Driverless: Waymo and the Robotaxi Race—Waymo Takes the Lead
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In February, a wild scene took place on the streets of San Francisco's Chinatown neighborhood. A crowd of people surrounded an empty Waymo driverless car and destroyed it. They broke its windows and covered the doors in graffiti. Ultimately, the car was set ablaze after someone threw a firecracker inside. The vandalism capped off a rough few months for the driverless car industry.

Even though San Francisco is historically friendly to tech companies, tension over self-driving technology had been building after a series of incidents involving driverless vehicles belonging to Waymo, which is owned by Google parent company Alphabet, as well as Cruise, which is majority owned by General Motors. As the number of driverless cars on the road increased,

So too did the problems. Just recently, two Waymo cars stalled near the Pride Parade downtown, backing up traffic. This cruise car stalled in the middle of a street in San Francisco in June. It was blocking a lane of traffic as emergency vehicles tried to access the scene of a mass shooting in the mission.

But 10 months later, Waymo has come a long way. Also, do you want to talk about how it shows you your initials so you know which one is your car? Yeah, okay, so we're pulling up to the Waymo and it's showing my initials, MK, to let me know that this is indeed our car. Wall Street Journal tech reporters Miles Krupa and Megan Bobrowski have been covering Waymo's efforts to build a business around driverless cars.

Please make sure your seatbelt is fastened. For any questions, press the call support button to speak with a rider support agent. Thank you Waymo. After years of testing with human safety drivers behind the wheel, now Waymo has about 300 vehicles driving around San Francisco, picking up anyone using its app.

It's not a novelty anymore. That's right. It's like the wheel turns on its own. We've seen it do that for a year. I don't feel like a ghost is driving. I'm not really thinking about who's driving. I almost feel like I'm on public transit or something. Waymo is already operating beyond the Bay Area. The company has about 400 vehicles in Los Angeles and Phoenix, Arizona, where earlier this year, the company began giving driverless rides to employees on some high-speed freeways.

And in October, Waymo announced it was doing 150,000 paid rides every week across all of its markets, up from just 10,000 in the summer of 2023. Driverless cars are a mainstay of sci-fi futures seen in movies like Total Recall and video games like Cyberpunk 2077.

And while it's still unclear whether the tech will catch on with the public at large, Waymo is making a big bet that real-life driverless cars are the future of transportation. I'm Danny Lewis, and this is Driverless, Waymo and the Robotaxi Race, a new series from The Wall Street Journal's Future of Everything.

We're looking at how Waymo took the lead in the competition to build the future of driving and what it will take for the company to stay at the top of the growing industry, with rivals like GM's Cruze, Amazon's Zoox, and Tesla snapping at its heels. Today, episode one, Waymo takes the lead. That's after the break. Say this is your financial life. Over time, things can get more complex with a personalized plan.

Merrill can help you navigate it all. Learn more at ml.com slash bullish. Merrill, a Bank of America company. What would you like the power to do? Investing involves risk. Merrill Lynch, Pierce, Fenner & Smith, Inc., registered broker-dealer, registered investment advisor, member SIPC, a wholly owned subsidiary of Bank of America Corp. Walk around San Francisco on any given day, and there's a good chance you'll see Waymo cars driving around the city.

They're easy to spot. The white electric Jaguar SUVs Waymo uses have bulky rooftop equipment, LED screens, cameras, and whirling sensors. And, of course, no humans behind the wheel. It's all very high-tech.

But the dream of having the benefits of driving, without the pesky things like having to pay attention to the roads or traffic, has existed almost since cars started becoming commonplace in the United States. "To help us get a glimpse into the future of this unfinished world of ours, there has been created for the New York World's Fair." At the 1939 World's Fair in New York, General Motors' exhibition included a model portraying a world of the far-off year of 1960.

where technologically advanced highways kept cars and trucks zipping along and out of danger. Safe distance between cars is maintained by automatic radio control. Curved sides assist the driver in keeping his car within the proper lane under all circumstances. The keynote of this motorway: safety. Safety with increased speed.

