Waymo One, the first commercial robotaxi service, is now picking up passengers in Arizona

Robot cars are now officially a real business. Waymo on Wednesday launched a commercial robot ride-hailing service in Arizona called Waymo One.

Like Uber or Lyft, customers will summon a ride with a smartphone app. But in this case, the car will be driving itself.

“This is a game changer. It’s historical in nature,” said Grayson Brulte, who heads driverless car consulting firm Brulte & Co.

Only “a few hundred customers” will have access to the app and participate in the early stages, according to Waymo, which is an arm of Google parent Alphabet Inc. Although the cars will drive themselves, a Waymo engineer will sit behind the wheel in case anything goes wrong. Waymo did not say when the cars will start arriving without a human minder or when the program will be expanded.

Waymo’s cars, Chrysler Pacifica minivans bristling with autonomous driving technology, are available in several eastern and southeastern Phoenix suburbs, including Chandler, Tempe, Mesa and Gilbert. The fares are similar to those charged by Uber and Lyft.

Waymo has ferried Phoenix-area passengers in robot cars since April 2017 in what the company calls its Early Rider program. Unlike Early Rider — which Waymo will continue — Waymo One customers won’t be required to sign nondisclosure agreements and won’t be expected to continually provide feedback about their experience.

Waymo One represents the beginnings of a business that could be worth a lot of money. How much, no one yet knows: Wall Street estimates of Waymo’s market value, should it be spun off, range from $50 billion to $175 billion.

Waymo began driverless-car development in 2009. Although dozens of companies, from small start-ups to major motor vehicle manufacturers, are developing driverless systems, Waymo is considered the emerging industry’s leader — in large part because of Google’s expertise in mapping and machine learning combined with the rich ample investment dollars churned out by Google’s search advertising money machine.

There appears to be far more demand for the service than Waymo is able or willing to provide at present. The Early Rider program attracted 20,000 applicants, the company said, but only about 400 were chosen.

A big reason for the slo-mo nature of commercial rollout, according to Waymo, is safety.

Self-driving technology is new to many, so we’re proceeding carefully with the comfort and convenience of our riders in mind,” Waymo Chief Executive John Krafcik said in a statement.

The emerging driverless car industry suffered a blow in March when an Uber robot car hit and killed a pedestrian in Arizona. The experimental vehicle, with an apparently inattentive Uber employee behind the wheel, plowed into a woman walking a bicycle across a highway at night. Although the pedestrian wasn’t in a crosswalk, neither the human driver nor the driverless system applied the brakes until after the woman was hit.

Deaths involving Tesla’s Autopilot system have also drawn headlines, although Autopilot is not intended to be used as an autonomous system.

Practically every company developing driverless cars uses a combination of radar, optical, ultrasound and lidar sensors — except Tesla, which has said expensive lidar, which uses laser light to detect objects, will not be necessary for the driverless cars it plans to deploy.

Even if robot cars prove safer than human drivers — one of the intended aims — bad publicity from freak accidents or manufacturer missteps could slow the technology’s acceptance by the general public and political representatives.

The Phoenix area was chosen deliberately for its friendliness to driverless cars — and not just because of the support of Arizona’s governor and local officials. (Regulations on driverless cars are less stringent in Arizona than in California.)

The flat, snow-free desert terrain, the well-kept and well-marked roads, the scarcity of trees to block street signs, and sun-blasted sidewalks on which few pedestrians tread all lend themselves to early robot car deployment.

Other companies are planning to take on more challenging environments. GM-Cruise announced plans to offer a commercial robotaxi service on the streets of San Francisco by the end of this year, but according to Reuters technical problems have delayed the rollout.

As featured in the December 5, 2018 edition of The Los Angeles Times.


Why Honda’s Waymo Talks Failed and GM Clinched the Deal

Honda Motor Co. and Waymo, the self-driving car unit of Alphabet Inc., were nearing a deal to jointly develop autonomous vehicles earlier this year when the Japanese company walked away, according to people familiar with the matter.

Just a few months later, Honda bought into General Motors Co.’s GM Cruise LLC unit instead, choosing a familiar partner over a tech heavyweight. There are any number of reasons to explain why the Waymo deal failed, but the most pressing issues underscore the complexities that technology companies and automakers face as they both team up and also compete for a piece of the future of transportation.

For one, Waymo wasn’t willing to share the substantial technology it had already developed to run autonomous vehicles, and was seeking to cut a deal that would focus on Honda providing the cars, according to two people with knowledge of the matter, who asked not to be named because the talks were private. Essentially, Waymo wanted to be the brains and have Honda be the brawn in the relationship.

