Parallel Systems Emerges From Stealth With $50 Million For Autonomous Electric Trains—But Will Its Plan Work?

David Shultz

David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.

Parallel Systems
Image courtesy of Parallel Systems

Parallel Systems has big dreams for the future of railway freight operations, and it seems that the venture capital world has taken notice.

The Los Angeles-based transportation startup announced a $49.55 million Series A funding round as it emerged from stealth mode on Wednesday. The round was led by Anthos Capital, with additional investments from the likes of Congruent Ventures, Riot Ventures and Embark Ventures.

Comprised of former SpaceX, Google and Tesla engineers, Parallel Systems is aiming to develop autonomous and electric freight train cars that would make the American shipping industry greener and more efficient.


“We’ve been pretty quiet about what we’ve been doing,” Parallel Systems CEO Matt Soule, formerly the principal avionics engineer at SpaceX, told dot.LA. “Our website has been pretty barren.” Soule co-founded the company two years ago with fellow former SpaceX engineers John Howard and Ben Stabler. Including $3.6 million in seed funding, the startup has now raised more than $53 million to date.

Parallel Systems’ technology relies on replacing traditional diesel-powered locomotives with battery-powered freight cars. In its model, each train car is self-powered, and can break apart from or join together with other cars as needed. In theory, this ability to autonomously break apart and reassemble as needed would reduce the need for switching stations, where trains are reorganized and rerouted manually.

It could also drastically reduce the significant physical footprint of trains, converting them from two-mile-long behemoths into “platoons” of 20-to-50 cars that wouldn’t require massive terminals for loading and unloading. Smaller trains would be able to travel closer to their final destinations before being unloaded—reducing trucking emissions, which account for roughly 7% of all greenhouse gas emissions in the U.S., in the process.

“The opportunity we’ve been after is kind of decarbonizing freight from a new angle,” Soule said.

All of these ideas would be beneficial toward alleviating America’s clogged supply chains and reaching its ambitious carbon emission goals—if they were able to be integrated into America’s existing rail infrastructure. On that front, some experts are skeptical.

“My first instinct was that this looks like SpaceX engineers getting bored and working on something that they know nothing about,” Chris Caplice, executive director of the Massachusetts Institute of Technology’s Center for Transportation & Logistics, told dot.LA. “They didn’t think about the larger system—whether it's regulatory, the network itself, the rail operations or the labor involved. I think they just found a technological solution to a problem they wanted to solve.”

From left: Parallel Systems co-founders Ben Stabler, Matt Soule and John Howard.Courtesy of Parallel Systems

Caplice worries that Parallel Systems’ technology fails to consider the realities of America’s existing rail network. Today, rail lines are divided into signal blocks, which can range from less than a mile to 15 miles long; these blocks are in fixed geographic positions, and only one train at a time is permitted into any signal block. For the new autonomous, single-car system to work, “you would have to put in thousands more control points in different places to get the network chopped down small enough to do this,” according to Dale Lewis, the former director of strategic analysis for CSX Transportation.

Even then, it likely still wouldn’t look like what Parallel Systems is imagining, with cars continuously breaking in and out of platoons. To realize what the company is pitching, Lewis says you’d need a complete revamp of the entire rail system.

“If [Parallel Systems] can bring in a couple people who have deep experience in operations planning…and sit with them for a day to go through how this would fit in the system, they’d probably come to some different conclusions about what they’ve got,” he said.

While the startup doesn’t employ any full-time railway operations specialists, Soule says Parallel Systems has brought in “veterans from the industry” who have helped them “understand the business.” He says safety is a top priority for the company; indeed, their vehicles would feature AI that would allow them to come to a stop quicker than traditional trains. No one is going to argue against safer trains—though most modern trains already come equipped with a system known as Positive Train Control, which autonomously prevents train-to-train collisions and other human errors.

Still, the 24-person firm is planning to hire heavily on the software side as it tries to figure out how to integrate its ambitious designs into the existing infrastructure. On the hardware side, Parallel Systems is working toward the second iteration of its prototype battery-electric rail vehicle, and testing it on a closed track in California.

“We’re going as fast as we can in terms of building the tech,” Soule said.

Parallel Systems Explainer VideoVideo via www.youtube.com

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The Good, the Bad and the Ugly from LA’s EV Scene

David Shultz

David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.

The Good, the Bad and the Ugly from LA’s EV Scene

I’ve been on vacation this past week, so of course there’s been a ton of news in the Southern California EV world that I missed. I’m not even supposed to be back online until Tuesday, when I’ll be covering SXSW in Austin, Texas. But so great was the deluge of news that I’ve holed up in a Starbucks off of I-70 to whip up this little recap for you. Here we go.

