Earlier in January this year, Waymo received a permit from the Arizona Department of Transportation (DOT) in the United States to operate as a transportation network company (TNC), paving the way for Alphabet’s self-driving subsidiary to start its own self-driving ride-hailing service. The regulatory approval made Waymo the first company in the United States to become legally eligible to commercially deploy its self-driving vehicles in a ride-hailing service. Waymo’s fleet of self-driving Chrysler Pacifica Hybrid minivans will be able to pick up and drop off riders in Phoenix, Arizona using a smartphone app, as with other ride-sharing service providers such as Uber and Lyft.
Waymo’s lead in commercial deployment of self-driving vehicles reflects its progress in area of autonomous driving. The company, among the first to venture into autonomous driving, has been testing its self-driving technology since 2009. Waymo has finetuned its self-driving system through extensive testing on both private and public roads, in varied driving conditions, and across multiple locations in the United States. The company claims to have driven more than 5 million miles, the highest by any company working on autonomous driving. In addition, the company has driven billions of miles in simulation, including 2.7 billion miles in 2017 alone.
Waymo has been preparing for nearly a year to start self-driving ride hailing service in Phoenix. In April 2017, the company started a pilot programme that makes self-driving vehicle available to family and urban commuters in parts of Phoenix metropolitan area, including Chandler, Tempe, Mesa and Gilbert. Waymo took next step in testing of self-driving vehicles by removing safety drivers from the driving seat in select vehicles. While such vehicles completely rely on its self-driving system to navigate, these vehicles do have safety drivers sitting in the rear seat with access to button which could safely stop the vehicle in the event of an emergency.
Others also targeting ride-hailing as first commercial use
Other companies, including automakers and technology start-ups developing autonomous driving technology are also looking at ride-hailing or ride-sharing services as their preferred choice for commercialization of such technology. Last year, GM announced its plans to have its self-driving vehicles ready for use in a ride-sharing service within two years. Ford is also developing SAE Level 4 autonomous vehicle with plans to begin volume production of such vehicles for use in public ride sharing service in 2021.
In Europe, Volkswagen (VW) Group is aiming to begin operating fully autonomous ride-sharing service in 2-to-5 cities globally by 2021, via its wholly-owned subsidiary Moia or ride-hailing start-up Gett, in which the German automaker invested USD300 million in 2016. BMW is also considering introducing its own self-driving ride-sharing service. The German automaker is collaborating with Mobileye and its parent Intel for developing autonomous driving system with goal to begin commercial production of such vehicles by 2021.
In Japan, Nissan recently teamed up with DeNA to launch self-driving taxi service called ‘Easy Ride’ for testing in Yokohama beginning today (5 March). During the two-week trial, the partners will invite about 300 group participants who can commute on a 4.5 kilometer-route between Nissan headquarters and the Yokohama World Porters shopping center using a dedicated mobile app and give their feedback. Nissan and DeNA plan to launch Easy Ride self-driving ride-hailing service in a limited environment first, and later introduce full service in early 2020s.
Ride-sharing companies like Uber and Lyft are also focusing on developing their own self-driving technology. Such companies plan to put vehicles equipped with their self-driving systems in their respective ride-sharing networks. In January, Uber CEO Dara Khosrowshahi told Bloomberg that the company plans to deploy self-driving vehicles on some selected routes in the next 18 months. Uber is sending its self-driving vehicles in Tempe, Arizona to users who request to ride the company’s self-driving vehicles. However, such vehicles have two engineers in the front seats to deal with any emergency.
Uber’s rival Lyft has also stepped up efforts to develop its own autonomous driving technology in past one year. The company is reportedly planning to deploy fully autonomous vehicles on its ride-sharing network by 2021. Last year, Lyft established a self-driving research facility called “Level 5” in Palo Alto, California, United States to accelerate development of autonomous driving technology. In addition, Lyft has entered into agreements with several companies working on autonomous driving, including GM, Ford and nuTonomy to deploy their self-driving fleets on its own ride-sharing network. At the CES 2018 in Las Vegas, United States, Lyft and Aptiv came together to demonstrate fully automated point-to-point ride-hailing experience. The collaboration allowed Lyft users to request a self-driving ride in Aptiv’s fleet of autonomous vehicles from the Las Vegas Convention Center’s Gold Lot to more than 20 destinations throughout the city.
