09/17/2020

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Drone Delivery Faces Ups and Downs



One Company Finds a Niche in the EV Space

Workhorse Group (WKHS), an electric vehicle maker, is developing truck-mounted drone package delivery systems. The company’s shares rose by about 400% so far this year as it hones its unique strategy in the EV sphere and bets on the future of delivery.

Unlike some other players in the EV industry, like Tesla (TSLA) and Nikola (NKLA), Workhorse is entirely focused on delivery. It sees drones as a way to enhance the capabilities of its electric vehicles and to make last-mile delivery to businesses and homes more environmentally friendly.

Facing Challenges

Though there is much potential for delivering products with drones, developing the technology to do this safely and effectively has been challenging. Workhorse has a patent on technology for launching drones from vehicles in motion, but is still working to perfect the hardware and software for these drones.

As Workhorse experiments with its drone, called the Horsefly, it has had some breakthroughs—but has also faced challenges with the drones’ navigation software and structural integrity.

Workhorse’s drones are yet to be certified by the Federal Aviation Administration. For now, they can only be used if the person flying the drone can see it for the entire flight. The company says that FAA certification is likely 12 to 18 months away.

Operating in a Competitive Airspace

Other companies like UPS (UPS) and Wing (which is owned by Alphabet) are also betting on this futuristic form of delivery. Wing became the first drone delivery company to receive US based commercial delivery approval from the FAA last April. UPS was granted FAA approval to operate a fleet of drones as an airline in October. Then, just yesterday, the FAA approved Amazon’s Prime Air delivery drone fleet. The FAA approval permits Amazon to carry packages on small drones “beyond the visual line of sight” of the operator.

Widespread use of commercial delivery drones will likely take some time. Developers have faced more challenges with drone development and with FAA approval than some people predicted when drone technology was first being built. Despite the setbacks, customers and investors alike will have their eyes on the skies to follow the future of delivery by way of drones.


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