Ocado has invested £10 million into Oxford-based self-driving car startup Oxbotica that includes a partnership to develop autonomous vehicles for curbside deliveries.

The investment came as part of a funding round for Oxbotica and forms the basis of a multi-year collaboration that ultimately aims to reduce costs for Ocado.

The deal is an extension of an existing partnership between the two companies and will focus specifically on developing new hardware and software interfaces for autonomous vehicles that will be used in and around Ocado’s Customer Fulfilment Centre (CFC). This includes a range of logistical drones for use across its factories and loading areas.

Both firms are also interested in “last mile” delivery drones that take goods from vans to front doors.

Data sharing agreements have also been signed as part of the deal, which includes the fitting of “data capture capabilities” inside Ocado delivery vans that will be used by Oxbotica to train and test its technologies. The idea is that the data will highlight which Oxbotica technologies will suit Ocado’s needs.

“We are excited about the opportunity to work with Oxbotica to develop a wide range of autonomous solutions that truly have the potential to transform both our and our partners CFC and service delivery operations, while also giving all end customers the widest range of options and flexibility,” Ocado’s chief of advanced technology, Alex Harvey said.

The partnership could also lead to new jobs with Ocado, which is creating new engineering teams to work specifically with Oxbotica. While no figures have been provided, we do know these roles will be within Ocado’s Advanced Technology division, which is already separate from the team that develops the Ocado Smart Platform.

Logistical costs make up a large part of Ocado’s overall expenditure, the firm said. Approximately 1.5% of sales in the UK are lost due to the cost of moving finished orders from the fulfilment centre to delivery vans, while 10% of sales are lost when delivering goods from the van to the door. Labour also represents 50% of these costs, according to Ocado.

Ocado expects to see the first prototypes of some early use cases for autonomous vehicles within two years.