Weekly brief: How the Honda GM Cruise partnership changes everything

Waymo has won the race to commercialize robo-taxis and that’s all but a foregone conclusion at this point.

Its vehicles have covered the most ground, completed the most pilots and forged the most partnerships with local businesses and city, state and federal governments. The company is scheduled to deploy its full commercial service in Phoenix any day now. The finish line is near. No other autonomous vehicle player is even in sight.

However, what will start out as a robo-taxi hegemony is already looking vulnerable. Last week Honda and General Motor’s Cruise announced that they’re partnering to build a mass produced autonomous vehicle for Cruise’s global robo-taxi business. Honda is investing $750M into Cruise and pumping an additional $2Bn into the joint AV project over the next 12 years, as my colleagues Greg Hyde and Stephen Lawson reported here and here.

Here’s why this is important. Honda was supposed to be one of Waymo’s best options for scaling its business. The start-up is currently preparing cars by buying them blank from carmakers like Jaguar and Chrysler and then souping them up with Waymo software and sensors. That can work for Phoenix. It can work for a few additional cities and states too but, to take over the world, Waymo will need millions and millions of vehicles and buying each of those cars and then tacking on its technology becomes overly tedious and time consuming at that scale. Waymo can’t build the cars itself, so the only alternative is to form a substantial partnership with a carmaker.

Up until last week, Honda had looked like one of Waymo’s best options. The two were in negotiations for a joint AV project last year but those talks fizzled out and now Honda has thrown its hat (and a whole bunch of cash) in with a competitor. Waymo’s talks with Ford have likewise gone nowhere, in large part because Waymo has gained a reputation among carmakers as wanting too much too fast while offering too little of an incentive in return. GM owns Cruise so it won’t be doing Waymo’s bidding. The list of potential suitors is getting shorter and shorter.

Don’t get me wrong: none of this suggests that Waymo’s demise is near. Far from it. The company can cobble together its fleet for now and still has time to forge a partnership with carmakers in the future. What it does mean is that the company’s first to market advantage may be tempered by its inability to mass produce AVs on its own, thus giving competitors like GM Cruise leverage. Not only can Cruise mass produce fully integrated AVs off the production line through GM, now it’s decided to franchise the model through fellow carmakers like Honda. With Cruise scheduled to deploy its commercial robo-taxi service next year, that could prove a significant advantage down the road, no matter how far ahead Waymo may appear today.


One comment

  1. Drue Freeman 8th October 2018 @ 4:30 pm

    What this article clearly highlights is that Waymo has NOT won the race to commercialize robo-taxis, but has won the pole position in what will prove to be a very long and grueling endurance race. Starting in the front is no guarantee of winning when the race is sufficiently long and when the competition is as fierce and well funded as this.

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