Autonomous Driving Daydreams: Champions Emerging

From horses to trains, to cars and airplanes, the transportation revolution keeps rolling. With all the hype about self-driving cars, robotaxis, and transportation as a service, questions emerge about where we are today, where we will be tomorrow, and who will blaze the path to the future? While timelines have been off, many realities of today seemed like science fiction ten years ago. Hand in hand with their sophisticated marketing efforts, Tesla has delivered supervised autonomous driving, Waymo has rolled out robotaxis to several major cities with more on the way, and other competitors, like GM and Uber, have been keeping market leaders on their toes. With different verticals, such as passenger consumer vehicles, robotaxis and transportation as a service, the total addressable market is projected to be in the trillions within the next ten years.1 With a prize that large, the grand prix is on, and the well capitalized leaders of today in Tesla and Waymo are likely to be the winners of tomorrow.

In a much-hyped Tesla event on October 10th, Tesla revealed an autonomous driving shuttle called the Robovan and a two-seat vehicle with no steering wheel or pedals called the Cybercab. As the cherry on top, guests were greeted by and mingled with humanoid robots named Optimus. The event was heavy on performance but light on timelines and specifics, disappointing investors with shares falling over 8% the following day. While it was stated that Cybercab would be produced in 2026, notable hurdles remain in cutting costs and appeasing regulators for the autonomous driving vehicle. Further, investors have grown wary of Elon’s promises on Tesla’s autonomous driving rollout as the past decade has been full of missed deadlines.2 However, by setting lofty targets, Tesla has achieved some incredible milestones along the way. Tesla uses a unique approach to train its autonomous driving vehicles by collecting real world driving data from its customers via cameras to build a neural network.3 This approach is cost effective and has yielded promising results, with several outlets naming Tesla the best in supervised autonomous driving tech. With its unique approach and increasingly large neural network, Tesla will continue to be a leader in autonomous driving for consumer passenger vehicles. On the other hand, Tesla’s reliance on camera based autonomous driving has not led to meeting regulatory standards for its robotaxi, causing it to fall behind competitors who use different approaches.

Tesla’s Autonomous Driving Tech

Waymo’s robotaxis, backed by Google, currently give over 100,000 rides per week to customers in San Francisco, Phoenix, and Los Angeles, with Atlanta and Austin on the way.3 Waymo has a few key advantages over Tesla geared towards pleasing regulators. First, Waymo uses multiple sensors to execute its autonomous driving, including laser lidar, radar, cameras and audio sensors, while Tesla solely uses cameras. Second, Waymo rides are confined to certain cities and areas that have been well mapped out by the developers of the technology compared to Tesla’s rides that can theoretically go anywhere.

Third, Waymo has remote human monitors who assist its robotaxis in unique circumstances and interact with police or riders, if necessary, as opposed to Tesla which has no human monitors.3 These safety advantages have pleased regulators and given Waymo a sizable lead for autonomous driving taxi rides as it rolls out to more cities before competitors get out of the gate or have been forced to backtrack.

In 2020, GM’s Cruise rolled out its own version of the robotaxi that used camera, radar, and LiDAR sensors.7 Cruise was early on its launch, but has had a tumultuous journey, showing the pitfalls of moving too fast. Incidents involving obstructions to traffic, public transit, and first responders surfaced on social media shortly after Cruise’s launch. The negative headlines came to a climax last October when a Cruise robotaxi ran over and dragged a pedestrian in San Francisco. Regulators came down hard on Cruise, and the California DMV immediately suspended the company’s permits for autonomous driving vehicles.8 Cruise still maintains small fleets operating in other states that have a human driver supervising the vehicles as they attempt to win back public trust. Amid the pitfalls, GM has invested $850mm more into Cruise, bringing its total investment to more than $8B as it signals it is not ready to give up.8 Cruise’s difficulties have served as a warning to other competitors who have decided to sit out of the arms race and find another way to get into the game.

Uber did not want to miss out on the autonomous driving revolution but saw the risk of losing the arms race and decided to go another route. Instead of focusing on technology, Uber has made strategic partnerships with Waymo, Cruise, and up-and-comers like Aurora and Nuro to offer autonomous driving robotaxis on their platform. Through these partnerships, Uber has already completed tens of thousands of trips with many more to come as they roll out to other cities.10 The deals make sense for both parties; the developers get to license their technology with less overhead, while Uber gets to offer groundbreaking technology on its platform. Further, Uber saves billions in R&D by staying out of the technological arms race. The future of transportation is unlikely to be a winner take all scenario, and Uber is carving out their niche.

In the race to the future, Tesla and Waymo are currently leading the way for autonomous driving passenger vehicles and robotaxis, respectively. Tesla has missed deadlines but is still the pace setter for consumer passenger vehicles. Waymo has had a fast yet deliberate rollout and is dominating the nascent robotaxi market. However, with a total addressable market expected to be in the trillions, dozens of other competitors like Cruise and Uber are fiercely fighting for their slice of the future. In the wake of extreme competition, Tesla and Waymo cannot risk their leads by growing complacent. Judging by the broader success of Google and Elon Musk run enterprises, complacency should not be an issue. Further, with the growing costs that have bogged down competitors like GM and Cruise, their large market capitalization serves as a huge advantage. In the race for the future, Tesla and Waymo are in the lead, and with their access to capital and proven track record, they are the likeliest winners in the transportation revolution.

Sources:

1. Precedence Research. June 2024. “Autonomous Vehicle Market Size, Share, and Trends 2024 to 2034”
2. Wall Street Journal. October 2024. “Tesla’s Robotaxi Event Disappoints Investors”
3. Forbes. October 2024. “Elon Musk Sees Tesla’s Future In Self-Driving Robotaxis But He’s Far Behind Waymo”
4. What Car? Undated. “Which car has the best self-driving tech?”
5. Tesla. October 2024. “We, Robot”
6. Waymo. October 2024. “Meet a better way to move”
7. Medium. October 2020. “How Cruise Uses Simulation To Speed Up Our Sensor Development”
8. Tech Crunch. June 2024. “GM gives Cruise $850M lifeline as it relaunches robotaxis in Houston”
9. Cruise. October 2024. “Driving our mission”
10. Waypoint. September 2024. “Waymo and Uber expand partnership to bring autonomous ride-hailing to Austin and Atlanta”