Despite all the promise, a future filled with self-driving cars still seems like a distant dream. But U.S. and Chinese tech giants, automakers, and startups, including Ford, GM, Baidu, Tesla, and Alphabet, have invested billions of dollars and years of research and development to make it a reality. Robotaxis seem like a strong option to be the first to really get into the market. As one expert puts it, “Ride-hailing is a terrible business model with frustrated human drivers and urban mobility problems.”
An Apollo Robotaxi drives through Shougang Park in Beijing, China on May 2, 2021, as Baidu launches China’s first driverless taxi service.
He Luqi | Qianlong.com | Visual China Group | Getty Images
For years, leaders at Alphabet’s Waymo and elsewhere have promised that self-driving cars were just around the corner, but that future hasn’t arrived yet. Why?
“In a word: complexity,” says James Peng, co-founder and CEO of self-driving car maker Pony.i. “Every innovation brings challenges. We have AI, fast computer chips, and sensors. By seamlessly combining these, we can solve all of this. 99.9% is not enough to make the technology perfect.”
Despite the promise of saving lives, combating climate change and making driving more cost-efficient, the reality is that “self-driving car utopia is a decade away,” said Michael Dunn, CEO of auto technology consultancy ZoZoGo. “It’s not impossible to get there, but even the most cutting-edge technology isn’t there yet, and is primarily used in predictable, limited areas. Universal acceptance is far from assured.”
What’s more, “the business model is a bigger challenge than the technology,” he said.
Self-driving cars, with no steering wheel or brake pedal, have been slow to take off and are considered a novelty by many. Additional road testing is needed to iron out technical issues. Regulations regarding permitting driverless cars are still evolving by city, state, and country. Self-driving cars sell for a high price, over $100,000, making them a barrier to personal purchase for most buyers. Commercialization is still a work in progress. Safety concerns remain, especially after the fatal accident involving an Uber vehicle in Tempe, Arizona in March 2018 and multiple accidents involving Teslas operating in self-driving mode.
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Still, market leaders are betting big on smarter transportation technology, logging thousands of miles to test its feasibility and train their self-driving algorithms and AI sensors to drive better than humans in all weather and unpredictable conditions. Tech giants, automakers and startups such as GM’s Cruise, Waymo and Baidu are investing billions of dollars and years of R&D in this emerging market that is expected to reach 12% of global new car registrations by 2030. Meanwhile, Tesla continues to develop its semi-autonomous Autopilot and Self-Driving systems.
A decade later, after some rocky starts, robotaxis, robotic delivery, and autonomous trucks are emerging as some of the most promising money-makers in the market.
“Ride-hailing is a terrible business model, with frustrated human drivers and urban mobility problems. The next great thing could be fleets of robot taxis,” said Eric Gordon, a professor of entrepreneurship and technology at the University of Michigan, who envisions city roads free of accidents, horns and congestion, and lanes reserved for self-driving cars.
The next phase of passenger and road testing faces added technical complexities due to unpredictable traffic patterns and weather factors such as fog and rain, as well as lingering issues of public perception and acceptance.
“It will still be a long time before autonomous driving is commercialized on a large scale,” said Dong Wei, vice president and chief safety and operations officer at Baidu’s intelligent driving business group in Beijing.
Paying passengers to ride in fully driverless robotaxis could be the next step towards the commercial development of this transformative market.
Pony.ai, ranked 10th on the 2022 CNBC Disruptor 50 list, is leading the way in introducing paid robotaxis to the public in China along with Beijing’s Baidu. The two companies began charging fares for a robotaxis service in Beijing in November last year, with safety drivers monitoring the ride. In addition, Pony.ai will launch a paid taxi service in May this year in Nansha District, Guangzhou, using 100 AVs as traditional taxis. The two companies are also testing AVs and robotaxis in the United States, but Pony.ai’s driverless tests were suspended in California after the vehicle crashed into a lane divider and a road sign in the city of Fremont.
China has targeted smart transportation as a national growth strategy and has designated several areas in major cities as testing sites. “If you’re looking for the best places to test autonomous driving, no one can beat China in ambition,” Dan said.
While the Chinese and US markets are developing in close parallel fashion, one likely scenario is “two global ecosystems, one China-led and one US-led, with their respective systems and governments coexisting,” given the intensifying innovation race between the two countries and restrictions on cross-border investment, Dunn said. “China doesn’t want US companies to siphon off their data, and Chinese testing in the US faces the same problem. Chinese AV companies are likely to keep their R&D in the US, but deploy in China for China.”
In the US, industry leaders Waymo and Cruise will soon launch their own paid driverless robotaxis in San Francisco after months of employee test drives, and Waymo plans to expand its paid driverless taxi fleet to downtown Phoenix after conducting test drives for paying customers in suburban Chandler in late 2018.
Argo AI launches driverless operations in Miami and Austin.
