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Its business is tailored for fixed-route delivery from warehouses to stores and post offices, a $250 billion market. and aims to be profitable in three years or less,
By Alan Ohsman, Forbes Staff
Self-driving vehicles were expected to revolutionize transportation. But the robotaxi fleet in San Francisco is being blamed for clogging intersections and causing headaches for emergency vehicles. Promising robot truck startups are either scrapping plans or failing outright. Industry giants like Alphabet’s Waymo and General Motors-backed Cruise have raised billions of dollars to improve the AI in their systems, but won’t share tough targets for profitability.
And then there’s the dynamic.
Trevor Pockhus for Forbes
The upstart, whose Sanskrit name means “progressive” or “fast”, is headquartered in a small commercial building in Mountain View, California. Unlike larger neighbor Waymo, located near the Google X campus, it is not developing robotic taxis or semis. Instead, its focus is on unmistakable “middle mile” delivery, using a fleet of about 50 trucks to carry goods from warehouses to grocery stores, big box retailers, post offices and fast food chains. Gatic has raised at least $115 million — less than a tenth of the money put into Waymo, Cruise and Amazon’s self-driving competitor Zoox. But revenue should be in the “high single-digit millions” this year, CEO and co-founder Gautam Narang pointed out. forbes, He is targeting up to $100 million in revenue within five years based on multi-year contracts with Walmart, Kroger, Pitney Bowes, Canada’s Loblaws supermarket chain and a few other large retailers he declined to name. Narang also had a good idea of how quickly the company could go into loss.
“Late 2025 or early 2026,” he said. “Our biggest challenge right now is to be able to move fast.”
Launched in 2017 by 32-year-old Narang, his brother and CTO Arjun Narang, and chief engineer Apeksha Kumawat, Gatiq has taken a radically different approach to mastering autonomous driving: Do the easy things first. carry goods, not people; operating at a speed less than 50 mph on fixed city routes; Drive around tricky or dangerous intersections and avoid fire stations and schools. It has been proved now. The company’s fleet is logging hundreds of delivery runs per week throughout Dallas, Fort Worth, San Antonio and Toronto and is working to expand as there is more demand for the service than trucks.
“Our biggest challenge right now is to be able to move fast.”
It helps that the market for middle-mile delivery, though more niche, is estimated by Narang to be worth about $250 billion annually. Still, it dwarfs the $800 billion long-haul market that robot truck developers like Aurora want to break into and the even bigger taxi and ridehailing market Cruz and Zoox want to conquer — but it just means that those competitors have Ignored it. Waymo experimented with mid-mile delivery for UPS in Phoenix, where it runs a robotaxi service, but has suspended it for now.
Gatic, A forbes The AI50 alum, still small, has fewer than 60 trucks on the road, but by 2024 it plans to have more than 300 autonomous delivery vehicles — without human backup drivers — daily in Dallas, Fort Worth, San Antonio and Thousands Haulage Toronto. From there the goal is to add new cities and hundreds more vehicles.
“What Robotaxis, Waymo and Cruise have done in San Francisco and Arizona is amazing from a technology perspective,” said Narang, a Delhi native with a bachelor’s degree in robotics from Carnegie Mellon University. “Is this a real business in the near future? In my opinion, the answer is really no.”
Cruise CEO Kyle Vogt thinks it might. Last year, they set a target of reaching $1 billion in annual revenue from robotaxis services by 2025. But he hasn’t shared any target date for profitability yet.
mid-mile demand
Meanwhile, driven by the continued growth in e-commerce and online grocery shopping, demand for middle-mile delivery from retailers and supermarket chains is growing faster than Gatic customers like Pitney Bowes can find human drivers.
“It is a lack of capacity. With our couriers, it’s driver shortages and unpredictability like that,” said Stephanie Cannon, senior vice president at the global shipping and mailing company. Gatic’s “Trucks are very predictable and repeatable. versus us contracting these out to other providers.”
Grocery chains like Kroger use Gatic’s autonomous trucks to stock up for online orders.
Gatic, Kroger
Since last year, Pitney Bowes has had five Gatic trucks equipped with laser lidars, cameras and other sensors deliver e-commerce parcels to 74 post offices a day in the Dallas-Fort Worth area. The trucks currently include backup safety drivers, according to Gatic, though that won’t be the case until a year from now.
