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Ocado bots on the grid at the Erith Customer Fulfilment Centre

Ocado invests £10m in Oxbotica for autonomous vehicle solutions

Image credit: Ocado Group

The online grocery delivery platform has announced plans to develop a range of vehicles integrated into the Ocado Smart Platform.

Ocado Group plc has commercially partnered with Oxbotica Ltd, headquartered in Oxford. Ocado will invest £10m in Oxbotica as part of Oxbotica’s latest Series B equity funding round, which included other strategic and financial investors in the UK, the US, China and Australia. Ocado will take a seat on Oxbotica’s board.

The purpose of the partnership is to collaborate on hardware and software interfaces for autonomous vehicles, enhancing and integrating Oxbotica’s autonomy software platform into a variety of vehicles.

Potential use cases range from vehicles that operate inside of Ocado’s Customer Fulfilment Centre (CFC) buildings and the yard areas that surround them, all the way to last-mile deliveries and kerb-to-kitchen robots.

This will be a multi-year collaboration and the ultimate ambition is to enable Ocado’s partners that use the Ocado Smart Platform (OSP) to reduce the costs of last-mile delivery and other logistics operations.

As part of this collaboration, Ocado will outfit a subset of its delivery vans and warehouse vehicles with data capture capabilities, which may include video cameras, LiDAR, radar and other sensing devices. Ocado will make this data available to Oxbotica to train and test its technologies, which will then inform Ocado as to what opportunities exist and where best it might take advantage of these new partnerships.

The Ocado/Oxbotica relationship began in 2017, when the companies conducted a two-week trial using an early prototype delivery vehicle doing autonomous deliveries in Greenwich, London. Since that initial trial, Oxbotica has made significant progress in developing its platform, leading to today’s announcement of a broader relationship that includes both Ocado’s financial investment and a commercial collaboration agreement.

Oxbotica’s two core products are Selenium and Caesium. Selenium is an on-vehicle suite of software that brings full autonomy to a vehicle in a way that is agnostic to both hardware and environment. Caesium is a cloud-based autonomy management system that brings fine-grained control, audit, data management and monitoring to autonomous fleets. Oxbotica’s products use an advanced set of AI, machine learning and optimisation technologies to yield a low-power, safe, explainable, quick-to-deploy, modular and completely flexible 'Universal Autonomy' platform.

Logistics costs constitute the single-largest line item in the operating cost structure of online grocery. Moving finished orders from CFCs to ‘spokes’ (where they are then cross-docked to delivery vans) represents approximately 1.5 per cent of sales in the UK; the cost of final-mile delivery is approximately 10 per cent of sales. Labour represents approximately 50 per cent of these costs.

Beyond potential cost savings within its core operations, Ocado sees significant opportunities to improve its partners’ customer proposition by being better able to respond to peak delivery demands, reducing the cost-to-serve of its immediacy proposition, and accelerating the shift to electrically powered vehicles (thereby improving fleet sustainability and reducing environmental impact).

Alex Harvey, chief of advanced technology at Ocado, commented: “We are excited about the opportunity to work with Oxbotica to develop a wide range of autonomous solutions that truly have the potential to transform both our and our partners’ CFC and service delivery operations, while also giving all end customers the widest range of options and flexibility.”

Paul Newman, co-founder and CTO at Oxbotica, said: “This is an excellent opportunity for Oxbotica and Ocado to strengthen our partnership, sharing our vision for the future of autonomy. By combining both companies’ cutting-edge knowledge and resources, we hope to bring our Universal Autonomy vision to life and continue to solve some of the world’s most complex autonomy challenges.”

For both regulatory and complexity reasons, Ocado expects that the development of vehicles that operate in low-speed urban areas or in restricted access areas, such as inside its CFC buildings or within its CFC yards, may become a reality sooner than fully autonomous deliveries to consumers’ homes. However, all aspects of autonomous vehicle development will be within the scope of this collaboration. Ocado expects to see the first prototypes of some early use cases for autonomous vehicles within two years.

In addition to this collaboration with Oxbotica, Ocado continues to seek further investments and/or partnerships as it grows and develops its autonomous vehicle capabilities.

Ocado will build teams of engineers within its existing Advanced Technology division to work with Oxbotica on these diverse use cases. The Advanced Technology division is independent from the engineering team that develops core OSP software and automation. The initial development work will focus on UK operations and will then extend to international markets where Ocado’s partners operate.

The logistics of fulfilling and delivering the surge in online orders has become a major pinch-point for many companies since the coronavirus pandemic began. Delivery companies already under pressure to electrify their van fleets for both environmental and commercial reasons have been accelerating their plans.

In early 2020, UK electric van maker Arrival secured a £340m order from UPS for 10,000 purpose-built electric vans, which are already being rolled out across the UK, Europe and the US. UPS also has an option to purchase a further 10,000 vans, as necessary.

Amazon has also entered into a deal for brand-new electric delivery vans, partnering with EV start-up Rivian. Ten thousand is once again the magic number for the initial delivery, with an on-road date of 2022 for the new fleet. The Rivian vans are projected to have state-of-the-art technology onboard, such as sensing equipment and an advanced driver-assist system. Amazon estimates that it will have 100,000 of these vans on the road by 2030.

Meanwhile, in the groceries delivery sphere, Tesco has pledged to make its home-delivery fleet fully electric by 2028. Announcing its plans in November 2020, the move forms a key part of the retail giant's commitment to reach net-zero by 2035. Tesco currently operates approximately 5,000 vehicles in its Tesco.com fleet and has already deployed 30 electric delivery vans in Greater London as part of its EV transition.

The company is also adding 2,400 charging points for customers across 600 of its major store sites, 400 of which were due to be fitted with the chargers by the end of 2020. This programme will ultimately boost the UK’s electric charging network by 14 per cent.

As EV battery costs continue to fall and range anxiety is eased, the move towards adopting smarter electric delivery vans for vehicle fleets offers companies a range of benefits. Aside from the costs associated with complying with certain environmental regulations – such as vehicles entering London's Congestion Charge and Ultra-Low Emission Zone areas – putting pressure on fossil-fuel-powered vehicles, smarter vehicles that can be updated 'over the air' can significantly streamline the fleet-management process.

Upgrading safety features and autonomous driving capabilities to multiple vehicles with a single software update is a very attractive proposition. An integrated-technology electric van that can also capture valuable logistics, performance and potentially customer data is almost certainly on the wishlist of every delivery company. The only caveat is that very few such vehicles are widely available on the market at this time.

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