“It’s about control of technology and user experience,” said Grayson Brulte, co-founder of autonomy consulting firm Brulte & Co. “You have to assume that Honda wants to maintain a degree of control.”

One person familiar with the talks said that Waymo wanted Honda to supply electric vehicles — an area where the automaker is just beginning to establish itself. All of Waymo’s existing partnerships supply EVs or plug-in hybrids because its autonomous driving system needs more power than the puny 12-volt batteries in conventional cars.

After starting talks with Honda in late 2016, Honda told Waymo it was working on an EV for the partnership that would compete with Tesla Inc.’s Model 3. But by December of last year, Waymo was concerned about progress toward that goal and Honda went shopping for battery packs to power the vehicle, the person said.

Meanwhile, Honda had an existing partnership with GM to develop fuel cells. The Detroit automaker has its Chevrolet Bolt EV in showrooms and has developed a battery pack that will be used in 20 new EVs globally by 2023. In June, the companies announced a deal that would have Honda using GM’s cells and battery pack. GM’s battery not only had good range, but by working together the two automakers figured they could lower costs.

Shortly after that, the two started talking about teaming up on autonomous technology, too. GM had demonstrated its self-driving cars last year and drawn a $2.25 billion investment in May from Japan’s SoftBank Group Corp., giving its tech credibility.

Over the past two months, Honda workers went to San Francisco to take a deep dive into GM Cruise’s technology. Its engineers took multiple rides a day for weeks, one of the people said. Honda got to examine Cruise’s code and get a close look at the technology, which is something Waymo doesn’t like to do.

The result: a deal announced this week in which Honda pledged to put $2.75 billion into Cruise in exchange for a 5.7 percent stake, valuing the company at about $14.5 billion.

“This is a great deal for GM and it satisfies Honda’s needs” for a partner on batteries, said Mike Ramsey, an analyst at Gartner Inc. “The other deal falling through isn’t a problem for Waymo.”

Shares of GM have advanced almost 3 percent since the pact was announced, while Honda has declined less than 1 percent.

Honda and Waymo declined to comment on the collapse of their talks. Kyle Vogt, Cruise’s chief executive officer, said in an interview that his company’s deal was the result of “a pre-existing relationship with Honda that goes back and covers many collaborations on new technologies.”

Waymo likely wouldn’t have sold a stake as GM did with Cruise. Alphabet has other businesses that have sold interests, such as Verily, a health-care technology unit, that got a $800 million investment from Singapore’s Temasek last year. However, Waymo’s partnerships haven’t involved selling equity, with Alphabet retaining full ownership.

Even if Waymo was willing to sell a piece of the company, its valuation would likely be a sticking point in any deal similar to the one Honda struck with Cruise. Morgan Stanley analysts have valued Waymo at well over $100 billion, so even a small investment would be very expensive for an automaker like Honda. Alphabet also has more than $100 billion in cash, so Waymo doesn’t need outside funding.

For Honda, teaming with GM is a way to get into autonomy while sharing the investment. Meanwhile, Cruise gets more cash to push the technology and possible future access to a market like Japan for ride-sharing and delivery services.

Honda and Waymo are still talking about a partnership. Waymo already has a deal with Fiat Chrysler Automobiles NV to turn its Chrysler Pacifica minivans into self-driving vehicles, and an agreement with Tata Motors Ltd.’s Jaguar Land Rover to put the technology into the Jaguar I-Pace electric sport utility vehicle. For the most part, those companies are supplying a total of about 80,000 electric cars to Waymo, which installs its own the software and sensors.

Waymo is in talks with Fiat Chrysler about licensing its technology so the carmaker can sell driverless vehicles to private owners, although that’s a much longer-term goal.

As for Cruise, Vogt said GM is open to other partners, even more carmakers. “This is a space that’s evolving rapidly,” he said. “We’ll talk to any partner.”

As featured in Bloomberg on October 4, 2018

GM’s Cruise Draws $2.75 Billion From Honda in Self-Driving Pact

General Motors Co.’s self-driving car unit drew its second major investment in a matter of months, with Honda Motor Co. committing to spend $2.75 billion on backing the company and joining forces to bring autonomous vehicles to market.

Honda’s partnership will strengthen GM’s position as one of the front-runners in the packed race to bring self-driving vehicles to market. The Japanese carmaker will make a $750 million equity investment in GM Cruise LLC, plus spend $2 billion over 12 years on jointly developing and deploying autonomous vehicles, according to a statement.

