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Aurora: the technology company transforming trucking

Claire Shaw, Portfolio Director

Key Points

  • While 80 per cent of US freight is moved by trucks, it’s an industry beset by problems such as labour shortages and a poor safety record
  • Aurora develops software enabling trucks to drive themselves, which will be safer, more fuel-efficient and get goods to their destinations quicker
  • Investment manager Tom Slater believes Aurora’s competitive edge lies in the team’s ability to form strong partnerships and their deep technical expertise

© Aurora

As with any investment, your capital is at risk.

Aurora is “on a mission to deliver the benefits of self-driving technology safely, quickly and broadly,” chief executive Chris Urmson tells investment manager Tom Slater in a recent discussion. It’s starting point is the $800bn trucking industry in the US, addressing pain points from labour shortages to a poor safety record that its technology is well-placed to solve.

 

In the driving seat

Trucking is not for the faint-hearted. It involves long hours, not seeing your family for days, has implications for your health and can even be fatal. “In the US, if you drive a truck, you’re 10 times more likely to die on the job than the average American,” Urmson explains.

This has led to a shortage of drivers – 80,000 – with the American Trucking Association estimating that 1.2 million new drivers will be needed in the US over the next decade to keep up with rising demand.

But these are all things that the software, the Aurora Driver, can address along with other pressure points, including high fuel costs and the need for driver downtime. The Aurora Driver can go from Houston to Los Angeles in 24 hours, whereas regulations restrict a human trucker to 11 hours a day behind the wheel.

With 80 per cent of freight in the US (by value) moved on trucks, autonomous trucks also promise greater convenience and more choice for consumers and businesses. Everybody wins, he said.

 

Driven to save lives

Aurora’s biggest claim is its positive impact on road safety. There are over half a million collisions per year in the US involving trucks. Urmson aims to prevent these by working “to bring these incredible advancements in artificial intelligence and sensor technology to bear on such a fundamental problem”.

“If we can make driving incrementally safer, we all benefit. And then, as this technology rolls out more broadly to light vehicles, the whole transport ecosystem will also get safer,” says Urmson.

Because, ultimately, success will depend on whether people feel safe with their families in the car on the road next to a self-driving truck. “The only way you get there,” Urmson says, “is to do exceptional engineering. You must be methodical.”

Getting ahead

Urmson has been focused on driverless vehicles for two decades since researching motion planning and perception for robotic vehicles at Carnegie Mellon University. He got his first taste of the problem when working on the US Defense Advanced Research Projects Agency (DARPA)’s ‘Grand Challenges’, a contest designed to spur AV inventors.

The goal was to develop vehicles capable of autonomously navigating desert trails and roads at high speeds. Working alongside General Motors, Urmson began to appreciate the impact that AVs could have on our everyday lives, not just on warzones, the use case for which they were first devised.

From there, Google recruited him to help set up its self-driving car project, which later became Waymo. After seven years, he left to co-found Aurora.

Most AV companies concentrate on the vehicle, but Urmson and his colleagues focus on their strengths in software. That leaves the hardware to the experts with whom they strike up partnerships.

PACCAR and Volvo are two such partnerships, “Our engineering teams are in constant sync where they’re working to build a truck capable of talking to the driver, and we’re building the driver in a way that’s capable of talking to those trucks.”

 

Going along for the ride

Urmson understands the importance of bringing people along for the ride, from Aurora’s partners to regulators, investors, the public and its drivers. Aurora employs truck drivers who are “excited about the opportunity,” says Urmson, highlighting the interesting logistics roles that will be created for them on the back of it.

Urmson suggests that “by investing thoughtfully, by building consistently . . . we can build a truly transformational company”.

Emphasising the importance of founder-led companies, Slater highlights that Urmson brings, “huge credibility from his academic background, his deep understanding of the technology and . . . he’s also a leader and somebody that people want to work for.”

It’s that ability to form genuine partnerships with people and companies that can provide valuable inputs into Aurora’s business model that Slater sees as an important differentiator from other AV companies. It increases the chances of Aurora realising its ambitions of solving many of the pain points around transportation. If it succeeds, the growth opportunity is vast.

If you would like to hear the full conversation between Tom Slater and Chris Urmson, please click the link below. We’re providing this link as this company is held in a number of Baillie Gifford portfolios globally so could be of interest to you.

Listen here.

Green-lighting the future

Transporting people and goods is fundamental. And this technology shift could be as profound as the introduction of the internal combustion engine. Urmson concludes that “his imagination is not big enough to see how profoundly different the world will look in 50 years because of [this AV technology].”

What we can see, is that if Aurora succeeds, transport will be safer, better and more convenient for everyone.

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Author

Claire Shaw

Portfolio Director

Claire Shaw is a portfolio director and plays a prominent role in servicing Scottish Mortgage’s UK shareholder base. Before joining in 2019, she spent over a decade as a fund manager with a focus on managing European equity portfolios for a global client base. With a background in analysing companies and communicating investment ideas, Claire is also responsible for creating engaging content that makes the Scottish Mortgage portfolio accessible to all its shareholders. Beyond that, she works closely with the managers, meeting with portfolio companies and conducting in-depth portfolio discussions with shareholders.

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