Latest / Autonomy Insiders / From Rental Cars to Robotaxis: Hertz’s Bet on Fleet Operations | Doria Holbrook, CEO Oro Mobility
Transcript
- Daniel Abreu Marques: Welcome to Autonomy Insiders, the show where global industry leaders in autonomous driving unpack their real-world insights. Doria: look, AVs are still gonna need people to operate them. And so building a people centric business with safety and people at the core of what we do is only going to help us be more effective as operators. underneath every AV stack is an actual car that's got to be maintained. the challenge with AVs is that there isn't a proven residual market. So if a company that finances a vehicle wants to take a car back, there's a known value of what that car is worth. That isn't how AVs exist yet. We will get there at some point, but it's not there yet. Daniel Abreu Marques: Welcome back to Autonomy Insiders. I'm your host, Daniel, and most of the attention in autonomous vehicles goes to the technology. But there is a layer underneath all of it that decides whether any of this becomes a business because somebody has to charge these cars, clean them, fix them, and get them back on the road before the morning peak. And that layer is where a very old industry is quietly repositioning itself. And in April, Hertz launched Oro Mobility. A separate operating company built to run fleets for autonomous and driver led mobility platforms. And my guest today is Doria Holbrook, CEO of Oro Mobility. And before Hertz she was at Cruise She was at Amazon, where she helped build the last mile delivery network. So Doria, welcome. So happy to have you on the show today. Doria: Thank you so much. I'm excited to be here. Daniel Abreu Marques: let's start with the basics. can you give me Oro in maybe one or two sentences? So how would you describe it to someone who has never heard of it? Doria: Yeah, Oro is really focused on servicing the ownership operation orchestration layer that connects supply and demand platforms and fulfilling Ride Hail and other demand, whether that's driver-led or driverless. Daniel Abreu Marques: And can you also walk me back? So who had the idea and what was the moment inside of Hertz where somebody said we should build a separate company for this? Doria: that's a good question. You know, I think we have been in the rideshare rental business, which is the most adjacent to Hertz's core business for about the last 10 years. And so as we have seen the industry evolve, it became clear that there was a need for this rapid turn mass dispatch capability that Hertz already had. We just need to apply it in a new use case. And so we launched our managed fleet business. where we put Oro drivers in Oro vehicles to fulfill ride hail demand on demand platforms. About a year and a half ago in pilot, and then we decided to commercialize about a year ago now, last September. And then from there it was just a decision of would it make the most sense to commercialize under the Hertz brand name or should we actually go launch a separate company to allow us to go even faster. And that's where Oro came from, because we know that innovation in a large company can be difficult. And so creating more of that independence allows us to go and break stuff and move very quickly. Versus in Hertz, where it would be, a higher risk for the business to do the same thing. So that's really where it came from. And then you know, in January we said should we take that one step further? And one announce it to the world, what's going on behind the scenes. And then two, should we actually go out and fundraise independently to try to get additional investment and growth capital into the business? Daniel Abreu Marques: as you mentioned, Hertz is a hundred year old rental company and building a new business inside such an established company is hard. So what have you found most challenging Doria: Yeah, I think the hardest part is large companies run a lot of pilots. And so getting folks to go from us is just another thing we have to test to be excited about the testing and then knowing, you know, we're actually gonna turn this into something. This isn't just another test that we're running. And so as we made that pivot from testing to commercialization. was really about telling the story and winning over the hearts and minds of our people. And that came over time. I think the other thing that's been challenging about innovation within a large company is making build versus buy decisions about where do you use the existing infrastructure, where do you go augment infrastructure, where do you build your own technology versus leverage the existing technology versus go and vendorize new technology? So everything across both the real estate and the technology was a conversation throughout. and I think sometimes that can be tricky conversations even within a large organization. Daniel Abreu Marques: And you already mentioned that Oro is a new brand and I probably think something like Hertz Mobility Solutions or something like that would have carried recognition. Why did you decide to name the new company Oro Mobility instead of something that connects to Hertz? Doria: Yeah, so our origin story is with Hertz. So Ouro is gold in Portuguese. And so we take that from our origins within Hertz. but we ended up going with a different brand, even grounded in the history that is Hertz, largely to try to continue to differentiate the products and services and capabilities that we're building within Oro versus what we would be building purely as something tangential to Hertz. And so it was really a goal to create both the connection back to our origins as well as a sign of the separation and independence that we're working towards. Daniel Abreu Marques: Makes sense and can you also tell me what was the the market signal that told you that the timing is the right to go into AVs right now? Doria: Yeah, it's a great question. So we're starting to