GM shares jumped after the investment from Honda, which will get a 5.7 percent stake in Cruise. The U.S. carmaker is a serious contender along with Waymo, Alphabet Inc.’s Google autonomous-vehicle unit. Analysts at Morgan Stanley have pegged the potential enterprise value of Waymo — widely perceived to be a leader in the space — at $175 billion.

“It’s a clear indicator that market consolidation has begun,” said Grayson Brulte, co-founder of the autonomy consulting firm Brulte & Co., in an interview. “The autonomous ecosystem is not a winner takes all scenario and we don’t need 20 different autonomous systems. Partners will have to be on the same team with a common goal of deploying multiple types of autonomous vehicles based on consumer wants and needs.”

GM’s stock gain of as much as 5.3 percent Wednesday was the biggest intraday jump since May 31, the day Cruise got a $2.25 billion investment from SoftBank Vision Fund. The stock was up 2 percent to $33.97 as of 10:16 a.m. in New York.

The deal with GM and Cruise is exclusive, Honda Chief Operating Officer Seiji Kuraishi said on a conference call with reporters. That raises questions about what happened to Honda’s plans to work with Waymo. While the two company announced talks in late 2016, details of what the two would do together have been sparse.

Kuraishi wouldn’t discuss what happened to negotiations between Honda and Waymo during the call.

Honda’s investment values Cruise at $14.6 billion, up from $11.5 billion when SoftBank made its initial wager earlier this year. Cruise’s worth has been on the rise since GM acquired the company about two years ago for $581 million in cash. Adding in bonuses and other payments to key employees, the deal was said to have cost the company closer to $1 billion.

The new partnership has the potential to boost the global scale of GM’s self-driving car technology and accelerate deployment of autonomous vehicles for Honda. The two automakers will develop a self-driving model that can be used in a variety of ways and will be deployed in a Cruise autonomous network.

GM will manufacture the car, which will be an electric vehicle, GM President Dan Ammann said. The companies haven’t decided what kind of vehicle they will jointly build, he said.

GM is still racing to deploy self-driving cars in a ride-hailing service in the U.S. next year, Ammann added. That car is based on GM’s electric Chevrolet Bolt.

Honda and GM already collaborate on battery technology and hydrogen fuel cells. The carmakers could even develop a self-driving car using hydrogen fuel cell technology, though no decision to do so has been made, said Mark Reuss, GM’s executive vice president of product development.

It would make sense, Reuss said, because a car with a set route in a limited area could have a hydrogen fueling station placed strategically in the area. Since fuel cells can refuel much faster than electric cars, it could be a good solution, he said.

“The pieces are all there,” Reuss said. “The refueling times would be much smaller.”

Earlier this year, GM met with investment bankers to look at long-term future options, such as issuing a tracking stock to list shares in Cruise or to eventually sell stock to the public. No decision was made at the time as GM was evaluating future options, people familiar with the matter said then.

As featured in Bloomberg on October 3, 2018

To Find China’s Best Driverless Technology, Look in Silicon Valley

China’s homegrown search giant, much like its U.S. counterpart, has a division focused entirely on driverless vehicles. And just like its rival, Google-born Waymo, both efforts are based in Silicon Valley.

It’s not only Baidu with a toehold in Northern California. China’s self-driving startups are sprouting major R&D outposts 6,000 miles from Beijing. China’s congested megacities may have a need for self-driving cars, but the expertise is elsewhere.

Just ask Pony.ai founders James Peng and Tiancheng Lou. When they decided over a drink in Beijing three years ago that it was time to leave Baidu’s self-driving car unit, the plan was always to start in California. “Silicon Valley is definitely the place to be,” Peng said in an interview. “That’s where all the talent is. China has a lot of raw talent, but with hardcore artificial intelligence, it takes years to build up. China has work to do.”

Baidu recognized this fact back in 2014 when it created an office in Sunnyvale, California, with 200 engineers and scientists working on A.I. and self-driving software. The tech giant said it’s currently adding 150 more people in a second facility in the same town. That research hub has been an overseas incubator for Chinese programmers and engineers, many of whom gain skills from U.S. institutions and colleagues before returning to China. But some leave Baidu and launch startups such as Pony and two other Chinese-backed self-driving firms, Roadstar.ai and Jingchi.ai, while poaching from elite U.S. tech companies.

The push into self-driving cars is part of China President Xi’s mission to make dominance in artificial intelligence a pillar of the country’s economic future. To get there, however, many of China’s biggest tech giants and most interesting startups need Silicon Valley’s knowledge. Engineers working in the U.S.—some Chinese visa holders who went overseas for degrees, some American hires—are a major part of China’s push to develop autonomous vehicles. Didi Chuxing, the ride-hailing giant that pushed Uber out of China, also keeps most of its driverless research in the U.S.

