The next generation of deliveries, autonomous or not, will depend on data mining — tons of it — that can be used to refine merchants’ customer strategies and logistics management. 

Cost Equation

While autonomous deliveries are in their infancy, a business model is forming. 

Laury said Udelv is working toward its goal of cutting merchants’ normal delivery costs in half. Generally, the driver represents 65% of the cost of traditional last-mile deliveries. Udelv is looking to bring down the retail price of Newton to about $150,000. 

Removing human management of ADVs will also reduce costs. Both Udelv and Nuro are migrating away from safety operators in or near the ADV in favor of teleoperations, where remote operators assume control of the vehicle in more complicated scenarios such as parking lot maneuvers, power outages, or severe weather. 

While the ratio of operator to ADV is one-to-one today, the goal is to scale up to one operator for 10 ADVs and then 20, finally only needing them in emergencies. 

Udelv has two customer plans: an outright sale of the unit with a subscription to operational services, or a lease that appears similar to a closed-end commercial lease.  

With the first plan, the customer takes title of the ADV and subscribes a la carte to services such as insurance, teleoperations, hardware upgrades, and technical assistance. Udelv will even help connect the buyer to financing.

In the second, Udelv keeps the title. The customer makes a monthly lease payment with the same menu of services. The customer is responsible for abnormal wear and tear and miles accrued over the lease term. 

Adriel Lubarsky, Udelv’s director of business development, conducted walkarounds of Newton during the conference, demonstrating how a smartphone enables the cargo container to extend and open the customer’s pod. 

Newton uses an open-source driverless car software platform from Baidu. While the technology behind autonomy is continuously retooled and tested by various entities, Lubarsky said Udelv wants to remain technology agnostic so it can concentrate on the other end of the equation — the logistics of the delivery itself. 

For mainline vendors thinking about delving into uncharted waters with autonomous deliveries, how is the service priced in a market that doesn’t yet exist? 

Lubarsky said that while Udelv is more expensive than a traditional third-party delivery company, Udelv avoids subsidizing its services in ways Uber or Lyft does. “Udelv is providing a blueprint for how to work in autonomous logistics,” he said. “We want our partners to see the value in that.” 

Instead of a first adopter, it’s sometimes more prudent to be a “fast follower,” said Lubarsky. “The early bird gets the worm; the second mouse gets the cheese, and the third animal goes hungry.”

Originally posted on Automotive Fleet