Weekly Brief: Robo-Taxis Hoping not to be Stuck in ‘La La Land’

Commentary By Andrew Tolve

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24th October 2022

Robo-taxis are headed to La La Land. Waymo announced last week that Los Angeles will be its next ride-hailing market, following in the footsteps of Phoenix and San Francisco.

The company plans to deploy an around-the-clock autonomous ride-hailing service that eventually reaches every corner of the sprawling city, from Miracle Mile to Santa Monica, Westwood to West Hollywood. Waymo first arrived in Los Angeles three years ago and has been mapping its many neighborhoods since. It will now begin piloting autonomous rides in central districts with safety drivers behind the wheel. Next, Waymo employees will start to ride as passengers, followed by paying customers from the general public, followed by a full commercial launch. Waymo did not provide a timeline for how quickly it will transition through these phases. A lot will depend on permits from the California Public Utilities Commission and the California Department of Motor Vehicles.

The LA launch comes at a critical moment for Waymo as competition stiffens from Cruise and Uber, both of which have accelerated robo-taxi deployments in recent months. Cruise in particular has claimed an early lead in San Francisco and now is moving into Waymo’s turf in Phoenix. Some critics wonder why Waymo, which has more experience than its competition and more advanced technology, is not moving faster to seize first-to-market advantage.

Other critics wonder if self-driving technology isn’t the transportation panacea that its proponents claim it to be and, instead, is becoming a giant waste of money. The market reflects this cooling enthusiasm. Many of the self-driving start-ups that went public in the past two years are in a nosedive. A year ago, Aurora was fresh off a reverse merger with a valuation of $13Bn. Fast forward a year, it’s lost 80% of its value. Ditto for TuSimple. Then there’s Mobileye, which Intel is keen to take public before the end of the year. Last week the tech giant announced that it was lowering its expected valuation of Mobileye from $30Bn to $16Bn ahead of its IPO.

General Motors has deep enough pockets to keep Cruise upright and expanding. The same goes for Waymo with backing from Alphabet but the pressure to perform is mounting. LA could help in this respect for Waymo. The city is one of the most coveted ride-hailing markets in the world, thanks to its cultural cachet and the global influence of the film industry, not to mention its 13 million residents who collectively represent an estimated market opportunity of $2Bn.

From a technical perspective, it won’t be easy. LA’s mobility landscape is rife with crippling traffic, criss-crossing freeway ramps and narrow surface streets. It’s a veritable Pandora’s box of challenging scenarios for an autonomous platform like the Waymo Driver to navigate. Unprotected left turns abound. Distracted drivers are a given. If Waymo can find purchase here, it will go a long way to silencing its growing chorus of critics.

In other news, BMW announced a $1.7Bn investment in its US operations, including $1Bn to prepare for the production of electric vehicles at the company’s existing US manufacturing facility in South Carolina and $700M to build a new high-voltage battery assembly facility in nearby Woodruff, SC. By 2030, BMW Group will build at least six fully electric models in the US. In order to qualify for federal tax credits, those models and their batteries will need to be manufactured in America, per the Inflation Reduction Act that President Biden signed into law in August.

The manufacturing facility in South Carolina is where BMW currently makes all of its North American Model X vehicles. “The home of the X is also becoming the home of the battery electric vehicle,” said Oliver Zipse, Chairman of the US BMW Group.