New tariffs imposed by the U.S. have come with a threat to block any company with 25 percent Chinese ownership from buying any American company that makes “ industrially significant technology.” But the trans-Pacific nature of these driverless efforts makes President Donald Trump’s push to wall off American technology difficult, if not impossible.

Trump has also made intellectual property a trade issue, and U.S companies worry about theft. In July, U.S. federal prosecutors accused former Apple engineer Zhang Xiaolang of downloading files containing proprietary information on driverless cars and selling it to a Chinese startup.

Regardless of Trump’s concerns, the Chinese tech companies are already here. Even if the Trump administration succeeds in stopping deals, it won’t prevent Chinese companies from hiring data scientists, software engineers and technical leaders from the likes of Alphabet Inc., Tesla Inc., and other major players in the driverless field. Qing Lu, the chief financial officer of Jingchi, came from Velodyne Lidar. Liang Heng, Roadstar’s chief technical officer, worked at Google and Tesla.

Peng started Pony two years ago with about 20 people in Fremont, near Tesla’s car factory, and now has more than 100 engineers working on cars that drive themselves. He has raised $214 million from investors in both the U.S. and China, with the latest being led by China-based ClearVue Partners and Eight Roads Ventures, an offshoot of Fidelity Management.

The company’s test cars can navigate traffic and drive at highway speeds. Those cars have been on public roads thanks to superior testing conditions found in the U.S. China until very recently had a strict ban on driverless test vehicles. Next year, Peng said, Pony will deploy a test fleet of robotaxis in Guangzhou—about the same time General Motors plans to start a driverless ride-hailing business, most likely in San Francisco. Pony plans to deploy the technology commercially, in either ride-hailing or delivery fleets, within three to five years.

Peng exemplifies the way China’s tech leaders come into their own through contact with U.S. institutions and employers. After an education in both China and the U.S., he worked for seven years at Google as a software engineer developing big data applications and artificial intelligence. He was lured away in 2012 by Baidu, where he led its autonomous-vehicle project in Sunnyvale. That’s where he met Pony co-founder Lou, who worked to develop self-driving cars at Google before the formation of the Waymo autonomous unit.

“I was always fascinated by cars and mechanical things,” Peng said. “The potential really fascinated me.”

Roadstar had a similar path. Founder Xianqiao Tong is a Chinese engineer who got started in autonomy by working on Nvidia’s driver assistance systems and then at Apple before joining Baidu.

To lure more talent, Tong set up a large R&D center in Cupertino, where Apple is based, and gave that office responsibility for self-driving tech. Roadstar is targeting 2020 to deploy thousands of robotaxis in Guangzhou, Tong said in an interview. The cars will be able to drive in Level 4, which means they will be fully autonomous within a mapped-out area.

“The Chinese startups are spending money to hire talent and they are attracting top talent,” said Grayson Brulte, co-founder of autonomous vehicle consulting firm Brulte & Co. “By setting up in Silicon Valley, they are getting the knowledge that they don’t have and they can export it back home.”

Roadstar is working with Renovo.auto, a Silicon Valley company that creates the operating system for self-driving cars, to connect its software to lidar, cameras and other sensors, said Renovo CEO Christopher Heiser. The operating system takes what the hardware sees and sends it to Roadstar’s computer brain, which then drives the car. Renovo can also connect Roadstar’s cars to mapping systems and even to a ride-hailing system like Uber or Lyft.

The idea is that even if Roadstar is starting out far behind American tech leaders such as GM’s Cruise or Waymo, the partnership with Renovo could speed up deployment. Roadstar, Heiser said, “learned a great deal working on AV tech in the Valley and have now built an international company that combines Chinese and Silicon Valley features.”

Will the Chinese startups succeed? Several new Chinese automakers made a similar play in electric vehicles in recent years, with mixed results. Faraday Future, based in Los Angeles and partly owned by indebted Chinese billionaire Yueting Jia, has delayed plans to build a plant amid financial trouble and recently started retrofitting an old tire plant. Karma, which was acquired by a Chinese industrialist, is building a luxury plug-in hybrid but sells cars in small numbers.

Earlier this month, however, Chinese-backed EV startup NIO kicked off a $1 billion initial public offering in the U.S. NIO’s chief financial officer, Louis Hsieh, said the company will be in Silicon Valley to develop autonomous vehicles. “There’s not the talent currently in China for autonomous driving,” Hsieh said. “You need lidar for Level 4 autonomy. Most of the talent in the area is in Silicon Valley.”

