Oxbotica Secures $13.8M Funding from Ocado for Autonomous Vehicle Technology

Ocado Invests in Autonomous Driving Technology with Oxbotica

Ocado, a leading U.K. online grocer, is expanding its technology reselling business through a new investment. The company is injecting £10 million ($13.8 million) into Oxbotica, a U.K.-based startup specializing in the development of autonomous driving systems.

Strategic Investment for AI-Powered Systems

This investment is viewed by Ocado as a key step in advancing the next phase of its technological growth. The aim is to create AI-powered, self-driving systems applicable across all facets of its operations.

These systems will encompass vehicles operating within and surrounding Ocado’s fulfillment centers, as well as the last-mile delivery vehicles bringing groceries directly to customers’ residences. Initial deployments are anticipated within two years, likely starting in controlled environments like warehouses.

Non-Exclusive Partnership and Broader Applications

Alex Harvey, Ocado’s chief of advanced technology, emphasized the company’s open approach. “We are not constraining ourselves to work in any one use case,” he stated. He also acknowledged the need for regulatory compliance as autonomous systems are rolled out.

The agreement is non-exclusive, allowing both Ocado and Oxbotica to pursue collaborations with other partners independently.

Oxbotica’s Series B Extension

This investment supplements Oxbotica’s Series B funding round announced in January. The total funding now exceeds $60 million, with bp ventures leading the round alongside BGF, Halma, HostPlus, IP Group, Tencent, Venture Science, and Doxa Partners.

While Oxbotica has not revealed its valuation, co-founder and CTO Paul Newman confirmed that the valuation increased with this latest funding.

Timing Coincides with Increased Industry Activity

The announcement arrives shortly after Walmart’s investment in Cruise, another autonomous technology firm, as part of a $2.75 billion funding round. This highlights a growing trend of investment in autonomous delivery solutions.

Competition Heats Up in the Online Grocery Sector

Historically, Walmart owned ASDA, a major U.K. competitor to Ocado. Ocado, in turn, has expanded into the U.S. market through a partnership with Kroger, whose online grocery service recently launched. This suggests intensifying competition between the two retail giants.

The online grocery market has experienced substantial growth in the past year, attracting both established players like Ocado and Tesco, and new entrants eager to capitalize on the increasing demand.

European Expansion and Emerging Competitors

In Europe, companies like Oda (formerly Kolonial), Rohlik, Everli, and Picnic are actively pursuing international expansion. Ocado itself has made significant investments to support its global ambitions.

Pandemic-Driven Demand and Future Outlook

The COVID-19 pandemic significantly boosted demand for online grocery services. However, as life returns to a more normal state, the market landscape is expected to evolve.

Ocado has already observed a decrease in demand, although levels remain above pre-pandemic figures. The competitive environment is likely to become more challenging.

Investing in the Next Generation of Services

Companies like Ocado are investing in advanced technologies to enhance efficiency and reduce costs, potentially shaping the future of grocery delivery services.

Logistics Costs and the Potential for Savings

Logistics currently account for approximately 10% of the total cost of grocery delivery. This percentage increases during peak demand or service disruptions. Autonomous technology offers the potential to significantly reduce these costs.

Subsidized delivery services and discounts, common in the current competitive market, further contribute to logistics expenses.

Ocado’s Broader Robotics Strategy

Beyond the Oxbotica investment, Ocado is actively pursuing a broader robotics strategy. This includes research into robotic arms, the acquisition of robotics companies Kindred and Haddington for $262 million, and investments in startups like Karakuri and Myrmex.

Existing Collaboration and Future Prospects

Ocado and Oxbotica have collaborated since 2017 on a delivery pilot program.

Paul Newman of Oxbotica stated, “This is an excellent opportunity for Oxbotica and Ocado to strengthen our partnership, sharing our vision for the future of autonomy.”

Challenges and Timelines for Full Autonomy

Despite advancements, significant regulatory and safety hurdles remain before fully autonomous delivery systems become widespread. Ocado anticipates initial deployments in low-speed urban areas or restricted access zones, such as its fulfillment centers.

However, Newman believes that fully autonomous on-street deliveries are becoming increasingly feasible, describing the process as achievable “in stages.”

Updated with interviews from both companies, and to reflect the completion of Walmart’s ASDA sale in February.