Dive Brief:

• The National Highway Traffic Safety Administration (NHTSA) on Thursday announced it granted autonomous vehicle (AV) company Nuro with a temporary exemption from certain federal requirements on low-speed driverless vehicles.
• The exemption applies to Nuro's R2, a zero-occupant, low-speed delivery vehicle designed to carry consumer products such as groceries, packages and restaurant orders. Nuro is the first company to be granted such an exemption, marking "a milestone for the industry," Nuro Co-founder Dave Ferguson wrote in a blog post.
• Ferguson said R2 will begin public road testing in Houston in the coming weeks. Nuro will be permitted to deploy 5,000 R2 vehicles during the two-year exemption, according to NHTSA. 

Dive Insight:

R2 is a second-generation vehicle from the AV company, which successfully launched its R1 vehicle in Scottsdale, Arizona in December 2018 through a delivery pilot with Kroger. The R2's strategic design includes zero-emission propulsion and a custom battery solution, and due to the exemption, it will not include features such as mirrors or a windshield, which are traditionally required by the U.S. Department of Transportation (USDOT).

In a statement, U.S. Secretary of Transportation Elaine Chao said such requirements "no longer make sense" for Nuro's newest vehicle, since the vehicle will not hold humans.

Ferguson said the exemption follows three years of discussion with the agency to figure out how to separate requirements on zero-occupant delivery vehicles, like the R2, from driverless vehicles designed to carry passengers. In late 2018, the company even submitted a voluntary safety report to USDOT to accelerate the deployment of such vehicles.

Investors are bullish on Nuro's future too. The company raised $940 million in financing in February after its initial pilot in Scottsdale. Since then, the company expanded its partnership with Kroger to Houston and in December announced a partnership with Walmart for grocery deliveries in Houston as well. In June, Nuro said it will eventually launch a pizza delivery partnership with Domino's, which will be complemented by R2 vehicle tracking via the Domino's app. The company is also reportedly in talks with Uber about a partnership to automate Uber Eats deliveries. 

Once on the road in Houston, the R2 vehicles have the potential to transform how consumers interact with on-demand deliveries. 

While foodies in Houston may be excited about this step forward for Nuro, some industry leaders are disappointed in NHTSA's decision. In a statement, Larry Willis, president of the Transportation Trades Department, AFL-CIO (TTD), said the exemption was issued "without any thoughtful regulatory framework in place," and puts the "interests of tech companies over the safety of the traveling public."

"Until legitimate safety concerns raised by transportation labor and many other key stakeholders are addressed, the exemption of standard safety features on autonomous vehicles is a dangerous and completely irresponsible abdication of NHTSA’s duties," he said.

Other organizations, like Securing America's Future Energy (SAFE), have applauded the NHTSA decision.

Regardless of public and industry feedback, it is likely Nuro will move forward with its deployment plans and pave the way for similar self-driving delivery companies. And as such delivery vehicles are tested, it is expected consumers will become more comfortable with the concept of driverless vehicles.

During Nuro's exemption period, the NHTSA will closely watch the company and require mandatory reporting regarding the operation of R2s and their automated driving systems. "As always, we will not hesitate to use defect authority to protect public safety as necessary,” said NHTSA Acting Administrator James Owens in a statement.