In an announcement that has surprised many, Waymo, a subsidiary of Google, said it would partner with Uber to incorporate Waymo’s self-driving car technology into Uber’s platform. The surprise element comes because the announcement marks a significant shift in their previous rivalry.
This alliance aims to allow autonomous rides and deliveries through Waymo vehicles, offering “an innovative and integrated transportation experience.” The project will be initially launched in Phoenix, United States.
According to Waymo, their self-driving car network in the Phoenix area spans over 180 square miles or 466 square kilometers. That explains the choice of Phoenix as the first city to test this arrangement. Waymo had recently included downtown Phoenix and the airport in its service area.
Waymo’s Self-Driving Car Agreement
As part of the collaboration, a specific quantity of Waymo vehicles will be made available to Uber’s services in the Phoenix metropolitan area later this year. Waymo vehicles will be available to customers through the Waymo One app, which was introduced in Phoenix in October 2020 and is now available to customers in San Francisco and Los Angeles. Uber users can also call for a Waymo vehicle using the Uber app if there is one available.
Waymo runs approximately 10,000 trips each week in Phoenix and San Francisco. The future looks good as it just added Los Angeles to its market, and Austin, too, will make the list shortly. Roughly 130 million people per month use Uber services.
The Voices Of Company Heads
Uber CEO Dara Khosrowshahi is very enthusiastic about integrating Waymo’s remarkable technology into the Uber platform. He says that fully autonomous driving is rapidly becoming a commonplace occurrence in the daily lives of nearly everyone.
Waymo co-chief executive Tekedra Mawakana underlined the benefits of combining their innovative technology and all-electric vehicle fleet with Uber’s extensive customer network. The integration will create an opportunity for Waymo to reach a broader audience.
Uber’s Autonomous Vehicle Initiative
Uber embarked on its autonomous vehicle initiative, Uber ATG, in 2015 as part of its entry into the self-driving business domain. However, this project crashed, resulting in a net loss of over $300 million in 2020. Uber also faced potential brand risks when one of its self-driving vehicles fatally knocked down a pedestrian in 2018. Consequently, Uber decided to sell Uber ATG to a startup supported by Amazon, Sequoia Capital, called Aurora Innovation, for $4 billion. Uber also invested an additional $400 million in Aurora as a part of the agreement.
Why The Collaboration Has Surprised The Industry
In February 2017, Waymo initiated litigation against Uber, claiming they had stolen trade secrets. The lawsuit involved a former Waymo engineer, Anthony Levandowski, who went on to establish Ottomotto, a self-driving truck company. Uber acquired Ottomotto in 2016 for $625 million.
Waymo accused Levandowski of using 14,000 confidential files from Waymo to establish Ottomotto. The legal dispute between the two companies was settled in 2018, and Uber agreed to pay Waymo approximately $245 million.
Levandowski was sentenced to 18 months in prison and ordered to pay $179 million to Waymo’s parent company. However, Levandowski sued Uber, challenging that the company had agreed to indemnify him against any legal action during the Ottomotto acquisition. In 2022, Uber agreed to pay a significant portion of the $179 million and paid Levandowski $2 million, thus putting the case behind them.
The Collaboration – A Win-Win For All
Both Uber and Waymo stand to benefit from this partnership.
Uber, as an industry leader, will be able to cater to the changing expectations of its customers in a better way. Waymo, with its cutting-edge technology and fleet of all-electric vehicles, will get instant access to Uber’s extensive customer base. Waymo will get an excellent opportunity to achieve its goal of significantly increasing the number of rides it offers. The company is aiming for tenfold growth by the summer of 2024.
The Growth Potential
In 2022, Waymo had only around 400 autonomous cars in Phoenix. There is a good chance of demand exceeding supply depending on the number of cars they offer via Uber and its popularity.
Waymo has the opportunity to increase the portion of its fleet available via Uber. If the partnership clicks, Uber can expand its footprints to places where Waymo operates.
At present, that means the growth prospect is limited to LA and San Francisco. But as Waymo expands its operations, Uber’s autonomous service area could also grow alongside.