see autonomous vehicles, you know, expand from testing to commercialization. Now, then the question is where with what partners, who's at what stage in the journey, because not all AV companies are at the same point in their go to market. And so for us, the question was not necessarily is now the right time, but more so. How should we do it to get the timing right? And for us, that's why you'll hear us talk a lot about our driver-led businesses, which we see as a precursor to our driver-less businesses. Because it allows us to build the infrastructure, the capabilities, the turn times, the SOPs, the operating rhythm of a business. while you have revenue and profitability against it and then convert that business to driverless operations over time or I would actually augment the business to driverless operations over time. So when you think about a driver coming in from dispatch, that vehicle needs to get cleaned, charged, turned, in minutes or less than 30 minutes before the next set of dispatch needs to happen. That Skill is the exact same one that we'll need to use when an AV is coming in. It needs to be turned quickly and dispatched quickly. The other thing that this allows us to do is that our driver-led rental business has real estate throughout, you know, 33 markets in the US. And that retail footprint, we think about that as our pit stops versus our larger depots. And so we're able to build those pit stops throughout the cities. That AVs could stop at for opportunistic charging, they could stop at for lost and found, for quick cleaning. And together, that business today is, you know, we have 45,000 vehicles in that fleet. It's growing, it's it's profitable. And so we're able to start building out this network and these capabilities, but with a business that exists today that's profitable and growing today. Daniel Abreu Marques: now let's get really concrete about what Oro actually sells on the AV side. So can you break down the service stack? So if I'm an AV developer and I sign with Oro, so what exactly am I buying and what is still the responsible of them? Doria: Great question. So Oro will own, operate, and orchestrate AVs. So that means you can operate out of our depots, you can leverage our maintenance services, our technicians, our turn times. We can run the depots for you. And that's sort of, you know, I would say the second component of this is we work with the AV partners to find out what do they want to do, what do they want partners to do? How can we support and help them scale their businesses? And so some of it is meeting. different players where they are in their crawl walk run journey. and it's really about serving those customers in whatever they need at that point in time. So some folks need safety drivers, some folks need supervised driving, some folks just need real estate access, some folks need advice on how to do maintenance on the core vehicles. So we do all sorts of stuff, whether it's a la carte or full service, we're really here to help accelerate the development of this industry. Daniel Abreu Marques: That sounds great. And in some offerings I think there is somehow a grey zone. So some things like remote assistance, incident response or roadside recoveries. So where do you as Oro draw that line? Doria: Yeah, I would say remote assistance is one that we're open to. We're not doing it today. we have large teams that are capable of expanding into that. We run obviously large call centers today. now I know that that capability is somewhat different than a roadside or a remote assistance, but those same capabilities and skills can be adapted for the the remote assistance piece. We already have a huge roadside business today. across not only the 45,000 vehicles in Oro's fleet, but across the 500,000 vehicles in Hertz's fleet, there's capabilities that we can leverage as we think about roadside and other capabilities. So it's actually all grounded in the fact that we have been running very large fleets through their entire life cycle for hundred years that allows us to adapt that to AVs Daniel Abreu Marques: Makes sense and you already explained also that you have two different businesses under one roof, so the driver-led side and also the autonomous fleet operations. Doria: Yep. Mm-hmm. Daniel Abreu Marques: and where are the synergies though? So are those two different companies under one roof, or is it more like one company with shared infrastructure that you can leverage for both business units? Doria: It's a good question. I would say a little bit of both. We definitely can leverage shared infrastructure. So for example, let's say we have a vehicle that comes back that's having mechanical issues. While we could service it or outsource it to a local vendor, we could equally send it back to a Hertz depot to get maintenance and services on. that's an option. If depending on the type of maintenance that it needs, let's say it's a tire change, we have the tires in stock at the airport. We could pop the vehicle over, have the tires switched out and come right back to the business. And so you can decrease your turn times in that way. So I would say there's more overlap or sharing of capabilities that we can leverage. But to be honest, like we're still trying to define where those lines are between each organization. and that's part of what makes this fun and makes this an adventure. is we have so many shared capabilities that we could leverage and we're working through that over time. Daniel Abreu Marques: And what I'm also curious to learn about is so what are you actually measured on by your partners on the AV side? is it then vehicle uptime? Is it turnaround time in the depot? So what's the KPI that defines whether you're doing a good job? Doria: I would say it's a suite of KPIs. turn time is obviously one. except I would say safety is probably the key metric. And so how quickly are we responding to safety incidents? How quickly are