Parallel Systems, an electric railroad startup, said on Wednesday it has raised $49.55 million in Series A funding to build autonomous battery-electric rail vehicles to move freight.
What Happened: The Culver City, California-based startup was founded in 2020 by three former SpaceX engineers.
SpaceX is a space exploration company that designs, manufactures and launches advanced rockets and spacecraft and was founded in 2002 by Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk.
Parallel revealed it is coming out of stealth mode as the first round of angel funding follows a seed funding of $3.6 million.
The latest funding round was led by Anthos Capital, and includes investments from Congruent Ventures, Riot Ventures, and Embark Ventures.
Electric Railroad Freight: The funds will be used to further build a fleet of electric, self-powered rail vehicles that could be more cost effective than traditional trains or trucks, execute advanced testing programs and hire more people, the company said.
“We founded Parallel to allow railroads to open new markets, increase infrastructure utilization, and improve service to accelerate freight decarbonization,” said Parallel CEO Matt Soule.
“Our business model is to give railroads the tools to convert some of the $700 billion U.S. trucking industry to rail.”
See Also: Ballard Bags Additional Order To Support Canadian Pacific's Hydrogen Locomotive Program Expansion
The startup claims its patent-pending autonomous battery-electric rail vehicles are more flexible than traditional trains and can also take off pressure from the trucking industry as it faces overwhelming demand and a driver shortage of 80,000 U.S. drivers.
Why It Matters: The U.S railroad system is spread over 140,000 miles of track. Though, according to Parallel Systems, less than 3% of that network is occupied by active trains at any given moment, leaving huge scope for making freight deliveries economical.
Traditional railroads companies usually focus on moving shipping containers over distances of more than 500 miles. The startup says there’s an opportunity to bring more business to rail by improving the unit economics over shorter distances.
The U.S. railroad sector last year witnessed a huge consolidation when Canadian Pacific Railway Ltd (NYSE:CP) acquired Kansas City Southern for $27.2 billion.