Ride-hailing first choice for commercial deployment
Ride-hailing or ride-sharing services is clearly emerging as first commercial use of self-driving vehicles. By deploying fully-autonomous vehicles on ride-hailing network, companies aim to substantially reduce cost of operations by doing away the amount they are currently required to pay to their driver partners. According to an estimate by GM, ride-hailing service in the United States cost consumers about USD2 to USD3 a mile, with the ride-hailing companies paying drivers the equivalent of about three quarters of revenue. Without driver cost, the rates could drop as much as to under USD1 per mile by 2025. Once that is realized, GM estimates, about 75% of the miles people drive could be through sharing or hailing services.
Some companies are also looking at other potential uses of self-driving vehicles. Ford, for example, is considering using self-driving vehicles in commercial delivery services. Last year, the US automaker partnered with Domino’s Pizza to jointly assess the feasibility of deploying self-driving vehicles in pizza delivery service. Under the collaboration, Domino’s delivered pizzas to randomly selected customers in Ann Arbor area in Michigan, United States, using a Ford Fusion Hybrid Autonomous Research Vehicle, manually driven by Ford’s safety engineer. The joint research offered both partners the opportunity of studying customers’ perspectives on food delivery by self-driving vehicles. Last month, Ford and Domino’s Pizza announced that they are expanding their collaboration to Miami.
Another potential commercial use of autonomous driving technology could be trucks. Many believe, truck industry is more ideal for autonomous driving considering they spend a great deal of time on highways. Last year, Waymo confirmed that it is testing self-driving technology in truck in Arizona, United States. German supplier ZF teamed up with Deutsche Post DHL (DPDHL) to develop and test fleet of autonomous delivery trucks, featuring ZF’s ProAI self-driving system, beginning this year. DPDHL’s fleet of 3,400 trucks can be equipped with ZF’s solutions to enable the vehicles better understand their surroundings and navigate safely in self-driving mode.
Deployment at low scale, limited area
While Waymo and others are gearing up for commercial deployment of fully autonomous vehicles in ride-hailing or ride-sharing services, initially such deployments are expected to be at low scale and limited to some restricted areas for various reasons.
• First, such companies would need permissions from multiple regulatory authorities, generally at state/province level to launch self-driving ride-hailing services. Waymo, for example, obtained permission to operate as TNC in Arizona. However, to operate in other US states, the company would need permission from respective state DOTs, which could be highly time consuming.
• Second, companies working on autonomous driving solutions are at different stages of development. Barring a few, most companies are still years behind mastering fully autonomous driving capability. And to deploy self-driving vehicles on ride-hailing or ride-sharing, a company would need nothing less than fully-autonomous capability.
• Fourth, even with fully-autonomous capabilities, companies need to undergo extensive testing in each region where they plan to start ride-hailing services. Waymo, for example, has been running pilot testing in Arizona for nearly a year to become well acquainted with the roads and driving conditions. To extend its ride-hailing service in other states, the company would need to undergo similar extensive testing. That also explains why companies need to conduct self-driving tests in multiple regions, in varying driving conditions. Waymo, for example, is currently testing its self-driving fleet in some 25 locations in the United States.
• Sixth, to start ride-hailing services, companies would need basic support, including HD mapping of the targeted areas and a well- developed ride-sharing platform to enable various ride-hailing functions, such as ride reservation, routing, match-making as well as seamless payment for the service by users.
“Scaling up is [another] big challenge because conditions differ between locations,” says Jeremy Carlson, principal analyst at IHS Markit. “The vehicle technology is generally very transferable to another location, but operational knowledge of the area, brand recognition, and a user base are all required to expand—not to mention all of the legal and regulatory approvals, both for the autonomous vehicle and the mobility service business,” Carlson said.
Despite this, permission to Waymo from Arizona DOT is a significant development in commercialization of self-driving vehicles. Automotive industry has been investing billions of US dollars in developing autonomous driving technology. The industry is looking at various options to generate revenue and return on huge investment it has made with ride-hailing service one of the key focus areas. Waymo’s permission to operate commercial ride-hailing service could be a guiding example for others in the industry to follow.