By: Argo AI
Argo AI, which is backed by Ford and VW, has begun operating self-driving test vehicles with employees on board in Miami and Austin, Texas, without a human safety driver. Argo is testing its self-driving technology on the roads of eight cities in the U.S. and Europe, and in Miami Beach, Fla., passengers are using its vehicles with a human safety driver through Lyft’s ride-sharing network. Lyft owns about 2.5% of the company.
Zoox, a startup acquired by Amazon, has plans to provide on-demand self-driving transportation in cities and is testing a fleet of Toyota Highlanders equipped with sensors and safety drivers in the Bay Area, Seattle and Las Vegas.
Chasing this opportunity, equity investment in self-driving technology companies has topped $12 billion in 2021, up more than 50% from 2020, according to CB Insights. U.S. fundraising has been dominated by Waymo, which has raised $5.5 billion, including from Alphabet, and Cruise, which has received $10 billion in backing from GM, Honda and other investors and a $5 billion line of credit from GM Financial. Pony.i, co-founded in 2016 by former Baidu lead developer of self-driving cars, Peng, has raised $1.1 billion in funding, including a $400 million investment from Toyota.
Self-driving startups are piggybacking on major automakers and ride-hailing services, such as Motional, which was founded in 2021 through a joint venture with Hyundai and is testing with Lyft. Uber sold its self-driving unit, Advanced Technologies Group, to Aurora Innovation after co-founder and former CEO Travis Kalanick touted self-driving as a priority. Aurora, which is backed by Amazon, Hyundai and venture firms Sequoia Capital and Greylock, plans to launch a commercial robotic truck system by late 2023 and a robotaxi project afterward.
There are several other market segments being carved out as differentiators by companies developing commercial robotaxis. Diversifying from its search and advertising core, Baidu is one of the most advanced, supplying the Apollo Go AV “brains” for China’s robot buses and other transportation vehicles, as well as Apollo self-driving solutions to automakers. A Baidu spokesperson said the five-year monthly fee for Apollo Go is comparable to the wages of a ride-hailing driver in a major Chinese city. The company is also selling its intelligent transportation solutions, with projects in 34 Chinese cities to improve traffic conditions, road safety and air quality. Baidu has also partnered with Geely, Volvo’s Chinese owner, to fund its intelligent electric vehicle business JIDU to mass-produce robot cars for a 2023 launch.
Producing robotic vehicles is costly but is being pursued as another strategy to commercialize the market. Cruise is partnering with GM and Honda to mass-produce its all-electric, self-driving shared vehicle, the Origin, which is expected to ship from GM’s Factory Zero assembly plant in Detroit within the next few years. Amazon-owned Zoox is building dozens of custom-built electric autonomous robotaxis at its Fremont factory for a phased rollout. Waymo is expanding its current fleet of Detroit-built I-Pacer and Chrysler Pacifica hybrids and is working with Chinese automaker Geely to outfit all-electric, dedicated AVs on U.S. roads in the coming years. Pony.ai recently unveiled its sixth-generation self-driving system, which will be outfitted in a seven-seater Toyota Sienna model and begin road testing in China later this year, with robotaxis to follow in 2023.
Robot delivery services are also emerging as a viable path to commercial scale and profitability. Cruise is partnering with Walmart to deliver groceries in the Phoenix area and plans to expand the service nationally, said Cruise Chief Operating Officer Gil West. Nuro, a Silicon Valley robotics startup that makes autonomous deliveries, is testing a bot service with Walmart and Kroger customers in several cities, and recently expanded it to 7-Eleven customers in Mountain View. Uber began testing food delivery using sidewalk robots and self-driving cars in Los Angeles this month.
One scenario where Zoox could provide last-mile delivery for Amazon from its shuttles is plausible. “We haven’t ruled that out as a use case,” says Zoox CTO and co-founder Jesse Levinson. “Our business model is to charge a fee for rides. The biggest cost of a ride-sharing vehicle is the driver. We can amortize the vehicle cost over five years with the fare.”
It may seem counterintuitive, but the AV long-haul trucking sector is perhaps the fastest moving in this evolving market. Jim Shainman, founding managing partner at Maven Ventures and an early investor in Cruise, noted that Embark Truck and other AV trucking companies will contribute to this trillion-dollar market in a number of ways. “Not only will it continue to be incredibly important to drive down transportation costs in a world of supply chain challenges and inflation, but it also helps to address the long-haul trucking labor shortage and helps the environment,” Shainman said. “It’s a big win for everyone and for the planet,” he added.
Pittsburgh-based Locomation is one of the newcomers developing hybrid semi-autonomous technology that runs in a convoy of two trucks, with the driver of the lead truck monitoring the trip while the driver of the following truck takes a break. “With trucking demand on the rise and driver shortages, this technology helps solve a pain point,” says Cetin Merikli, co-founder of Locomation, which is testing the system with three national trucking clients. “The system doubles driver efficiency, allowing trucks to run more frequently and speed up deliveries,” he says. “In a very 2020-like way, our first autonomous delivery was a trailer full of toilet paper.”
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