Self-driving Startup Gatik To Double Workforce, Strikes Kroger Deal

Self-driving trucking startup Gatik will double its workforce by year end, a top executive said, after it announced a deal on Wednesday with grocer Kroger Co to transport goods within its Dallas, Texas network.

Gatik, which operates traditional mid-sized trucks fitted with its autonomous technology, aimed to expand to 15 new U.S. states over five years, CEO Gautam Narang told Reuters.

The company focuses on transportation over short, fixed routes for businesses.

Many in the autonomous driving industry are cutting staff or shutting down, but Gatik has found a niche by limiting its work to routes with relatively little complexity.

It delivers goods, for example, from larger distribution centers to retail locations for companies such as Walmart and Pitney Bowes. The company has hauled more than half a million customer orders on its mid-sized box trucks that have no human in the cab.

Gatik had pushed back hiring plans last year but now intended to expand its workforce to more than 250 employees from the current level of about 120, said Narang, who founded the firm in 2017.

He said the company planned to focus on deepening its current presence in Texas, Arkansas and Louisiana in the U.S. and Ontario in Canada and to begin expanding to the 15 new states over five years, starting next year.

Many investors in the self-driving industry have grown sceptical as complicated technology and tough safety regulations have delayed large-scale commercialization.

Autonomous truck company Embark Technology said this month it would lay off 70% of its employees and start evaluating options, including winding down the business. That followed job cuts this year at Alphabet Inc's Waymo unit, and Ford Motor and Volkswagen AG pulling the plug in November on an autonomous driving company they were backing, Argo AI.

Narang said Gatik had navigated the regulatory challenge by focusing on the "middle mile", in which trucks did not cross state borders and moved at lower speeds.

Leasing the trucks instead of owning them had also helped the company manage capital better while charging a fixed fee per truck per year had helped shore up revenue, he said.

That has drawn investor interest. Microsoft plans to invest more than $10 million in Gatik at a valuation above $700 million, sources told Reuters in January. Narang declined to confirm that.

"Investors are rewarding companies that have a near-term application focus and where the business and numbers are already proven," Narang said.