we measuring safety? Do we have the appropriate safety management system in place to address the challenges that an AV might see? and then on the operational side, yes, it's absolutely turn time and a couple of things. I'm a little limited on what I can say given our contract and our NDA. But I would say it's you know it's pretty typical of what you would see in any fleet organization. So you have both your cycle time and turning the vehicles, the cycle time on every single piece of the pie, whether it's your charging cycle time, whether it's your tire change cycle time, whether it's just maintenance downtime overall. there's different cycle times and safety records that are required on everything. So for us it's a lot more about we want to get vehicles ready to be in service, whether they're dispatched into service or not, that their the capacity and the supply is ready to go as safely and quickly as possible. Daniel Abreu Marques: All right. Now I would say we have talked a lot about the model and now it's time to look at what's actually running today. and maybe we start on the driver-led side. So I think Atlanta was was your pilot and then you went to LA and San Francisco and northern New Jersey. So was there something that Atlanta teached you that changes then the model before you scale it to the other cities? Doria: a lot. So I think what some of the things that we learned in Atlanta, we're learning about hours of operation. What times do you operate in order to maximize and meet ride hail demand? We learned about safety inspection. So what is the appropriate amount of time and level of inspection that you need to do at the start and end of every shift? Do you snap to DOT standards? Do you write your own standards? Cause these are not DOT regulated vehicles. So a lot of these things we were refining through our pilot in Atlanta. I'd say the other thing is we learned about just how important it was to get to standard work on every piece of the supply chain. So even things like how do you configure the parking lot? How do you dispatch safely? What are your walking lanes versus your dispatch lanes? So we switched from 90-degree parking to 45 degree parking to linear parking, all in the goal of dispatching faster and more safely than before. Things like you know, it's really dark in the morning and at night in the winter. So what are your de-icing standards? How early, even things like we knew that we had to defrost all the vehicles so that we weren't spending time waiting for the vehicles, windshields to to de- ice. So it's actually as much as it's the big stuff, it is all these little micro procedures that you have to get locked down in order to get your highest amount of uptime as safely as possible. Daniel Abreu Marques: And another point I think probably some are arguing is that the driver-led business puts you also in a kind of strange position. So you're building a business around human drivers while also preparing to operate a technology that replaces them, maybe at some point. how do you think about it internally? I think you already gave some hints that it's also helping you to have early revenue and to learn a lot of things. but maybe also what are the drivers telling you Doria: So look, AVs are still gonna need people to operate them. And so building a people centric business with safety and people at the core of what we do is only going to help us be more effective as operators. So creating career paths for our drivers is a key part of what we're doing. whether that's going through maintenance academy, whether that's being a dispatcher, whether that's being a talent coordinator or an HR coordinator, these are all capabilities that we're gonna need to be successful. Daniel Abreu Marques: So maybe now let's go to the autonomous side. There you have the lucid gravity with the Nuro stack in the Bay Area on Uber's platform. So what does day one actually look like for your team there? And can you also walk us through the depot? Doria: Yeah, so day one for the team. So everyone's on boarded now. They're going through training. they're learning about safety checks, they're learning about all of the vehicles, what they need to be looking out for. they're providing feedback to the engineering teams of what they're seeing. So all good relationships between all the players, whether it's with Nuro with Lucid, with Uber, and the Oro team. So everyone's working really well together and we're excited about what is next on that relationship. And I can't comment a whole lot on the depot, I'm sorry. but you know we feel really lucky that we've been able to work as closely with these partners as we can to help ultimately make them successful and serve customers. Daniel Abreu Marques: And if you think about servicing a lucid gravity with a Nuro sensor set, I think it's not like servicing a typical Toyota or something like that. So you have sensor calibration and stuff. So how much of your existing technician workforce also transfers to that and how much did you have to rebuild from scratch, so to speak? Doria: Yeah, I get this question a lot, and I would say there's actually more overlap than one might think. So most vehicles today have some version of calibration, sensors. so vehicles are getting progressively more complicated, and our technicians have been coming along with those vehicles as the technology has advanced. And so to go from managing a car with different ADAS capabilities, it's not as big of a step to go to a fully autonomous vehicle. You know, I think the other component that we have had is we have owned large EV fleets. So we had a fleet of 50,000 Teslas several years ago. And so we've been maintaining those vehicles and we still have quite a few left in our fleet. And what's been unique about our EV strategy has been that we have gone down the path Of learning how to hold EVs for extended periods of time. So all the capabilities that we've been