The parent company of Google, Alphabet Inc. (GOOGL), appears to be pulling ahead of rivals such as Tesla Inc. (TSLA), Uber Technologies Inc., General Motors Co. (GM), and Ford Motor Co. (F), among dozens of other transportation companies, in the race to rule the new frontier of self-driving cars, the Wall Street Journal reports. Led by respected auto industry veteran John Krafcik, the self-driving car division of Alphabet, dubbed Waymo, has forged partnerships with Fiat Chrysler Automobiles NV (FCAU) and is in talks with Honda Motor Co. Ltd. (HMC). Waymo now has the world’s largest fleet of self-driving cars, with over three million miles of testing on public roads so far, the Journal says. (For more, see also: Self Driving Cars Behind $7 Trillion Market by 2050.)
Bridging the Cultural Gap
Krafcik, previously a high-ranking executive Ford and at Hyundai Motor Co. Ltd. (HYMLY), and later the president of car buying online platform TrueCar Inc. (TRUE), is making headway in bridging a yawning cultural gap between Silicon Valley and Detroit, the Journal indicates. Rather than isolating himself in a cushy corner office, like a traditional auto executive, he has a desk among software engineers at Waymo, and is working hard to instill enthusiasm about manufacturing processes among them.
Meanwhile, Krafcik’s also been trying to allay fears among auto manufacturers about being turned into mere commodity producers, with tech companies like Waymo angling to provide the real value added. Indeed, a few years ago the Dodge division of now-partner Fiat Chrysler ran a TV ad that scoffed at the idea of self-driving cars from “a search engine company,” the Journal says. Among the options being considered by Krafcik, per the Journal, is licensing Waymo’s technology to auto manufacturers.
Waymo Speeds Ahead
While competitors may be thinking of specific applications for their own self-driving technologies, Waymo is looking at developing theirs for a broad range of uses, including ride-hailing, freight delivery and public transport, the Journal indicates. Another key factor in building Waymo’s technological lead has been Alphabet’s aggressiveness in testing self-driving vehicles on public roads with real customers, while traditional auto manufacturers like GM were reluctant to venture beyond the test track. At one time, Alphabet allegedly even considered acquiring cutting-edge electric car maker Tesla, the Journal says.
A related project for Krafcik, the Journal reports, is changing the mindset of the auto industry from units sold to miles driven. He points out that, at average profit margins per vehicle sold, and average miles of usage before the typical vehicle is scrapped, auto manufacturers are earning a mere one cent per mile. Widespread adoption of self-driving technology may be a way to get consumers to spend per mile driven, especially if ride-sharing and vehicle-sharing arrangements explode in popularity. (For more, see also: How Google’s Self-Driving Car Will Change Everything.)
Waymo’s self-driving vehicles racked up 635,898 miles of usage on California’s public roads during the 12 months ending November 30, 2016, per company disclosures to the California Department of Motor Vehicles, as reported by the Journal. This left competitors in the dust, at least in that test market: GM, 9,776 miles; Nissan, 4,099; Delphi, 3,099; Bosch, 983; Mercedes-Benz, 673; BMW, 638; Ford, 590; and Tesla, 550.
Tesla indicates that all its models now have the necessary hardware to support self-driving, but millions of miles of real-world testing are still needed to perfect the system, the company’s website says. A fatal crash involving a partially self-driving model has garnered negative publicity for Tesla, despite evidence of driver error, as reported by USA Today. GM is in the early stages of planning a wider test of its own self-driving technology in a ride-hailing application, according to Fortune. Currently limited to GM employees in the San Francisco area, the test of the ride-hailing service eventually will be opened to the general public. GM has a stake in Lyft, a leading competitor of Uber.
Riding-hailing service Uber celebrated the one-year anniversary of its self-driving pilot program in Pittsburgh last week, as reported by the Pittsburgh Tribune-Review. Uber’s Advanced Technology Group is located in Pittsburgh, and indicates, per the Tribune-Review, that its fleet of more than 200 self-driving cars have logged over 1 million miles and provided over 30,000 rides to customers in Pittsburgh, San Francisco and Tempe, Arizona.
Uber’s venture into self-driving cars is beset by controversies. Waymo has sued Uber and Otto, a San Francisco-based developer of self-driving technology acquired by Uber, alleging theft of intellectual property, according to The Washington Post. Uber launched its driverless car test in San Francisco before securing the proper permits, per The New York Times, and it won approval in Pittsburgh with promises to the city that were not fulfilled, according to another Times article. The Post has reported accusations of repeated traffic violations, such as running red lights. There have been two crashes involving Uber’s self-driving vehicles, in Tempe in March, and in Pittsburgh on Monday. Uber was cleared of blame in the former accident, but the latter is still under police investigation, per the Tribune-Review.