This week, we’re looking at what insurance for autonomous trucks might look like and how truck manufacturers are booking additional revenue by selling chargers and hand-holding advice with electric trucks.
Insuring the drive, not the driver
Autonomous trucking software developer TuSimple and Liberty Mutual insurance are working together to figure out how to insure a truck without a distracted, drowsy or otherwise human driver behind the wheel.
Truly driverless trucks are several years away, though TuSimple plans a fourth-quarter pilot on Arizona highways.
David Blessing, Liberty Mutual’s chief underwriting officer for new mobility, says working with TuSimple, which operates 50 Level 4 highly autonomous trucks in three Southwestern states — all with safety drivers — will help develop custom insurance underwriting for early adopters and fleets that add autonomous trucks later.
Sorting out the specifics
Rising premiums and coverage availability landed insurance as the No. 5 issue on the American Transportation Research Institute’s Critical Issues list in 2020. Insurance costs per mile have risen 18.3% over the past five years. And that is with humans behind the wheel.
What happens when robots take over? I talked with Jason Palmer, general manager of Transportation Intelligence at Omnitracs. The fleet data management and analytics firm works with government agencies, fleets and autonomous trucking software developers.
FREIGHTWAVES: Would there be separate insurance for trucks with safety drives and those without?
PALMER: Absolutely. There are some companies that I would consider traditional underwriters who are developing a new practice around insuring autonomous vehicles. Most large commercial trucking companies are self-insured for the first $5 million. But then they have to have an excess layer of insurance that’s underwritten by Zurich or somebody else.
FREIGHTWAVES: How do you get a baseline for insuring autonomous trucks?
PALMER: There’s a couple different pieces. They’re looking at what the system is, the system performance and what the operating domain is. And then what they believe the risk is if a human is driving and how do I map that to an autonomous vehicle.
FREIGHTWAVES: How would the number of accident-free miles and other robotic driver metrics figure into premiums, or would they?
PALMER: I think it’s a jump to say they are safer so far. As we get more data, and there’s more miles [driven], that will prove itself out over time. What we see now is there’s a different risk. I think where we’ll see autonomous vehicles deployed is where they tend to operate more safely like Interstate 10 in Arizona and New Mexico.
Saddling up with safety
Two of the major autonomous trucking players are playing it safe — literally.
First, TuSimple hired Jim Mullen, former Federal Motor Carrier Safety Administration acting administrator, as chief safety officer last September before naming him chief administrative officer and legal officer.
This week, rival Plus named Wiley Deck, former FMCSA deputy administrator, as its vice president of safety and public policy.
There’s gold in them thar chargers
For all the attention lavished on battery-electric trucks, their sales in the near term won’t amount to much: hundreds and maybe low thousands in the next few years. So, manufacturers look to charging them and advising customers as additional business.
Daimler Trucks North America said this week it would offer three levels of electric truck eConsulting through its Detroit subsidiary. A range of chargers for its eCascadia Class 8 and eM2 Class 6 trucks also will be available for purchase.
Also this week, PACCAR’s European brand DAF Trucks rolled out chargers from 20 kilowatts (kW) to 350 kW depending on customer needs. DAF offers site inspections, energy modeling and installation if needed. It’s part of a companywide infrastructure plan.
In January, the Volvo Group created a new unit, appropriately called Volvo Energy, to handle all things electrification.
Navistar, which will offer a medium-duty Class 6 truck next year, introduced the model nearly two years ago. Executives spent more time explaining its NEXT eMobility Solutions service than the electric MV model itself.
The particulars around preparing for electric trucks are time-consuming, expensive and confusing. Who better to light the way than the manufacturers making the trucks? So, whether it’s truck charging or mobility followed by the words “as a service,” the manufacturers know an opportunity when they see it.
“We like to make money in everything we do,” PACCAR CEO Preston Feight said last October. “And that’s our model for electric vehicles as well as for anything else we do.”
Movin’ on up
Xos Trucks could barely fit its prototype ET-One electric truck into its 100-square-foot warehouse in North Hollywood, California, five years ago. Now in line for $525 million in cash from its pending reverse merger with special purpose acquisition company (SPAC) NexGen Acquisition, Xos is stretching out in new digs — 85,000 square feet of them. Xos co-founder and CEO Dakota Semler recounts the journey in a post on Medium.
Speaking of SPACs
ABI Research added up the total of equity valuations for SPACs in commercial vehicles. The total as of April was more than $38 billion — all focused on strategic technologies for last mile, automation and electrification or alternative fuels. Most of the names are familiar by now: Nikola, Proterra, Lordstown Motors, Lion Electric and Hyzon Motors.
The calculation did not include TuSimple, whose traditional initial public offering generated an $8.1 billion valuation. A few more companies like TuSimple rivals Plus, Embark Trucks, Kodiak Robotics and Swedish cabless truck maker Einride could end up in SPACs.
Or maybe not. After a blistering 15 months in which more than 560 SPACs of all stripes attracted more than $180 billion, the pace is cooling dramatically. One expert described it as deal fatigue.
Even if a blank check company can raise IPO funds to target an acquisition for reverse merger, private investment in public equity (PIPE) money is getting scarce. The PIPE is the sweetener that boosts the high valuations.
Then there is the Securities and Exchange Commission’s finger-wagging over how SPACs account for stock warrants issued to insiders and PIPE investors. Nikola, Proterra and flatbed logistics rollup Daseke Inc. — which went SPAC in 2017 before they were in vogue — all restated past earnings this week to show warrants as liabilities instead of equity.
The SEC’s other caution over whether liability protection applies to SPAC projections of future revenue and profits is also taking some of the crazy out of the craze.
That’s it for this week. Thanks for reading.
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