Now, Waymo will make 10 of its AVs available for riders to book through Lyft’s app in the Phoenix, Arizona, metro area. Waymo’s trained safety drivers …
Waymo CEO John Krafcik recently revealed that later this year a small number of his company’s autonomous vehicles (AVs) will be made available through the Lyft app. Waymo and Lyft first announcedplans to work together back in 2017, but didn’t disclose many details at the time.
Now, Waymo will make 10 of its AVs available for riders to book through Lyft’s app in the Phoenix, Arizona, metro area. Waymo’s trained safety drivers will still be present in the vehicles, and all fleet maintenance and upkeep will be conducted by Waymo.
Here’s what it means: The agreement shows Waymo is taking a two-pronged approach to advancing its AV strategy.
The firm has been operating a proprietary ride-hailing service called Waymo One in Arizona since last year. Waymo One made history last year as the first commercial autonomous ride-hailing service to launch in the US. In the lead-up, Waymo struckagreements with legacy automakers to buy cars that it’ll equip with its technologies and deploy in the service beginning in 2020. The company has shown no indication that it will go back on this agreement or phase out Waymo One in favor of its Lyft partnership.
With the Lyft partnership, Waymo will now operate two core AV ride-hailing channels, giving itanother pathway to generate revenue from its investments in AV technologies.Waymo now has more opportunities to get riders in its cars. It’s worth noting that Waymo will likely share revenue earned via Lyft’s platform with the ride-hailing firm, though neither company disclosed any such details.
The big picture: Partnering with Lyft should enable Waymo to scale its AV ride-hailing business.The Lyft deal indicates that Waymo feels it’s necessary to turn to third parties to reach more customers and maximize the revenue-generating potential of its AVs. Acquiring new customers is an expensive proposition, especially for a service like AV ride-hailing: Many consumers distrust AVs.
Waymo could assuage some such fears by partnering with a trusted, well-established brand like Lyft, and it will also be able to reach more customers by making its AVs available to Lyft’s large user base. Most importantly, it won’t have to spend significant cash to do so.
While the firm will still have to dedicate resources to Waymo One, adding its cars to Lyft’s network shows that Waymo is willing to cede ownership over part of the customer experience to a partner in the name of ultimately trying to maximize the revenue-generating potential of its AVs.
Waymo’s move is one that other AV ride-hailing players — specifically legacy automakers like GM — should consider to keep up with Waymo.Ride-hailing firms beyond Lyft have amassed massive user bases — Uber has 91 million monthly active platform users, for example — something that would take AV startups and legacy automakers alike significant time and resources to build.
That may not be feasible for companies like GM’s Cruise, for example, which had to spend significant dollars building AV technologies before ever approaching the customer acquisition phase for a ride-hailing service. Partnering with an established fleet operator is a way to circumvent some of the costs and get companies more quickly on the road to scaling AV ride-hailing services.
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Uber’s financial details, revealed in the run up to its IPO, confirmed what many had already assumed: It dominates the ride-hailing industry. But whether the company’s shares are a good investment remains uncertain.
Uber said that while it generated $11.3 billion in revenue in 2018, it lost $1.85 billion, excluding the sale of parts of its Southeast Asia and Russia businesses. Meanwhile, its take rate, or the percentage of fares that it keeps rather than gives to drivers, has declined.
The reason? Additional services like UberPool, promotions it offers drivers and restaurants, and discounts it offers to riders. And the growth of its ride sharing and food-delivery services has started to slow.
On the bright side, Uber had 91 million monthly active consumers using its ride hailing, food delivery, and logistics services at the end of 2018. It also said it has 3.9 million drivers, serving more than 700 cities across the globe. Uber can instantly tap into that network in trying to grow some of its other businesses. Uber Eats, the biggest among those side businesses, had $1.46 billion in revenue in 2018, making it one of the top three meal delivery services in the U.S.
In general, analysts say Uber is a company to watch. Here are further details:
Tom White, analyst at D.A. Davidson:
While Uber is the clear frontrunner among ride-hailing services, “sharp” revenue growth slowdowns related to rides and Uber Eats orders are hurting the company’s near-term results. Also, to compete with other services and to expand, Uber has also lowered its take rate, pocketing less money on each transaction.
“We understand it’s going to take some time for these businesses to generate profits, but the trends of Lyft aren’t deteriorating as bad as Uber,” said White, who initiated his coverage on the company with a neutral rating on May 1.
But Uber eventually could turn a profit and prove to be a lucrative investment over the long-term, White said. However, he added: “The near-term trajectory and core platform projections are pretty bad. But we do acknowledge that some investors may be willing to own stock,” because in the long-term, Uber could eventually produce attractive margins.
