Parallel Systems, a downtown Los Angeles-based company, bills itself as the world’s first autonomous battery-electric rail system.

Its battery-powered autonomous freight system works with existing freight devices, like train cars that carry shipping containers through the vast network of the U.S. railway – once a symbol of American industrialism that fell out of favor as paved highways made trucking the choice mode of on-land, short-distance logistics.

Parallel, which raised $38 million in series B growth capital in April and launched its first pilot program in Georgia, is one of several companies in Los Angeles pushing to crack the code of self-operating vehicles. The industry has been enticing to investors – about 25% of all venture funding in the autonomous space since 2016 has gone towards vehicles, according to PitchBook. We are also approaching 10 years of venture funding and startup innovation to the space – and yet, in a city where our expansive roads and busy ports necessitate updated transportation, autonomous transportation is still far from a reality.

When an emerging industry like autonomous vehicles gains popularity, industry and government regulators scramble to create set standards. It’s something Brandon Schuh, head of specialty insurance at Christensen Group Insurance, saw with the emergence of Uber and other rideshare platforms.

“I think that’s largely why you see Waymo in a few specific cities,” Schuh said. “Because the regulatory environment there is where they haven’t necessarily figured it out, but it isn’t keeping them necessarily from (operating on the roads).”

And while robotaxis, delivery robots and self-operating trains have used Los Angeles as experimental grounds, a litany of problems still surround the wide adoption of the autonomous movement. That ranges from the technology itself to brewing insurance legalese.

“Since no company has really gotten to that point, I don’t even know if such a regulatory framework exists at the moment,” said Rahul Jain, a professor at the Viterbi School of Engineering at the University of Southern California.

Testing the market

Santa Monica-based Anthos Capital, an early investor in Parallel Systems, led its series B investment round. Other investors like Venice-based Riot Ventures participated in the round, which culminated in around $100 million in funding to date for Parallel Systems.

Parallel Systems also announced in April that it would kick off its first autonomous rail commercial pilot program in Georgia after receiving approval from the Federal Railroad Administration to experiment on 160 miles of track.

“Federal Railroad Administration approval and closing our series B funding round are two critical milestones for Parallel Systems,” Matt Soule, the founder and chief executive of Parallel Systems said in a statement. “Together with our strategic partnerships within the rail industry, Parallel Systems is now poised to fully commercialize our battery-electric rail system, starting with the FRA-approved project in Georgia.”

Parallel Systems is bringing the often-neglected form of shipping and delivery into the 21st century. The company has said that its technology attaches and detaches train cars automatically, and brakes faster than current trains do.

The pilot program entails utilizing the Port of Savannah to reach other distribution centers on the East Coast, which the company said could help decongest roads and ports by taking large trucks off highways and putting those goods on the rail system, while reducing pollution and offering a faster option.

Slow but steady approach

But the company’s pilot program covers a small sliver of the more than 100,000 miles of rail that traverse the United States. It’s a strategy deployed by many companies that attempt to build autonomous vehicles.

“Some of these companies that do a rollout, they don’t do a rollout all across the state,” Jain said. “What stops them? It’s because it’s expensive to do that mapping over and over again. So, you would see the rollout in a limited domain.”

Amazon.com Inc. has staked its claim in Los Angeles. Zoox, its autonomous vehicle arm, announced in April it would begin collecting mapping data of the city as part of a test and laying the foundation for future service. With that, it may be a while before potential riders get a chance to jump into one of Zoox’s self-driving, futuristic shuttle carriages. Los Angeles marks the sixth testing site for Zoox. Company representatives declined to be interviewed for the story.

Many autonomous vehicle companies rely on high-definition maps, often captured by an array of LiDAR sensors, to see what’s in front of them and operate reliably and safely. As a result, roads and streets that change due to construction or weather changes need to be constantly remapped, and companies will choose areas to deploy their autonomous vehicles based, in part, by how easy that area is to map.

“Some of these vehicles are driving around collecting data and mapping,” Jain said. “It’s basically part of the experimental deployment.”

The insurance question

Even if the technology side were to reach peak development, ancillary problems surrounding local regulations, municipal jurisdiction and insurance coverage is a roadblock for widespread adoption of autonomous vehicles, according to Jain.

“When it comes to mass deployment, the bar for that is much higher than for limited deployment for experimental purposes,” Jain said.

Waymo, the Mountain View-based company owned by Alphabet Inc., began operating in Los Angeles County in November – what was, at the time, the largest city in which the company’s robotaxis would operate. However, it is only able to operate on surface streets without a person behind the wheel, and the rollout came months after initiating its pilot program in the area.

“We build in-roads with the community; this includes collaborating with and educating local stakeholders including policy makers, community leaders, local nonprofit organizations, and of course emergency personnel and first responders, who are trained to effectively engage with our vehicles,” Franklin Trujillo, the head of commercialization programs at Waymo, wrote in an email. “Once we complete this process, we roll out slowly and incrementally, typically starting internally with employees and eventually through a full public roll out.”

Alphabet Chief Executive Sundar Pichai said during the company’s earnings call that Waymo may be in the business of selling its autonomous vehicles for personal use – though not at any time soon.

“When more of these actually get on the road and then individuals start having vehicles that have autonomous capabilities, the policy form is going to have to probably substantially change because the current one doesn’t really account for what’s happening right now in terms of fault,” Schuh said. “Whose fault is it?