Computer-controlled highways, elevated sidewalks, landing decks for helicopters and auto gyros. That's a small flying vehicle that's kind of like a cross between an airplane and a helicopter. The whole thing was about as jet-age utopian of a future as you could imagine. Because that is where we are going to spend the rest of our lives.

It's been more than 80 years since then, but Waymo's technology has advanced beyond what the makers of GM's Futurama imagined. But before we get into how Waymo came to lead the race to build a driverless car, we need to talk about how they work. Many of the driverless cars currently on the road have been retrofitted to move and navigate without a person behind the wheel.

That's thanks to the spinning sensors we mentioned earlier and the roof rack equipment that looks kind of like a modern tech version of the spinning emergency lights from old ambulances or police cars. The suite of sensors include radar as well as lidar, which is a laser based system integral to a lot of self-driving car technology. And the picture they provide of what's going on around the car, coupled with feeds from cameras installed all over its body, is fed into the machine learning software driving the car.

30 years ago, when we were doing self-driving cars, the baby version, there were kind of three big lessons in retrospect. Phil Kopman is an associate professor at Carnegie Mellon University, and he's been working on self-driving cars and how to make them safe for decades. One was that dedicated lanes for highways doesn't work because the interchanges were going to cost like a billion dollars. It's going to have to be mixed traffic.

Another one was that people cannot pay attention to cars that almost drive themselves. If you remove steering, they're going to drop out. The third thing we learned is the technology wasn't really ready. What's changed is machine learning. That's a branch of artificial intelligence that uses pattern recognition and a lot of data to teach a computer how to do a specific task, like identifying whether something on a camera is a tree or a person.

Because if you're wearing brown pants, both of them have long vertical brown things on the bottom, right? And you're in a green shirt, which is it? Machine learning comes along and you show it a bunch of examples of people and trees. And it figures out some statistical attributes so that it can decide, is that a person or is that a tree? It might be obvious to a human driver, but not to the software driving the car. Programmers need to teach the machines the difference, and that can take serious computing power to put together into an image.

So you take the cameras and you take the lidars and you take the radars and you take the ultrasound and you feed all of that into a machine learning system. And it tells you, yep, that's a pedestrian and he's in your way. You need to slow down. This is the basic tech that most of the big players in the driverless car world are using. Aside from Tesla, which is trying to develop self-driving cars only using AI and cameras. But that's a bit of a different story we'll get to more in the next episode.

In any case, Waymo, Cruise, and Amazon's Zoox use a combination of sensors to give their cars an understanding of the world around them and how to respond to situations as they arise. Of all of these companies, Waymo has been working on this for the longest. Wall Street Journal reporter Miles Krupa covers Alphabet, the parent of companies including Google, Waymo, and YouTube.

It started as something called the Google Self-Driving Car Project, and they've been methodically improving this self-driving technology over many years. Since 2009, to be precise, which shows up in how its tech has developed, as well as how its cars handle real-world traffic. My partner loves to talk about how easy it is to take advantage of Waymos on the road. Because they tend to follow the rules of the road to a T.

Kind of like how someone learning to drive might be extra cautious and deferential to other cars on the road. WSJ tech reporter Megan Bobrowski has also done a lot of reporting on driverless cars and says she's seen that same behavior. You know some of those drivers who don't let you into their lane? Waymo's like, come on in. Like, you know, we'll almost delay their ride if someone wants to come into their lane. If you talk to people in the industry,

The general consensus is that Waymo's been slower and more cautious than some of the other players. Waymo co-CEO Takedra Mawakana spoke about this in September at the All In Summit, a conference run by tech business leaders and venture capitalists. We are pushing to make sure people who put autonomous vehicles on the road have to demonstrate their safety case. We think the worst thing that could happen is introducing a new technology that doesn't actually improve this problem.