Daniel Ives, an analyst at Wedbush Securities:
Uber’s trajectory is similar to the early days of companies like Facebook and Amazon, Ives said.
Uber has “built an unrivaled platform that puts them in a situation that very few companies in the last 20 years have found themselves,” said Ives, who initiated his coverage with an “outperform” rating.
The company has become a “three-headed monster,” Ives said, allowing it to dominate the ride-hailing industry, compete in food delivery, and logistics. And though Uber as the upper hand on its rivals, he said its long-term success will be determined by how well it can executive its strategy.
“In the near-term, it’s a murky path to profitability,” he said. “The best case is reaching profitability maybe in the next five to six years, but that’s going to be the biggest question mark for investors.”
Brent Thill, an analyst at Jefferies:
During it’s IPO roadshow, Uber compared itself to Amazon, the one-stop shop for nearly everything in retail. And that comparison isn’t “too far off base,” Thill said.
Uber already has multiple tentacles, and it continues to push boundaries with flying vehicles and autonomous cars – no matter the expense. It spent $457 million alone on research and development for autonomous vehicles, dwarfing Lyft’s entire research and development budget of $300 million, Thill said.
The industry is young enough, he said, for both Uber and Lyft, with Uber as the clear frontrunner.
“Our belief, right now, is you have a duopoly structure,” Thill said. “The closest pressure would be if Google [Waymo] gets into the game.”
The autonomous Lincoln MKZ started turning left at a Beijing intersection when a speeding truck aggressively cut in front of it and sensors in the car …
The autonomous Lincoln MKZ started turning left at a Beijing intersection when a speeding truck aggressively cut in front of it and sensors in the car detected the approach and instantly froze it in place.
But that put the Lincoln directly in the truck’s path, so Baidu engineer Sun Lei grabbed the steering wheel, spun it to the right and floored the accelerator to get out of harm’s way. The truck zoomed by as Mr Sun’s colleague in the passenger seat calmly took notes on a tablet computer – just another learning exercise for the self-driving fleet being tested around the nation, according to Bloomberg.
“We hope to see more interventions during the road tests so that we can improve our technology,’’ said Calvin Shang, general manager of strategy and operations for Baidu’s Intelligent Driving Group. “It won’t help if you only run the cars on simple routes even for 10,000 or even 100 million miles.’’
Although disaster was averted, the incident shows how China’s push into autonomous vehicles is barely out of first gear, with only a handful of cities allowing limited trials by search-engine giant Baidu, start-up Pony.ai, trucker TuSimple and others since last year. Domestic and foreign testers are putting cars, buses, trucks and delivery vans through self-driving trials to teach them how to navigate the notoriously congested streets of the world’s biggest auto market.
The nation is getting a late start in the burgeoning field, considering California has allowed public-road testing since at least September 2014. That’s enabling US developers to lap their China counterparts, with Alphabet’s Waymo logging millions of cumulative test miles in that state alone. But China’s chaotic traffic has the potential to boost the self-driving industry’s capabilities beyond those of the US.
“The US is ahead right now,’’ said Bill Russo, chief executive of Shanghai-based consultancy Automobility. “But China will soon make significant strides, and I am fully confident that by 2030 it will be a different game.’’
The Chinese government set next year as the target date for large-scale adoption of early-stage AVs, and it wants 10 per cent of all new vehicles sold by 2030 to be fully autonomous – meaning hands-off driving.
The stakes are high. China’s market for smart and internet-connected vehicles will generate 100 billion yuan (Dh55.08bn) in revenue by next year, the government forecasts. The technology is core to the “Made in China 2025’’ plan that’s central to the US-China trade war.
Yet China’s approach to self-driving cars has been considerably more conservative than with electric vehicles, an industry where it’s the global leader in sales.
China is so behind it ranks 20th of 25 countries in a KPMG index measuring their level of preparedness for autonomous vehicles. The Netherlands ranks first and the US fourth.
There aren’t any national US regulations, but 41 states support autonomous-vehicle testing. The leaders include California, Arizona and Florida, according to BloombergNEF. That compares with just 14 Chinese cities allowing public-road testing.
But even after billions of dollars of research and development, the technology for autonomous vehicles is still unproven in the US, and none of the early leaders are making money on it.
Waymo only deploys robotaxis in one suburb of Phoenix, Uber has spent more than $1bn without clear plans to launch a service, and Elon Musk recently said Tesla’s technology would lead to 1 million vehicles on the road that are fully capable of self-driving – a claim met with scepticism.
