WSJ Tech News Briefing: Driverless – Waymo and the Robotaxi Race—Under the Hood

Release Date: December 15, 2024 | Host: The Wall Street Journal

Introduction

In the latest episode of WSJ Tech News Briefing, titled "Driverless: Waymo and the Robotaxi Race—Under the Hood", host Danny Lewis delves deep into the competitive landscape of the autonomous vehicle industry. Focusing on Waymo's continued dominance, the episode contrasts its advancements with Tesla's ambitious forays into driverless technology and explores the broader implications for the future of robotaxis.

Tesla’s Bold Step into Driverless Technology

The episode opens with a recount of Tesla's high-profile unveiling of its first prototype driverless car in October. CEO Elon Musk showcased the futuristic Cyber Cab during a meticulously staged event at Warner Brothers Studios in Burbank, California.

Elon Musk [01:04]: "As you can see, I just arrived in the Robo Taxi, the cyber cab."

The demonstration featured a sleek, gull-winged two-seater vehicle devoid of a steering wheel, brake or accelerator pedals, and side-view mirrors—marking Tesla’s definitive pivot to entirely driverless vehicles.

Elon Musk [01:19]: "Future is here and it feels great."

Despite the spectacle, the event lacked substantive details on the business model and technological specifics, leading to investor unease and a subsequent nearly 9% drop in Tesla shares—the company's worst day in 2024.

Waymo’s Established Lead in the Robotaxi Market

Contrasting Tesla's theatrical debut, Waymo, backed by Alphabet, has already established a robust presence in the real world. Operating in Los Angeles, Waymo’s robo taxis are available for public hailing across 63 square miles, offering autonomous rides without the need for a human driver on board.

Danny Lewis [02:07]: "Members of the public can already hail a driverless car to get around Los Angeles."

Waymo currently conducts approximately 150,000 paid rides weekly across four cities, significantly outpacing competitors like Tesla and Amazon's Zoox, which remain in testing phases.

Technological Divergence: LiDAR vs. Camera-Based Systems

A pivotal discussion centers on the differing technological approaches within the industry, particularly the use of LiDAR versus camera-based systems for autonomous driving.

Elon Musk [05:12]: "Anyone relying on LIDAR is doomed."

While Waymo and Zoox employ LiDAR sensors to map and interpret their surroundings, Tesla has opted to rely solely on cameras and artificial intelligence algorithms, eliminating the costly LiDAR components. This "end-to-end machine learning" approach allows Tesla to use real-world data from its fleet to train its AI systems without manual programming for every scenario.

Phil Koopman [06:12]: "Camera goes in one end, wheels spinning, comes out the other end. It's all machine learning through and through."

However, experts like Professor Phil Koopman from Carnegie Mellon University caution that while camera-based systems may handle common driving situations effectively, they struggle with rare or complex scenarios, raising safety concerns.

Economic Pressures and Cost Challenges

The financial feasibility of operating a robo taxi service presents significant challenges. Waymo’s vehicles cost approximately $125,000 each, factoring in Jaguar I-Pace SUVs, multiple LiDAR units, cameras, and radar systems, compared to Tesla’s estimated $25,000 to $30,000 per Cyber Cab.

Shweta Kajuria [10:26]: "The cost of a fully autonomous car, as it stands today with Waymo, includes the cost of the cars."

Additionally, Waymo incurs substantial expenses in computing power, research, and maintenance, leading to projections that it might take up to 10 years to break even on its $15 to $20 billion capital investment.

Strategic Partnership with Uber

In a strategic move to enhance operational efficiency and market reach, Waymo announced a partnership with Uber to integrate its robo taxis into Uber’s platform in Austin, Texas, and Atlanta, Georgia. Under this agreement, Uber assumes responsibilities for vehicle maintenance and ride booking, while sharing revenue generated from Waymo rides.

Elon Musk [13:05]: "You could see that easily driving more adoption of Waymo as long as enough people opt in."

This collaboration is seen as a blueprint for Waymo to expand into new cities without the high costs associated with scaling operations independently. However, it also raises questions about rider adoption and the seamless integration of driverless technology into existing ride-hailing ecosystems.

Path to Profitability and Future Prospects

Waymo faces the dual challenge of reducing operational costs and increasing ride adoption to achieve profitability. High vehicle costs and the expensive nature of end-to-end AI technologies remain significant hurdles. Additionally, maintaining a competitive pricing structure is imperative to attract and retain riders who might otherwise opt for cheaper, human-driven alternatives.

Shweta Kajuria [17:42]: "We did an experiment with 20 rides within San Francisco and 20 different ride requests within Phoenix... Waymo was consistently approximately 25 to 30% more expensive than an Uber ride."

Despite these challenges, Waymo continues to focus on expanding its market presence, recently announcing plans to launch its service in Miami, Florida, by 2026.

Waymo's potential shift towards licensing its technology to other automotive manufacturers, rather than operating its own fleet, presents another avenue for revenue generation. Analysts suggest that partnerships and technology integration could provide higher-margin returns, essential for long-term sustainability.

Shweta Kajuria [19:05]: "We are more likely, in my view, to see a scenario in the next three to five years whereby way more technology is then integrated into [other automakers]... Waymo gets a high margin licensing fee for that technology."

Investor Confidence and Industry Outlook

Waymo’s strategic maneuvers have attracted substantial investor confidence, evidenced by a recent $5.6 billion investment from firms including Andreessen Horowitz, Silver Lake, and Tiger Global. Investors praise Waymo's balanced approach to ambitious goals and responsible execution, emphasizing its leading position in the market.

Tiger Global Founder Chase Coleman [19:23]: "Waymo had balanced ambitious goals with responsible execution."

Silver Lake Co CEO Egon Durbin [19:23]: "Waymo's driving technology leads in earning trust."

With competitors like General Motors stepping back from the robo taxi race, Waymo's lead appears to be widening, positioning the company as a pivotal player as the industry evolves.

Miles Krupa [21:30]: "If you can get the name recognition with people that associate self driving cars with Waymo and you feel safe in Waymo, building that brand loyalty right now might really pay off..."

Conclusion

The episode concludes with a nuanced perspective on Waymo’s future, highlighting both the immense potential and the substantial challenges that lie ahead. As Waymo navigates the intricate balance between technological innovation, operational efficiency, and market expansion, its journey offers critical insights into the evolving landscape of autonomous transportation.

Notable Contributors:

• Danny Lewis: Host and Producer
• Miles Krupa: WSJ Tech Reporter
• Megan Bobrowski: WSJ Tech Reporter
• Shweta Kajuria: Analyst, Wolf Research
• Phil Koopman: Professor, Carnegie Mellon University
• Elon Musk: CEO of Tesla

For those interested in the cutting-edge developments in autonomous vehicle technology and the competitive dynamics of the robotaxi industry, this episode offers a comprehensive and insightful analysis.