Because it'll kill the whole industry. Because it'll kill the whole industry. At the same time, she said companies making driverless cars also have to manage the public's expectations for the technology. How prepared is the public to accept that this isn't going to be a panacea and it's not going to be perfect?

But even though Waymo's paid rides skyrocketed in the last year, it has a skeptical public to win over. A 2021 survey by the Pew Research Center found that only about a quarter of Americans say the widespread use of driverless cars would be a good thing.

compared to 44% who say it would be bad. And a 2024 survey by the American Automobile Association found that the public has become more skeptical of the technology in recent years, with 66% of people saying they're afraid of driverless cars. The safety of the technology is a big concern, which Miles says was highlighted in an incident in late 2023 involving Waymo's biggest competitor. The incident that we saw with Cruise last year

So let's rewind a little bit to late 2023. Driverless car companies had just won a big victory in California that August after the state's Public Utilities Commission allowed them to start charging customers for rides. That was a really big watershed moment because

All of a sudden, these companies were basically allowed to start being businesses. They were going to be able to start charging people for the service. And that sort of signaled, I think, this is getting really serious. Again, at the time, Waymo had been working on its driverless car technology for 14 years. And finally, after all that time and money and effort putting regulators and potential customers at ease over this tech, it was time to put the business side to the test.

But just a couple months later, in October, an incident involving a vehicle belonging to GM's cruise threw the industry into a crisis. Here's Megan.

This woman is in the street. A human-driven car hits her. She falls into the path of a cruise. The driverless car also hit the pedestrian, and she ended up pinned beneath the vehicle. It knows a collision has occurred, and so it tries to pull over to the side of the road, not knowing that the woman is pinned under the car. The car dragged the woman 20 feet before coming to a stop.

She survived, though she was severely injured. And so this happens. There's some back and forth between Cruz and the state regulators, and they pull their driverless permits. Cruz can still do rides with drivers in the car, but that is essentially moot because they're trying to build a driverless car business, and they took away the permits that allow them to run their business.

At the time, the California Department of Motor Vehicles said Cruise's vehicles weren't safe for public operation and that the company misrepresented information related to the safety of its technology. And last month, the U.S. Justice Department said Cruise admitted to submitting a false report on the incident. It paid a $500,000 criminal fine. In a statement, Cruise president Craig Glidden said the company will comply with the agreement's requirements and is committed to transparency with regulators.

But that moment was a point where things really changed. Because while Cruise was no longer able to operate driverless cars on the streets of San Francisco, Waymo was now the only company allowed to operate an actual driverless car business in the city. And that's when the company appears to have shifted from slow and steady to pressing on the accelerator. What happened next? That's after the break.

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In the summer of 2023, when it was still competing with Cruise for Passengers, the company was doing about 10,000 paid rides a week across all of the cities it operates in. And then, those numbers started to go up. Fast. By May of 2024, it was doing 50,000. In August, that doubled to 100,000. And then, in late October, ride numbers went up again.

Now, each week Waymo is driving more than 1 million fully autonomous miles and serves over 150,000 paid rides. That's Alphabet and Google CEO Sundar Pichai speaking during the company's October earnings call. And despite Alphabet pouring billions of dollars into Waymo over the years,

Even Pichai seemed caught off guard at the company's sudden success. You know, it surprised us on the positive in terms of how much consumers are loving the experience from a safety standpoint, privacy standpoint, reliability standpoint, etc. So I think all of that has been on the positive side. And, you know, obviously the product will continue to improve. Waymo is now on the precipice of a new phase —

expanding to new cities and new customers. We interviewed Takedra Mawakana, the co-CEO of Waymo. WSJ's Myles Krupa. She used the word accelerate a few times, and it does sort of feel like Waymo is starting to accelerate the pace at which it's bringing cars to the market.

and thinking a bit more about what the business model might look like in a few years. Which, even at the beginning of this year, was a very different situation than what Waymo was grappling with. Remember the Waymo-smashing crowd we talked about earlier? Even in tech-friendly San Francisco, driverless cars face challenges.