In China, the national government sets minimum guidelines for testing, and local authorities can augment those while issuing permits. Cities started issuing permits in March 2018, when Shanghai gave SAIC Motor access to remote suburban streets.
By comparison, California had issued permits to 63 companies as of February 2019. They include Tesla, Volkswagen, Toyota Motor – and 15 China-based testers developing algorithms and honing software and sensors.
“We can’t sit and wait to act,’’ said James Peng, chief executive and co-founder of Pony. “As the Chinese government gets to understand better what self-driving technology can achieve today while ensuring road safety, they’ll become more liberal and practical with the regulations.’’
The leading tester in China is Baidu, which covered about 140,000km in Beijing last year – less than a typical month for Waymo. No accidents have been reported. Foreign companies such as Daimler and BMW also test, but their roadwork is limited.
For Daimler, as well as other car makers, the cost of deveoping autonomous and electric vehicles can be onerous.
Pressure to develop electric and autonomous cars has led R&D costs at Mercedes-Benz passenger cars to rise to €14bn (Dh) from around €8bn four years ago, outgoing chief executive Dieter Zetsche said this week.
At the same time, China, the world’s largest car market, has seen sales momentum slowing for nine months in a row, with a 5.2 per cent fall in sales of Daimmler vehicles in March, Reuters said.
Daimler’s next chief executive will have a tough job to restore margins at Mercedes-Benz, Mr Zetsche said, as Mercedes-Benz launched a new luxury electric car to rival Tesla.
Mr Zetsche, who bows out as CEO on May 22, said the German luxury car maker needed to find a way to rebuild margins after research and development (R&D) costs ballooned.
“There are many challenges ahead. We are in a situation of an economic slowdown. It is not going to be easier going forward,” he said on the sidelines of the launch event near Oslo.
Back in China, bureaucratic issues are slowing development. China’s permitting process is particularly cumbersome, said Neil Wu, a Shanghai-based partner at consultancy Roland Berger.
Local authorities require each car to accumulate some kilometres on closed tracks and to pass several tests before granting public-road permits, and some cities require companies to renew those permits every three months.
“The current rules on public-road testing in China are limiting the amount of data and number of traffic scenarios, the two key factors for improvement in the intelligence level of robocars,’’ Mr Wu said.
The nation also needs to unify its traffic regulations, since even the basic signs can differ from city to city, said Yin Ying, deputy head of Beijing Electric Vehicle’s Research & Development Centre. The car maker tests robocars in the capital city.
Baidu, owner of China’s biggest search engine, had permits for Beijing, Chongqing, Pingtan, Changsha, Baoding and Tianjin in the fourth quarter of last year, according to BNEF.
“The US is ahead right now”
The Beijing-based company, long labelled the Google of China, is developing the equivalent of an Android operating system for AVs. The Apollo platform has about 130 members – including Volkswagen, Ford, BYD and Microsoft.
Its target year for large-scale deployment in highly autonomous, or Level 4, vehicles is 2020. Full autonomy is Level 5.
During a test drive near Beijing’s Daoxianghu Park, Baidu’s Lincoln stopped several times while attempting left turns and braked on an empty street after its laser-based sensors misinterpreted sprinkler spray to be a solid object.
“The diversity in scenarios in China will help speed up the iteration of autonomous driving technology,’’ Mr Shang said.
After testing for six months on remote Shanghai roads, TuSimple now runs autonomous tractor-trailers from the Yangshan Port to a nearby railway station, said Xue Jiancong, a vice general manager for the start-up’s Shanghai office.
The company, which surpassed a $1bn valuation in February, also hauls containers in Arizona.
“We believe the Chinese government will speed up to break the policy limits,” Mr Xue said.
Further south, Pony operates a fleet of 20 robotaxis inside the 50-square-kilometre Free Trade Zone in Guangzhou.
The start-up was founded in 2016 in Fremont, California, by ex-Baidu engineers Peng and Lou Tiancheng. It’s now valued at $1.7bn, with investors including Sequoia Capital China and IDG Capital.
A 3km autonomous ride from Pony’s offices to a Guangzhou hotel took about 12 minutes. The car reacted to erratic bicyclists, aggressive drivers and jaywalkers by slowing down, and it was one of the few vehicles obeying the speed limit.
The only sudden slowdown came when the vehicle’s rooftop sensors lost sight of the traffic light because of a tall truck.
The chaotic conditions are exactly what Mr Lou hopes for during the road tests.
“It is like a child learning how to swim,’’ he said.
“The harder the situation is, the quicker he learns.’’
