Uber has pushed onward its goal of having a fleet of autonomous vehicles by purchasing autonomous truck startup Otto and inking a deal with Volvo to start building self-driving cars.
The deal shows that autonomous vehicle technology is spreading beyond the consumer niche and reaches into commercial markets.
Otto, which is the brainchild of two senior self-driving car engineers who used to work for Google, builds kits that can turn existing transportation vehicles into autonomous trucks. The startup has 90 employees.
Anthony Levandowski and Lior Ron, the founders of Otto, explain that their company's partnership with Uber will shape the future of commercial transportation. However, the terms of the deal remain secret.
Levandowski will take the reins of self-driving departments at both companies in a focused attempt to see how the new tech can be fitted for personal transportation, delivery and trucking.
"We now have one of the strongest autonomous engineering groups in the world," Uber CEO Travis Kalanick says.
Uber, however, is not the only player who targets autonomous integration in its fleet.
Ford Motor has unveiled its plans to dispatch a fully autonomous car for the commercial sector, as part of a ride-hailing service by 2021.
Ford CEO Mark Fields considers that the next 10 years will be all about "automation of the automobile." He goes on to compare the impact registered by Ford's moving assembly line 100 years ago with the developments in today's self-driving technologies.
Cathy Roberson, a lead analyst for consulting firm Logistics Trends and Insights, shares her insight on the Uber-Otto deal.
She notes that few analysts expected to see Uber purchasing Otto. Most experts in the field considered Daimler Trucks as the first option for an Otto buyer, as the division of the carmaker strives hard to get into self-driving truck research.
Roberson is convinced that Uber's investment of $680 million in Otto will make for a hefty return.
"Uber is facing regulatory hurdles ... limiting [its] ride hailing service. They needed to start thinking about expanding their lines of business," she says.
Friedmar Rumpel, a director in the global consulting firm AlixPartners, underlines that both trucking and commercial transport have a bigger growth potential than self-driving vehicles in the consumer market.
"There is a high interest in getting commercial transport more automated," he notes. Rumpel adds that Uber has the ability to go "to the next level" by automating a commercial fleet, eliminating the need for a human driver.
What is more, the drive cycles of trucks and their significantly simpler routes (when compared with passenger traffic) could lead to a faster adoption of autonomous technologies on the big wheels.
Trucks usually travel on highways, linking factories to distribution centers, or warehouses to retail stores. With the increased predictability of these routes comes a potential increase in revenue for the company owning the trucks.
Otto sports five test trucks in its fleet, and announced that two more should be operational until the end of 2016.
Otto regards its own technology more as a driving assist tool than a full driver replacement. The venture announced that it is working on an electronic system that assists drivers to discover hauling contracts on the go.
Levandowski and Ron point out that the self-driving trucks will keep drivers better rested, and with the help of the new platform they will be able to "find loads and be paid fairly."
The duo underlines that the purpose of mixing the two technologies is to offer "a freight network that is constantly learning and improving," they said.
On the manufacturing side, the deal between Uber and Volvo asks both companies to bid $300 million in autonomous driving technology, with the final objective to create a car able to drive itself.
Levandowski and Ron said that by combining their company's self-driving instruments with Volvo's high quality vehicle and safety technology, a bright future is in store for both.
Uber also announced that passengers in Pittsburgh will be able to hail self-driving Volvo XC90 SUVs in the near future. Those concerned about safety should know that the cars will have a human driver on board, just in case. Also, users who choose to travel with Volvo's XC90 autonomous cars will have to opt in to take the ride.
