Uber turns to autonomous vehicle startup Nuro for Eats deliveries

·3-min read

Uber will use Nuro autonomous delivery vehicles to shuttle meals and other goods to its Eats customers as part of a 10-year commercial deal between the two companies.

The partnership, which kicks off this fall, will start in Houston and Mountain View, California and eventually expand to other areas, including the greater Bay Area, according to the companies.

Nuro has managed over the past few years to land partnerships with a number of high-profile companies, including Walmart and Kroger. This latest deal, however, marks an escalation of Nuro's commercial plans.

It also highlights Nuro's enviable position in the nascent autonomous vehicle industry. Nuro is one of the few companies to have received all of the necessary approvals and permits to operate an autonomous vehicle delivery service — that can charge customers — in California. Which means it can — and will — receive a fee for every autonomous delivery made for Uber.

Uber Eats customers will be charged the same for delivery, regardless of if it's a Nuro bot or a human gig worker. However, there may be some cost savings as Nuro bots can't accept tips. Customers won't know at the time of their order whether they're getting their own delivery or whether it's a typical courier delivery. If the Eats customer pre-selects the tip option and Nuro makes the delivery, that tip will be refunded.

Nuro bots are not going to replace the human gig workers who currently pick up and deliver food for customers, Noah Zych, global head of autonomous mobility and delivery at Uber, told TechCrunch. Instead, the company sees an opportunity to strategically use autonomous vehicles where they make the most sense.

This partnership, particularly in its first years, will help both companies pinpoint those best uses.

"We'll get a really good representative sample of where demand needs to be and how it is shaped throughout the day and throughout the week. And then, in turn, that not only obviously has benefits for the business, but it also allows us to be very focused in deciding and developing together alongside Uber, where do we really need to be developing our services and where to work?" Cosimo Leipold, head of partnerships at Nuro, said in a recent interview. "Where can we get the most bang for our buck, so to speak, in terms of AV development, and in terms of capacity and volume that's going to come through the system?"

Nuro, which was founded in June 2016 and has since raised $2 billion, will initially use its second-generation vehicle called the R2. This vehicle, introduced in February 2020, is not a sidewalk delivery bot. Nor can it shuttle people.

The R2, and its upcoming third-generation vehicle — simply called "Nuro" — are designed to carry packages and to travel on public roads.

The R2 is equipped with lidar, radar and cameras to give the “driver” a 360-degree view of its surroundings. It was designed and assembled in the U.S. in partnership with Michigan-based Roush Enterprises. The upcoming Nuro bot, which is expected to roll out in late 2023, is an automotive production-grade vehicle with twice the cargo volume of the previous model, customizable storage and temperature-controlled compartments to keep items warm or cool.

Nuro's supplier partner BYD North America will assemble the hardware components of the new third-generation model. The bots will then head to Nuro’s new $40 million end-of-line manufacturing facility in southern Nevada, where they will be readied for deployment.