That came after Uber’s former CEO Travis Kalanick began to suspect Waymo was planning to use its self-driving cars in a rival ride-hailing service, …
PHOENIX, AZ — Google’s self-driving venture Waymo is stepping up their game in Phoenix, partnering with Lyft to capture more of the ride-hailing market share.
The alliance between Lyft and Google was announced Tuesday with news about how it will work. By the end of September, anyone with the Lyft app in the Phoenix metro area can tap up one of the 10 self-driving Waymo cars.
Human drivers are still behind the wheel, Waymo executives were quick to point out. By merging with Lyft, there’s hope people will get more comfortable with the technology. Before the partnership, Waymo vehicles have had limited exposure to the public.
It remains unclear when these companies will achieve “level 4 automation” — the point where a human can be truly hands off. While executives have avoided disclosing hard dates, a demonstration without a human was held at a Waymo property in California.
Testing of the self-driving Waymos in Phoenix began in November 2017. In February 2018, Waymo was one of 13 to receive a ride-sharing permit from the state.
Gov. Ducey banned the fleets when a woman was struck and killed by a self-driving Uber car last March. The company was ultimately found not criminally responsible. The incident put a suspension on any self-driving operations for awhile, but Gov. Doug Ducey eventually allowed the startups to proceed.
Meanwhile, Uber and Waymo have been involved in a legal battle over alleged high-tech theft. Waymo accused Uber of orchestrating a scheme to steal some of its autonomous driving technology. That came after Uber’s former CEO Travis Kalanick began to suspect Waymo was planning to use its self-driving cars in a rival ride-hailing service, Arizona Public Media reports.
Waymo’s CEO John Krafcik said in a blog post that his company would soon deploy 10 autonomous Waymo vehicles on Lyft’s ridesharing platform in …
Alphabet‘s (NASDAQ:GOOG)(NASDAQ:GOOGL) self-driving vehicle company, Waymo, announced a new partnership Tuesday with ridesharing company Lyft(NASDAQ:LYFT). Waymo’s CEO John Krafcik said in a blog post that his company would soon deploy 10 autonomous Waymo vehicles on Lyft’s ridesharing platform in the Phoenix area.
Waymo launched its commercial ridesharing service in Phoenix just six months ago, and already has roughly 1,000 riders using the service daily to take self-driving trips to work, school, grocery stores, and elsewhere. While the cars drive themselves, Waymo still has a safety driver in each car in case a human needs to take over the vehicle.
Krafcik said in the post that “Once Waymo vehicles are on the platform, Lyft users in the area will have the option to select a Waymo directly from the Lyft app for eligible rides.”
The new partnership is a significant move for both Waymo and Lyft as the autonomous ridesharing market begins to take shape, and each stands to benefit from the new relationship.
Image source: Waymo.
A win-win for Lyft and Waymo
While the ridesharing market is gaining traction worldwide, the profitability of the model is still in question. The fees Lyft pays to its drivers and the company’s technology, marketing, and other expenses outpace the revenue intake for the company right now. That’s why Lyft and its rival Uber are looking to autonomous vehicles as a way to lower costs in the future.
Instead of creating all of its own self-driving technology, Lyft has opted to partner with other companies that are already making huge strides. For example, Lyft has worked with the self-driving car tech company Aptiv(NYSE:APTV) to provide more than 30,000 autonomous rides to customers in Las Vegas.
The new partnership with Waymo is yet another opportunity for Lyft to introduce its ridesharing customers to autonomous vehicles. It also allows them to gather important data on how riders respond to this type of technology and how well it works. Understanding how customers use autonomous ridesharing vehicles could be critical information for Lyft in the coming years, if the company’s management begins to pivot more in that direction.
For Waymo, the new partnership with Lyft allows the company to expand its autonomous-ridesharing reach in Phoenix. Krafcik said that adding Waymo vehicles to Lyft’s ridesharing network will help his company “welcome even more riders” to experience self-driving technology, and give Waymo “the opportunity to collect valuable feedback” from how riders use the service.
In addition to bringing more riders to Waymo’s service, the partnership will help Waymo show Lyft and other companies just how well its self-driving technology works for ridesharing. Waymo has said that one of the ways it plans to make money from its technology is by licensing it out to other tech companies and automakers. This partnership is just one more way for Waymo to prove its technology is ready for real-world use.
For investors who are still trying to figure out the ridesharing market and how autonomous vehicles fit into it, it would be wise to keep a close eye on this new partnership. Alphabet’s Waymo is one of the leading driverless-car companies in the U.S., and Lyft is the second-largest ridesharing company in the country. What these companies learn from this partnership could potentially influence their businesses for years to come.