Transportation Innovation

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>>> Warren Buffett supported driverless trucks. Now they are real.


Financial News Today

by Mario Ziegler

8-25-22


https://funancial.news/analysis-warren-buffett-supported-driverless-trucks-now-they-are-real/


Warren Buffett’s Berkshire Hathaway Inc. didn’t get fame for investing in startups. The reputable investor has a tendency to buy time-tested businesses such as an oil company, a railroad or an insurer that bet on the stable and profitable growth of the US economy.

Buffett shied away from technology stocks for years before stepping down with Apple Inc., which was already as deeply woven into the fabric of the economy as Occidental Petroleum Corp, BNSF Railway Company or Geico. It was no surprise that Buffett avoided the SPAC and NFT craze. His longtime business partner, Charlie Munger, railed in February against “tragic excesses” in both venture capital and cryptocurrencies.

That’s why investors should especially note that Pilot Company, which operates Pilot and Flying J Travel Center and is owned by Berkshire Hathaway, on Tuesday agreed to pick up a stake in Kodiak Robotics Inc., a driverless truck startup. The pilot will get one of the Kodiaq’s five board seats. Although the investment amount and ownership percentage in Kodiaq were not disclosed, Pilot is now the largest strategic investor in the startup.

This investment is a significant recognition, through a pilot by Berkshire Hathaway, that driverless trucks are on the verge of becoming a reality. It can be hard and even scary to imagine that an 18-wheeled vehicle with no human occupants humming along the highway with passenger cars. It can happen faster than people think.

Kodiaq already operates trucks with a security driver on routes between six cities, including Dallas and Atlanta. In a few years, Kodiaq hopes to take that safety driver out of the cab and operate fully autonomous large cargo trucks. Several other startups are also chasing the driverless dream.

Embark Technology Inc., Aurora Innovation Inc., Tusimple Holdings Inc. And all others are testing autonomous truck technology on the highway. Aurora has said it expects to start operating without a driver early next year. Aurora and Embark went public through special purpose acquisition companies, while TuSimple made a traditional initial public offering. All three have performed disappointingly and are down over 75% since the first trade.

Kodiaq, which has investors including tiremaker Bridgestone Corp and BMW’s Venture Fund, is working with Pilot to build an autonomous truckport in Atlanta that will provide services such as refueling, inspection and maintenance for Kodiaq’s driverless trucks. The Pilot’s truck stop will also serve as a meeting point outside large urban areas where a driverless truck will drop off a trailer that will be picked up by the truck and accompanied by a driver to navigate city traffic.

Driverless truck companies all argue that their technology will make bigger rigs safer for American highways. According to the National Highway Traffic Safety Administration, this is a low bar considering that 159,000 people were injured in accidents of big trucks in 2019 and 5,600 people died in such accidents in 2021. The market is also needed. The American Trucking Association estimates that there are fewer than 80,000 truck drivers in the US, and the shortage is concentrated in long-distance trucking that keeps drivers away from their homes for days and even weeks. Those are the long haul low-hanging fruit for autonomous trucks to take on.

If one of Buffett’s companies is getting into this new technology, don’t be surprised that driverless trucks will also be a mainstay of the American economy in a decade or two.

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