The makings of a partnership that reshapes the automated-driving technology landscape were there in plain sight.
Five days before Toyota Motor Corp. and self-driving tech company Waymo unveiled a sprawling partnership, Sundar Pichai, CEO of Waymo parent Alphabet, made a confession regarding his robotaxi company.
“We can’t possibly do it all ourselves,” he said during Alphabet’s quarterly earnings call on April 24.
Successful deployment will “require a successful ecosystem of partners,” Pichai said.
“Having the world’s largest auto company join forces with the world’s largest robotaxi firm backed by the world’s largest search engine company is a formidable combination,” Morgan Stanley analysts said in a report to investors after Waymo and Toyota announced the partnership.
Waymo already counts Hyundai Motor Group and ride-hailing giant Uber as key partners. But analysts said the Toyota relationship, rolled out April 29, could set self-driving technology down a fundamentally new path toward creating personally owned autonomous vehicles.
“There’s a clear business case for OEMs to invest in that,” said Augustin Wegscheider, co-leader of Boston Consulting Group’s Center for Mobility Innovation.
Toyota and Waymo are not the only ones chasing the dream of a personally owned autonomous vehicle, one that could whisk its occupants from their driveways to their destinations with no role for human drivers.
Dream of personally owned autonomous cars remains distant
General Motors shuttered its Cruise robotaxi division last fall and folded its technology and some employees into in-house efforts to develop personally owned autonomous vehicles, a goal CEO Mary Barra has placed on GM’s horizon.
Yet overall industry efforts to deploy Level 4 automated-driving technology for personally owned vehicle applications remain distant, Wegscheider said. Because it is a medium-term play, “it makes sense for automakers to partner versus building in house.”
Both GM’s pivot with Cruise and Waymo’s partnership with Toyota underscore another dynamic in the fledgling automated-vehicle realm: Robotaxis are an arduous business, said Sam Abuelsamid, vice president of market insights at Telemetry.
Waymo now provides more than 250,000 driverless rides per week as part of its ongoing Waymo One robotaxi service in four markets.
But “no one has figured out a business model yet that works for this,” Abuelsamid said. Waymo may be partnering with Toyota because “they probably feel like they have to find a pathway forward that generates enough revenue that covers their costs.”
Deal could mark shift in Waymo’s long-standing philosophy
A deal with Toyota to license self-driving technology offers the prospect of lower operating costs, Abuelsamid said. It also marks a prospective pivot. Toyota and Waymo sketched the contours of a partnership that will not only encompass autonomous vehicles, but also perhaps utilize Waymo’s technology in advanced driver-assistance systems.
Waymo has resisted such attempts in the past. In the early days of its technology development, engineers became alarmed when human drivers fell asleep behind the wheel as the automated system handled driving. Those incidents figured prominently in the company’s decision to focus exclusively on automated driving that left no role for humans.
Toyota came to a similar conclusion in its early self-driving research — engineers were concerned about integrating motorists and machines. They took the opposite approach, developing the Guardian system, which left humans always in charge of driving. An emergency automated system engaged only when humans needed saving from themselves.
But technology has evolved to the point where Toyota and Waymo could develop an advanced driver-assistance product that competes with the likes of Mobileye, Abuelsamid said.
Waymo has “maybe stepped away from the dogma of ‘partially automated systems are not a good idea,’” he said. “This could be something that car buyers find value in, and decide ‘OK, this is something worth paying for, if I could do a road trip and not have to watch the road.’”
Toyota has placed multiple self-driving bets
For Toyota, the Waymo partnership marks its latest foray into the automated-driving frontier.
The automaker has its own in-house software division, Woven by Toyota, which has worked on automated-driving technology among other pursuits. Separately, Toyota has backed Chinese AV developer Pony.Ai, North American robotaxi startup May Mobility and trucking firm Aurora.
“It’s smart for OEMs to place multiple partnership bets in parallel, especially as you look at different geographies,” Wegscheider said.
Toyota may be making bets on vehicle platforms as well. May Mobility is utilizing the automaker’s Sienna minivan in commercial service and started a project using Toyota’s e-Pallette AV platform in Japan. Another dedicated automated-vehicle platform appears on the way.
Toyota and Waymo said they “aim to combine their respective strengths to develop a new autonomous vehicle platform as part of their partnership.
Toyota partnership not Waymo’s first foray with a Japanese company
Waymo’s interest in Japan has been growing. The company completed a “road trip” in Japan last fall. Two weeks ago, it said human drivers from Nihon Kotsu, Toyota’s largest taxi company, would start manually operating Waymo vehicles on the streets of Tokyo.
Waymo said it has not committed to anything in Japan beyond a testing phase with Nihon Kotsu.
But “if we were to move forward toward full deployment, then having a strong local partner like Toyota would certainly be beneficial,” a company spokesperson said.
