A month after Tesla launched a trial robotaxi service in Austin, Texas, in June for select fans, CEO Elon Musk told investors that the company’s driverless taxis would likely be available to “half the population of the U.S.” by the end of this year.
Alphabet’s Waymo – the U.S. leader in autonomous ride-hailing – launched a similar test service in Phoenix more than eight years ago. Today, it operates in areas with about 3% of the U.S. population.
Musk’s pronouncements about expanding Tesla’s robotaxis at a “hyper-exponential rate” stand in contrast to Waymo’s deliberate approach ahead of entering new markets.
Musk sees a faster path to scaling the business because of Tesla’s reliance on just cameras and artificial intelligence, compared with Waymo’s rules-based AI approach that uses more sensors and high-definition mapping. The differing strategies have far-reaching implications for the early pecking order in the nascent autonomous-driving space, which some analysts and investors say could become a multitrillion-dollar market over the next 15 years.
Waymo’s expansion playbook involves comprehensively mapping new cities, and phasing in autonomous ride-hailing after testing the technology with drivers in the front seat and employees as passengers.
Tesla says its robotaxis use a different autonomous technology from Waymo’s, one that allows it to bypass much of that painstaking prep work. The cars – still in the testing phase – use AI that reacts to road conditions the way a human would. Tesla says that requires less-extensive road testing and mapping.
“Once we can make it basically work in a few cities in America, we can make it work anywhere in America,” Musk told analysts on a conference call in April. He has called Waymo’s approach “fragile,” saying its ability to expand is “limited.”
Many investors have bought in to Musk’s vision. Some analysts attribute the vast majority of Tesla’s stock-market value to autonomous driving capabilities that investors are betting can reach scale much faster than Waymo’s efforts. If successful in a rapid commercial expansion, the robotaxi business could solidify a new growth engine for Tesla.
Reuters interviewed a dozen current and former industry executives, regulators, law-enforcement officials and city planners to contrast Tesla’s early expansion efforts with those of Waymo, revealing sharp contrasts in their technical and go-to-market strategies.
Current and former Waymo executives say their market-by-market approach of mapping and testing before expansion is essential to ensuring safety, helping factor in the peculiarities of each city’s roads – for example, steep inclines in San Francisco that make it difficult to see what’s ahead.
“We really need to understand the core ingredients of each of these cities,” said Aman Nalavade, a Waymo product manager, in an interview with Reuters. “There is a lot of risk in doing this incorrectly.”
Musk has also talked about the importance of safety. “We don’t want to take any chances, and so we are going to go cautiously,” he said last month.
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Waymo says it is reducing the testing time in new cities as its autonomous technology gains more experience and applies previous lessons to new geographies.
Paul Miller, an analyst at market research firm Forrester, said Waymo’s approach is safer and more realistic in the short term, while Tesla’s approach is a riskier bet but a “far cheaper approach to scale globally.”
Bank of America analysts estimate Waymo lost between $1.2 billion and $1.5 billion last year. But analysts expect that Waymo’s model will eventually be profitable as vehicle costs come down and ridership grows.
Morningstar analysts projected in a March report that Waymo would have a “rapid ramp-up period” over the next few years while Tesla would have a “slower initial robotaxi rollout,” because its software “will not be ready.” Morningstar expects Tesla to launch fully autonomous robotaxis by 2028 and surpass Waymo’s ride-hailing market share by the end of the decade.
We’ve looked at this before, from a business model standpoint and how the overall way that we travel could be affected if one of these approaches becomes dominant. This is more about the technology and how it affects each companies’ ability to grow. There are other significant players out there – Zoox, the fledgling Amazon robotaxi service, for example – but so far I’ve not seen any of them factored into this analysis, probably because none of them have officially launched a service that people are using yet. Everyone is catching up to Waymo and Tesla at this point.
And along those lines:
Tesla has expanded its Robotaxi coverage area in Austin for the third time in just two months.
The company first launched the Robotaxi service in June, initially covering just a tiny, 22 square mile area in southern Austin. Now, with this latest increase, Tesla covers 173 square miles in Austin, and the company says it’s also increased the number of available cars by 50 percent.
A fun fact noted by Teslarati: The Robotaxi service area now also covers Tesla’s own Gigafactory Texas.
With this increase, Tesla has far surpassed Alphabet’s Waymo, which currently covers 90 square miles in Austin with its self-driving cars.
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It’s worth noting, however, that despite the increased service area and the number of cars available, Tesla’s Robotaxi service is still only available via invite to a limited number of users.
And so it remains hard to take Musk’s claims seriously. Both Tesla and Waymo are looking at further expansion in the near future. My advice to not engage with Tesla’s service remains in place.