developing on those Tesla fleets and holding them for multiple hundreds of miles is going to be very similar in what it's going to take to maintain an AV, which we expect to hold for three, four, or five hundred thousand miles. And so all the skills and capabilities that we've been learning on our Tesla fleet will directly translate over into an AV fleet. And then what you're thinking about is okay, so now we have high voltage experience. Now we have all of your general wear and tear, your tires, your brakes, these are some of the things that go first on EVs because the vehicles are so heavy. So then the step change of getting from you know a more sophisticated ADAS system on an existing vehicle to level four autonomy, that's just another module on top of our maintenance academy workflow. So there's a lot of similarities. between the vehicles that exist today and where AVs are going. Because underneath every AV stack is an actual car that's got to be maintained. Daniel Abreu Marques: Absolutely. And you and you just mentioned your Tesla fleet era. And I think Hertz was also building out a significant EV charging infrastructure during that period. is that infrastructure now an asset that Oro can leverage as well? Doria: Absolutely. So we have both L2 and DCFC chargers throughout our network that we can leverage. if you think about where Ride Hail demand, for example, is concentrated. A lot of it is at the airports where a lot of our charging infrastructure has been built. We do have off-airport infrastructure as well. But if you think about it, Oro via Hertz now has depots at every major airport across the US and in many cases across the world. And if that's a concentration of where ride hail demand is, that's quite an advantageous position to be in as these scale and as they're able to start servicing these airports. And so having our charging network that we've learned about and built and this long hold strategy that we've been taking with EVs, it all coalesces quite nicely around bringing Robotoxis to market and bringing them to customers specifically at the airport where many people start their their journeys. Daniel Abreu Marques: And the the latest news that you had was an strategic investment that you announced So what does that mean in practice for you? So how does that structure help you also serve your customers and scale your business? Doria: Yeah, so we took an $80 million investment from a couple strategic partners, so Cohen Private Ventures, Certares and Knighthead. and what that allows us to do is one to create more independence and it's the growth equity that we've needed to accelerate our development. so I think between investment and independence, those are the two things that will help us go faster. And so some of the investments that you're going to see us make will be in infrastructure. So augmenting our existing depots or customizing our pit stops to meet more of an AV use case. You'll see us invest in fleets and buying additional vehicles and buying additional fleets. You'll see us invest in people. So, cultivating maintenance academy, allowing it to move up into new capabilities that can service both EVs and AVs will also be a key part of our investment that we make. And of course, technology. So you need tech in order to effectively manage your depots, your turn times, your information. All these AVs are very smart, but they need to send all of their intelligence somewhere to be interpreted and have actions taken against them. And so that needs to be ingested and then turned into tasks that your depot staff or back to OEMs in order. for that AV to have action taken on it. And so that is also a critical component of what the the depot tech needs to look like. Daniel Abreu Marques: Makes sense and if we look at your customer base, we now know you have Lucid and Uber as your partners, but probably there will be more platforms, so from the vehicle side and also virtual driver side, that you will partner with, correct? So Doria: Absolutely. Absolutely. So can't comment a whole lot on that yet, but hopefully soon. Daniel Abreu Marques: And yeah. Okay. And if we look at the competition, there are a lot of other names. So we have some like AMOVO , Moove and every one of them says operational excellence at scale, so to speak. So where do you believe that Oro is differentiated and what strength are the customers responding to the most? Doria: Yeah, I think there's a couple things. one, we're already present in 33 markets in the US with our rideshare rental fleet. We have 500,000 vehicles in the Hertz fleet that we've learned how to finance, manage, sell, disposition, take apart. that scale of operation, that ability to ingest, manage, turn. On a frequent basis, that's something that's really difficult to replicate. And you pair that capability with the speed of a startup, and you're gonna get the best of what a hundred years of fleet infrastructure, fleet management, fleet financing looks like with the speed and agility of a startup. So it's really the combination of these two things that's gonna differentiate Oro and help us serve our customers even better. Daniel Abreu Marques: And now if we think again about expansion, so what what's the unit of your next expansion? So would it be more like a next city, a new depot, or maybe a partner? What what would be next in your opinion? Doria: Both. I would say we're looking at new city expansions for our driver led fleet. And again, those are precursors for our driverless operations with strategic partners. So, I think you'll see us augment with additional partners as well as additional cities. And though that's really the method that we're taking to be responsible, judicious as we continue to expand our operation across. The US and then eventually the world. Daniel Abreu Marques: and maybe one more follow up question to the vehicle ownership because you mentioned also some part of the money you raised will