Rivian

I covered Rivian’s Q4 earnings in last week’s newsletter. The results weren’t particularly pretty, with the company suggesting production guidance of just 50,000 units for 2023, which was below what many analysts had forecasted. But then, on Friday, Rivian employees told Bloomberg, that internally the company was saying it might be able to hit 62,000 units in the fiscal year. Shortly after that, however, Rivian announced that 50,000 vehicles was still the official target and that the larger figure had been taken out of context by employees. The company’s share price has fallen 24% since the earnings call.

But wait there’s more: Rivian had previously announced that it intended to lay off 6% of its workforce, and last week we got some more details about where those cuts will come from. The Palo Alto office is slated to lose 240 workers, and 204 look like they’ll be cut from the Irvine HQ, according to reporting from Carscoops.

But wait there’s even more: Rivian also announced today that it would recall 13,000 of its vehicles for issues related to an issue with the seatbelt that could prevent the passenger airbag from functioning as intended. This won’t be Rivian’s first recall, and it surely won’t be its last. Recalls are common and necessary in the automotive industry, but the news comes at an inopportune time for the EV maker.

Lastly, Rivian announced yesterday that it intends to raise $1.3 billion in cash to help it through the coming scale up phase. As I pointed out in the Q4 earnings article, the company’s current cash burn rate looked a bit too aggressive to bring Rivian into 2026, when the R2 platform is expected to launch and provide a pathway to profitability for the EV hopeful. An additional $1.3 billion helps to narrow that gap.

Vinfast

Some good news from Vinfast, actually. The company has delivered its first cars to US customers. Since its 999 SUVs arrived in the United States back in mid December 2022, the delivery process has been delayed by software issues with the vehicles. Last week, however, Vinfast announced that it had delivered 45 VF8s to customers. When the rest of the shipment will be ready for delivery is still unknown, but hey, it’s something. The news comes just a week after Vinfast cut its advertised lease price for the vehicle by a whopping 50%, which if you’ve been following dot.la’s coverage, brings its price much more in line with its value compared to competitors. Whether it’s enough to sway US consumers to take a risk on a new technology produced by a mostly unknown foreign brand, remains to be seen.

Mullen

On March 1st, Mullen’s top financier, Terren Peizer, was charged with insider trading by the Securities and Exchange Commission. Peizer and Mullen have a long history and Peizer has served as CEO of both Ontrak and Acuitas Holding Group. Back in April 2022, Hindenburg Research highlighted Peizer’s large stake in Mullen (29%), and his numerous ties to finance guys who’d found themselves in prison for various sorts of fraud. Now it seems the SEC is taking a look into Peizer himself. According to reporting by InvestorPlace, the agency has charged Peizer with selling $20 million in Ontrak stock while in possession of “material, nonpublic information (MNPI) concerning the company’s largest customer.” Whoops.

Meanwhile, Mullen announced today that it would showcase two new electric delivery vehicles at the NTEA Work Truck Show that’s ongoing this week. The press release contains images of the same class 1 cargo van that Mullen acquired when it purchased Electric Last Mile Solutions last fall, as well as a Class 3 low-cab forward delivery truck. How or where Mullen plans to make these vehicles at scale, remains unknown. But CEO David Michery said that both vehicles are coming to market later this year. Mullen would likely need to raise huge amounts of capital to bring manufacturing capacity online to deliver any meaningful volume of product, but the company does have multiple factory assets.

LA Venture: Toba Capital’s Patrick Mathieson on How VCs Can Better Support Founders

Minnie Ingersoll
Minnie Ingersoll is a partner at TenOneTen and host of the LA Venture podcast. Prior to TenOneTen, Minnie was the COO and co-founder of $100M+ Shift.com, an online marketplace for used cars. Minnie started her career as an early product manager at Google. Minnie studied Computer Science at Stanford and has an MBA from HBS. She recently moved back to L.A. after 20+ years in the Bay Area and is excited to be a part of the growing tech ecosystem of Southern California. In her space time, Minnie surfs baby waves and raises baby people.
LA Venture: Toba Capital’s Patrick Mathieson on How VCs Can Better Support Founders
Patrick Mathieson

On this episode of the LA Venture podcast, Toba Capital Partner Patrick Mathieson discusses his thoughts on investing in SMB platforms, gross revenue retention, and other things he looks for when investing.


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