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Faction gets in on driverless vehicle action

Autonomous vehicle maker gets new backer

Faction's compact AVs are custom-built for an urban logistics environment (Photo: Faction)

Driverless vehicles have been talked about as a wave of the future for years, a new mode to not only transport people but to transform the last mile of delivery by putting technology in the driver’s seat. But the results so far have been … well, less than desirable. Still, that hasn’t quenched investors’ zeal for putting their money into the space.

Driverless vehicle startup Faction is the latest company to reel in a new backer. The Bay Area-based startup, which develops fully autonomous electric vehicles for urban logistics and transportation, has received an investment of an undisclosed amount from TDK Ventures, a subsidiary of Japanese multinational electronics company TDK Corp. (OCTUS: TTDKY).

The new partnership aims to accelerate Faction’s time to market and bring its “right-sized” logistics solution to the public. Faction’s model keeps cost and sustainability top of mind — its fully electric vehicles are designed not as standard four-wheel vessels but as compact, three-wheel autocycles, which reduces the load demand on the electric system and keeps cost below $30,000 per unit. 

A recent graduate of the renowned Y-Combinator incubator, which has helped launch companies like DoorDash (NYSE: DASH), Instacart and Stripe, Faction had previously developed vehicles of all sizes, from light EVs to ful-size electric semi-trucks. But to build a solution custom fit for urban environments, the startup had to reinvent the wheel.

“Most autonomous projects are taking existing vehicles and trying to retrofit them for driverless technologies,” said Faction CEO Ain McKendrick. “Rather than do the same things over and over again, we took a clean-sheet approach from the chassis up.”

Watch: Surveying the driverless landscape

The other piece of Faction’s value proposition is its TeleAssist technology. That framework supplements cutting-edge autonomous tech with human supervision, with the aim of rolling out the company’s vehicles more quickly. A safe, fully autonomous solution is getting closer, but accidents and other mishaps have so far derailed its commercial viability. Faction is betting that its human-supported system will be able to circumvent this and get its product out fast, or at least faster than the competition. So too are investors.

“A key part of our mission is to progress technology which furthers digital, energy and environmental transformation,” said TDK Ventures President Nicolas Sauvage. “Faction addresses all three in an integrated way that can immediately improve society. They bring a digital approach to a problem in both the energy and sustainability space. We want to … expedite their development and see their vision to fruition as quickly as possible.”

With new funding from TDK Ventures, Faction now has the backing of a global company that invests frequently in mobility and cleantech solutions, which happens to be the intersection the startup occupies.

“Ninety percent of urban trips consist of one passenger traveling fewer than five miles. Using large legacy vehicles is not sustainable from an emissions, gridlock and energy use perspective,” Faction’s mission statement reads. “We are right-sizing driverless transportation, making it smart for the city and an affordable solution for the planet.”

Autonomous vehicles are catching on in the trucking industry, with companies from Uber Freight to DHL experimenting with going driverless. But less attention has been paid to their role in the last mile, especially in urban settings.

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Congestion in cities is on the rise as e-commerce has caused more parcels — and more delivery vehicles — to wind their way through urban supply chains. It was recently reported that New York City currently has some of the worst traffic in the world, with Chicago not far off, as roads are becoming packed with last-mile delivery vehicles. 

Making some of those vehicles driverless would help to alleviate some of that congestion with more efficient routing and communication, proponents say. And in the case of Faction’s driverless vehicles, their compact size can help them reduce the amount of space the last mile occupies on streets, though experts caution that congestion impacts likely won’t be felt until a greater number of AVs are on the road.

Another challenge facing the last mile has been sustainability. While the last mile only accounts for about 5% of supply chain emissions, it’s been projected that growth in the last mile will increase carbon emissions in that portion of the supply chain by 30% by 2030. 

Faction’s solution could help solve this issue as well. While research on the impacts of AVs on carbon emissions is still in its infancy and should be taken with a grain of salt, early studies suggest that driverless vehicles could “significantly” affect the United States’ ability to reduce greenhouse gas emissions, with the caveat that they must be electric. 

That’s no issue for Faction. And if the startup’s vision comes to fruition, congestion and carbon emissions may no longer be an issue for the last mile.

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Jack Daleo

Jack is a staff writer for FreightWaves and Modern Shipper covering topics like last mile delivery and e-commerce fulfillment. He studied at Northwestern University, majoring in journalism with a certificate in integrated marketing communications. Previously, Jack has written for Backpacker Magazine and enjoys travel, the outdoors, and all things basketball.