Weekly Brief: Robo-Taxi War Gears Up While Tesla Winds Down

Cruise is ready to commercialize.

After nine years of research, development and piloting autonomous vehicle technology, the start-up announced last week that it will begin charging the general public for rides in its robo-taxis in San Francisco. The decision comes after Cruise received the final permit it needed from the California Public Utilities Commission to charge for rides in its SF robo-taxis without safety drivers behind the wheel. This is a first for a driverless ride hail service in a major US city (sorry Waymo, the Phoenix suburbs aren’t the same) and thus a milestone for Cruise as a company and the AV industry as a whole.

The permit comes with several significant caveats. First, Cruise’s fleet of 30 robo-taxis can only function in fully driverless mode between 10pm and 6am, when car, truck and pedestrian traffic is at its lightest. At all other times safety drivers must be present for now, until the robo-taxis have a proven safety record in fully autonomous mode. Also, if there’s heavy rain or fog the fleet must have safety drivers onboard or be grounded until the foul weather abates.

Cruise says it plans to start rolling out fared rides gradually over the coming weeks and months. It won’t want to go too slowly though, as industry leader Waymo is hot on its heels. Backed by Alphabet, Waymo has more money behind its technology, more miles under its wheels and more experience with commercialization thanks to its Waymo One service in Phoenix. It also has a growing fleet of robo-taxis buzzing around the steep streets of San Francisco and is only one permit behind Cruise on the commercialization front. Game on.

In other news last week, a leaked email from Tesla CEO Elon Musk suggested that the carmaker is poised to lay off 10% of its 100,000 workforce worldwide, owing to what Musk calls “a superbad feeling” about the US economy.  The layoffs come as Tesla is being investigated by the National Highway Traffic Safety Administration for a number of fatal accidents when its advanced driver assistance feature, Autopilot, is engaged. The company has been sued by six female employees asserting troubling claims of sexual harassment; a judge recently denied Tesla’s request to move the case to arbitration. Last week Tesla was delisted from the S&P 500’s ESG Index because of concerns with the company’s codes of business conduct and its lack of a low-carbon strategy.

Ever since musk announced his bid to buy Twitter for $44Bn, his personal brand, and by extension Tesla, have come under greater scrutiny than ever before. It’s unclear if any of these pressures are guiding Musk’s decision for layoffs, or if this is simply about the “superbad” economy and Tesla’s struggling stock value. President Joe Biden responded to the news of Musk downsizing by pointing out that other carmakers are hiring employees to ramp up investments in US battery and electric vehicle production. “Lots of luck on his trip to the moon,” said Biden. “Thanks Mr President!” replied Musk via Twitter.

Musk’s brash and mercurial ways have made Tesla the star that is – uniquely equipped for dominance and uniquely vulnerable to getting mired in distractions and unnecessary setbacks. Musk might have a superbad feeling about the economy. I increasingly have a superbad feeling about his long-term prospects as the CEO of Tesla. Like Travis Kalanick at Uber, some CEOs have that rare mix of vision, bluster, intelligence, passion and cut-throat intensity required to grow a start-up into a unicorn but lack the even-keeled temperament and leadership to maintain it as a multinational, publicly listed corporation that must answer to stakeholders at every turn.

Leave a comment

Your email address will not be published. Required fields are marked *