be spent on fleet. so is there a difference between the driver led and the autonomous vehicle business in terms of asset ownership? Doria: So, you know, a vehicle is a vehicle is vehicle. and those vehicles need to be financed. There are differences between a driverless vehicle and a driver-led vehicle. So, the biggest thing is the residual value and understanding what that vehicle is gonna be at any point in time. Now, the challenge with AVs is that there isn't a proven residual market. So if a company that finances a vehicle wants to take a car back, there's a known value of what that car is worth. That isn't how AVs exist yet. We will get there at some point, but it's not there yet. And so the question is: if you have an unknown residual value at any point in time, you have a straight-line depreciation curve potentially. And it's really a matter of what's the financing structure that we're going to pursue. in order to account for that. And so if you think about, Hertz has $13 billion of assets under management, you know, hundreds of thousands of vehicles in really sophisticated asset back securities, that creates the diversification that you need in order to start absorbing potentially AVs and other vehicles into your ABS. And really the reason an ABS works so well is because of that diversification. But if you have exclusively only an AV ABS, there's not enough diversification with an unknown residual value market to get as many investors to buy in at efficient interest rates. And so that's really what we're working on is figuring out what's the right way to do that, leveraging the capabilities that we have through our existing ABSs and seeing how we essentially create a new mechanism for the industry. Daniel Abreu Marques: makes sense and Hertz has also a global footprint. and as mobility platforms expand, they probably expand globally. So how do you think about Oro's long term opportunity beyond the US? Doria: Yeah, so I think Europe's probably next for us. and we will go to market both through Hertz and through our franchisees throughout the world. You know, we have some of the best franchisees that we could ask for who have been operating for a very long time and we have a robust franchise program within Hertz. And so I think what that gets you is you get the power of the standardization, the standard operating procedures, the rigor, the technology by doing it ourselves. And then you get the hyper-local knowledge by working with our local teams or our local franchisees. And that's the power of partnership within our service offering. So still early days there, but couldn't be prouder of the franchise partners that we have around the world and the potential for us to work together in bringing these vehicles to market. Daniel Abreu Marques: Sounds good, but probably no timeline possible to mention here for a European expansion. Doria: Not yet, not yet. So we'll definitely as we move throughout the process, we'll of course be announcing and letting folks know. but for right now, I think we're might be a little different in that we like to prove stuff out before we tell the world about it. You saw that we were in operation for almost a year and a half before we told the world about Oro in a meaningful way. so I think you'll probably see that from us for the foreseeable future. Daniel Abreu Marques: Sounds good. And for you, so if you look in the future, what would success look like for Oro over, let's say, the next five years and what milestones will tell you you're on the right path? Doria: Yeah, I think for us, success looks like multiple cities, multiple markets of dispatch, scale for our managed fleet business, as well as multiple AV partnerships underway. Those would be the key milestones that I would be looking for. and then in addition, the safety record to back it up. So understanding that our safety management systems. And how we're running fleets is better to where the market is today. Look, there's people that die every single year on the roads in the US. And so AVs have a tremendous opportunity to cut that, And so if we're the operating partner that helps accelerate AVs to make an impact and save lives. We're gonna be out there doing everything we can to scale as quickly as we can with these AV partners because we have a lot of conviction that safety is one of the biggest reasons we're in this business. and so as long as we're creating that safe track record and serving our communities, that's how we'll also know that we're being successful. Daniel Abreu Marques: Absolutely. my last questions is in ramping up your first AV partner business with Lucid, was there something that surprised you or something that you had not modeled on day one that happened? Doria: I think when you go to market on unknown products, you model the unknown. And so for us, I think it was more about being patient, being willing to pivot, having this test and learn mindset and really a growth mindset as we went into the business. And so, all right, timelines slipped, no problem. How do we then pivot and deploy our people to keep learning? Okay. We're learning more. Should we switch them into learning turn times on the managed fleet and practicing some of those capabilities? and so I think as every curve ball gets thrown at you in this business, you can either get frustrated or you can say, okay, now what are we gonna do next? And how are we gonna learn from this moment? And ultimately, that's what we're focused on is just keep learning and sharing that knowledge out with our partners to make us both as wildly successful as we can. Daniel Abreu Marques: Perfect. So Doria, thank you so much for taking the time today and shed some light on Oro and your first deployments in the US. And I'm really looking forward to hearing more from Oro in the future and also hopefully soon in Europe, where I'm located. So thanks again for your time. see you soon. Doria: Sounds good. Thank you.