They freeze up in busy streets and intersections. "Vice President Kamala Harris is here, but her trip tonight into San Francisco might have had an obstacle or two. Our crews spotted a Waymo vehicle that had to be driven away from the motorcade route by police." They interfere with emergency situations. "But the cars have been confused by emergency scenes, sometimes plowing into caution tape or blocking fire trucks."

There was the midnight honking, when Waymos trying to park in designated lots overnight would endlessly beep at each other. Neighbors shared videos of driverless Waymo cars filing into the lot and backing into spots, which appears to trigger honking from the other Waymos.

And recently, Waymo passengers have reported other people interfering with their rides. The cars became immobilized in traffic with riders inside. Taggers attacked three cars, and then in another incident, two men harassed a female rider inside a car. The company is still facing challenges as it's seeing some success. Waymo is facing an investigation by federal regulators over its vehicles colliding with parked cars and driving the wrong way in traffic.

And at one point, Awemo killed a dog in a collision the company called unavoidable. In spite of this, the company is forging ahead with its expansion plans and winning over riders. There is greater level of adoption among consumers in the areas and geographies that they have launched where initially there was some hesitation. Shweta Kajuria is an analyst at the equity research firm Wolf Research.

She follows internet companies. Those include Alphabet and, by extension, Waymo, as well as ride-hailing companies like Uber and Lyft. There's that word of mouth that is helping them get more and more rides. And part of it is within each of the markets, they are making more cars available. Kajuria says there are a few reasons for Waymo's current push to expand its reach. But a big one is that when GM's Cruze was taken off the road in California, Waymo hit the accelerator.

There really isn't any other competitor in autonomous. What else are consumers today going to be testing? There isn't anything else. And so that also allows Waymo the first mover advantage. Over the last year, Waymo blanketed the Bay Area in billboards. It put ads on social media and even ran an ad campaign with fortune cookies.

You'd crack open the cookie and find a little slip of paper with the Waymo logo, a picture of one of their Jaguar I-PACE cars, a QR code, and the phrase, the future is here. WSJ reporter Miles Krupa says those efforts seem to be paying off, at least in San Francisco. Just a year ago, we were writing stories saying that the city isn't in love with Waymo and it's getting all this pushback from local officials.

And getting that right is really the most crucial thing for Waymo. Especially as it plans to expand its service to new cities. This summer, Waymo announced a new partnership with a former rival, Uber. Starting in 2025, the ride-hailing giant will add Waymo vehicles to its fleets in Austin, Texas and Atlanta, Georgia. But even though Waymo is in the lead at the moment, there's a lot that could change in this fast-moving industry.

Can Waymo win over a public skeptical about the safety of its technology? How can it hold its lead over self-driving rivals like Cruze, Zoox, and Tesla? And what might the future look like for the driverless car industry? Next week, we'll be looking at Waymo's competition and the future of its business. See you then. The Future of Everything is a production of The Wall Street Journal. Stephanie Ilgenfritz is the editorial director of The Future of Everything. This episode was produced by me, Danny Lewis.

Special thanks to Miles Krupa and Megan Bobrosky. Our fact checker is Aparna Nathan. Michael LaValle and Jessica Fenton are our sound designers and wrote our theme music. Catherine Millsop is our supervising producer. We had help from section editor Dagmar Ahland. Aisha El-Muslim is our development producer. Scott Salloway and Chris Zinsley are the deputy editors. And Falana Patterson is the head of news audio for The Wall Street Journal.

Thanks for listening.

Merrill can help you navigate it all. Learn more at ml.com slash bullish. Merrill, a Bank of America company. What would you like the power to do? Investing involves risk. Merrill Lynch, Pierce, Fenner & Smith, Inc., register broker-dealer, register investment advisor, member SIPC, a wholly owned subsidiary of Bank of America Corp.