Unlike San Francisco, there have been no accidents or safety issues that Canon is aware of. (Dallas officials could not immediately confirm any accidents, complaints or traffic problems related to Gatic’s trucks). Pitney Bowes is expected to add more robotic delivery trucks, though Canon declined to provide details. “It’s actually working better than we expected,” she said.
Narang said Gatic is charging customers $200,000 per year per vehicle and its contracts now require a three-year service period. By the end of 2023, it is expected to have more than 80 vehicles in its fleet, mainly manufactured by Japanese truck maker Isuzu.
“It’s actually working out better than we expected.”
Unlike Waymo, Cruise and Zoox, Gatic’s business model is “asset light” and does not involve building vehicles or sensors. It specifically focuses on improving the AI that operates the truck, integrates sensors and computing systems, and manages service for customers. The vehicles in its fleet are also leased from Ryder, the top provider of rentals and services for the US trucking industry.
It needs to raise additional funding to keep growing, and will likely do so later this year. Narang would not specify how much the company is targeting. He also wants Gatic to go public at some point, but not until the company becomes profitable.
The complexity of building a fully autonomous vehicle that Waymo and Cruise have focused on, Gatic’s founders had already noted, makes it a far more long-term challenge than many understood five years ago. Ford and Volkswagen acknowledged this last year when they spun off their autonomous tech joint venture Argo AI after investing about $3 billion in it. Uber, which once aimed to top Waymo, sold its self-driving tech unit to Aurora in late 2020, months after the closure of Starsky Robotics, an early mover in autonomous trucking. Embark, another budding robotrk developer, ran out of cash this year, laid off most of its staff and stopped trading on the Nasdaq after Applied Intuition, a developer of driving-assistance software, was bought out in a private sale. TuSimple, a leader in robotic trucking for a while, also faced tough times in early 2022 after video leaked of its semi crashing into a highway barricade. This was followed by management and board feuds, the firing of Xiaodi Hou, its co-founder, CEO and architect of its technology, and allegations that it improperly shared technology with a Chinese company. In June, the company said it was considering selling its US business.
(For example, Gatic’s new Dallas-Fort Worth trucking depot previously belonged to TuSimple, Narang pointed out.) forbes,
Even Waymo, which was developing long-range robot trucks and its own middle-mile service, has changed those plans. Co-CEOs Takedra Mavacana and Dmitry Dolgov said in late July that the company was prioritizing its robotaxi business, Waymo One, and was “moving back the timeline of our commercial and operational efforts on trucking.” The company has operated a growing robotaxi service in Phoenix, where there are fewer headaches than San Francisco, for about five years, is conducting trials in Los Angeles and plans to take its service to Austin and other cities. But it’s been a slow process and the Alphabet unit has never shared revenue details or a target date for profitability.
Operating a semi is in some ways easier than a robotaxis on a highway because there are no pedestrians or cyclists to watch out for, there are few intersections, and the roads are much simpler. But the challenge is to be able to drive an 80,000-pound vehicle safely at highway speeds at all times and deal with high winds, heavy rain or unexpectedly smooth roads that can be dangerous even for experienced human truckers. And in the case of robotaxis, transporting passengers anywhere in a city as smoothly as a human driver requires vast amounts of data, mapping, computing power and real-time sensor processing.
‘Chips on our shoulders’
“Eventually, all the different applications of autonomy will be resolved. We have enough evidence to say this with confidence,” Narang said. “But there is a difference of opinion on the time frame and the resources needed.”
Over time, he hopes Gatic will expand into long-distance highway trucking. It’s starting to do some testing in that area, but the service will only develop as its mid-mile business grows.
In its early days, Gatic probably didn’t garner as much respect as rivals in the autonomous vehicle industry because its approach seemed too limited, too specific. not anymore.
“The response we get from almost everyone is, ‘What you’re doing makes sense. It’s very practical.’ But that wasn’t the case when we started the company,” Narang said. That experience also fuels his desire to grow revenue and become profitable as quickly as possible.
“We have chips on our shoulders. We want to prove that everyone was wrong about our approach.
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