Thanks to tax credits from the government from the government, China’s automakers have become competitive players in the EV game. Now those same companies, alongside China’s overseas tech firms, are fishing in Silicon Valley’s limited pool for self-driving talent. That will pressure U.S. automakers like GM and Ford Motor.

“With the Chinese entering the market for A.I. and autonomy skills,” said Eric Noble, president of consulting firm The CarLab in Orange, California, “the automakers are having to make exceptions to their normally low pay for engineers. They have to pay up.”

As featured in Bloomberg on September 23, 2018

GM Puts Pieces in Place for Robo-Taxis in San Francisco

General Motors Co. has created its own ride-hailing platform and quietly built one of the largest charging stations in the U.S. to get its Cruise self-driving car unit ready to enter the robo-taxi business next year.

Cruise has installed 18 fast chargers in a parking facility near San Francisco’s Embarcadero, the well-trafficked boulevard along the city’s eastern shoreline where Uber Technologies Inc. and Lyft Inc. have busy drivers. And GM’s self-driving car unit has been testing its own Cruise Anywhere ride-hailing app and fleet-management system, said people familiar with the matter.

The largest U.S. automaker has long planned to start a ride-hailing business using self-driving cars by 2019, but it hasn’t said where the service would start or whether it will work with a partner. These latest moves show that the Golden Gate City is where GM is assembling the pieces to launch its own rival to Alphabet Inc.’s Waymo next year if the Detroit-based company decides against working with an established livery app like Uber’s or Lyft’s.

“It’s an indication that Cruise is getting ready to commercialize autonomous ride-hailing services for the public and it will be in San Francisco,” said Grayson Brulte, co-founder of autonomy consulting firm Brulte & Co. “I imagine they would want to own and operate the service.”

A GM spokesman said only that the automaker is still working toward commercializing its self-driving car service and that the company hasn’t decided whether to own the business or find partners. He declined to comment on the location.

What’s clear is that GM is building the resources to manage both the cars and the interface with consumers. Its ride-sharing platform could be used on its own or be tailored to interface with a partner, one person said.

Cruise has emerged as one of Chief Executive Officer Mary Barra’s top initiatives since GM acquired it in 2016. The business got a big boost in late May when Japan’s SoftBank Vision Fund agreed to buy a 19.6 percent stake in Cruise for $2.25 billion — more than half of which is contingent on having autonomous vehicles prepared for commercial use.

The automaker is also doing some early exploration into whether a tracking stock or an initial public offering would make sense once the business is established, people familiar with the matter said in June.

GM’s fast chargers are near the Embarcadero because it’s a popular location for ride-hailing services. The site will help Cruise quickly recharge its self-driving cars, which are heavily modified Chevrolet Bolt electric vehicles.

In addition to Cruise, GM has been testing new business models beyond traditional automaking. Its Maven car-sharing unit rents Bolts to Lyft and Uber drivers, helping the company learn to use electric vehicles for business fleets, said Sam Abuelsamid, senior analyst with Navigant Research.

“We can expect to see more of this as GM launches automated mobility services,” Abuelsamid said.

GM invested $500 million in Lyft in January 2016. Dan Ammann, the automaker’s president, sat on the ride-hailing company’s board until June.

Most charging stations have a handful of stalls for cars, making GM’s San Francisco site one of the bigger banks in the country, Abuelsamid said. The largest in the U.S. is Tesla’s station in Kettleman City, California, with 40 chargers, said Steve Loveday, a writer and editor with InsideEVs.com, a website covering the electric car market. Tesla has a few others with more than 20 ports, he said.

GM has also been working with California to get rules in place to facilitate its commercialization pilot. In May, the California Public Utilities Commission cleared the way for companies like Cruise to test self-driving vehicles with the public, but they rejected the request to let companies bill people for rides. Cruise is still seeking approval to do so, said one person.

While most autonomous vehicles, such as those being tested by Uber, have human monitors on board, GM has said it plans to launch its pilot using a version of its Cruise AV with no steering wheel or pedals if they feel the car is safe for public use. It also depends on California regulations allowing the service to run without a safety driver, the company said.

Cruise is also hiring for some key positions. On its website, the unit lists an opening for a head of business operations who will help develop GM’s commercialization strategy for self-driving cars. Cruise is also recruiting for several fleet-management jobs.

The first program will start late next year. GM will gauge progress and look to expand if it’s successful.

“Barra is trying to transform GM from car company to mobility-services company,” Brulte said. “She’s building her legacy.”

As featured in Bloomberg on July 3, 2018