Waymo’s Fleet Announcement: in context (Part 2)

As I noted in part 1 of this post, there were several important details to Waymo’s big fleet announcement last week. The most significant part of the presentation was the size of the fleet (20,000) and the volume of trips those vehicles can serve in a day (1,000,000), which is what I focused on in that post. But there were several other points that are worth consideration as well:

  • The vehicles are electric
  • The vehicles will be manufactured by Jaguar
  • The vehicles are being converted from Jaguar’s I-PACE
  • NO pricing was announced

Electric Autonomous Vehicles

It has been frequently speculated that autonomous vehicles will be electric vehicles. You can find articles to this effect from most major news outlets, as well as quotes from industry leaders. This is great because cars are responsible for roughly a quarter of greenhouse gas pollution in the U.S. If autonomous cars are predominantly electric, that would represent huge progress towards mitigating climate change (assuming our grid continues the current trend towards clean power sources).

What is less clear from all the media-hype is why electric drivetrains are more suitable for autonomous vehicles that gas powered drivetrains. It turns out there are several reasons. Historically, electric vehicles have been limited by short ranges and long charge times. No one wants to wait 30 minutes to charge their car or charge their car after every trip so their battery doesn’t die. Advances in battery and charging technology have begun to tackle these problems, but autonomous vehicles will render those problems largely moot. The vast majority of trips fall well within the range of those electric vehicles with the shortest range. AVs will only complete trips that can be met given their available battery range. After dropping off a passenger at work, they can head to the nearest charging station if they need to.

The second, far more significant reason, is that electric vehicles are cheaper to own and operate. Yes, electric vehicles are generally more expensive than their gas-powered counter parts up front, but they are may be far cheaper over-all. First, electricity is cheaper per-mile than gas. The US Department of Energy estimates that the cost of electricity is equivalent to 1.14 per gallon. Given how intensely fleet-operated vehicles are anticipated to be utilized, that is huge savings. The other reason electric vehicles are expected to be cheaper is more speculative because they haven’t been around for very long. It has to do with the relative simplicity of an electric drivetrain. Electric vehicles have fewer moving parts than gas-powered vehicles (20 versus around 2000). This potentially means less maintenance and a longer lifespan. More evidence is needed, but Tesloop, a transport service with a fleet of Teslas, has been putting 17,000 miles on their vehicles every month and their experience reinforces the low-maintenance, long-lifespan expectation for electric vehicles. One of their vehicles has clocked 300,000 miles already. It has incurred only $11,000 in maintenance costs and they expect to drive it much further. Both lower maintenance costs and a longer lifespan would translate to a huge benefit for fleet operators.

Thus, the fact that Waymo is purchasing electric vehicles for their fleet is no surprise. It corroborates what many have suspected would happen. It was perhaps more surprising that Waymo didn’t go with an electric vehicle when they purchased a fleet of Chrysler Pacificas. Continued improvement to battery and charging technology will only amplify the benefits of an electric fleet.

Jaguar

Among the more surprising aspects of the announcement is that Waymo decided to partner with Jaguar for the next phase of the fleet announcement. Notably, Jaguar is not replacing Chrysler. Both automakers will be manufacturing vehicles for Waymo. The reason this is surprising is that Jaguar produces luxury vehicles and Jaguars will represent the bulk of Waymo’s fleet in the near-term. I think many expected Waymo to find a more affordable vehicle in this early phase of fleet expansion. I see a few potential reasons for the Jaguar partnership:

  1. Waymo may not have had many choices if they wanted a fleet of electric vehicles. Most electric vehicles that satisfied Waymo’s needs, may have been premium vehicles. The Bolt or Model 3 would have been the natural alternative, but GM and Tesla are buildingtheir own competing AV technology (and the Model 3 is struggling with production bottlenecks).
  2. It may be that AV ride hailing in the near-term will be expensive. If this is the case, only well-resourced individuals will be able to afford the Waymo’s mobility service. In this scenario, Waymo had to find a luxury vehicle that would attract the customers they hope to serve. Many have speculated that AV technology will be far cheaper on a per-mile basis than contemporary cars, but that may not be the case in the near-term (though, hopefully, they will be cheaper in the long-term). AV developers have spent many billions developing this technology and they may need to charge high fees to recoup these investments. It may also be that the hardware and software required to make AVs possible is still very expensive on a per vehicle basis. I hope this isn’t the reason for the Jaguar partnership, but it may be.
  3. Finally, it may be that Waymo is simply trying to lure customers away from their personally owned vehicles by offering a premium travel experience. Many surveys have shown a reluctance by the public to adopt AV technology. Partnering with Jaguar may be a way of enticing skeptics into giving the technology a try while still providing an attractive price.

Fortunately, we’ll gain several clues when Waymo announces prices for its mobility service later this year.

Jaguar’s I-PACE

The intent to use the I-PACE for their fleet is significant because, like the Chrysler Pacifica, this vehicle is designed to be operated by a person and it has all the features that are required for human operation. It has a steering wheel, breaks, a dashboard, and mirrors, among other driving features, despite the fact that no one will be in the driver’s seat. Instead the vehicles will be outfitted with hardware and software to complete the driving task autonomously. No manufacturer is ready (as far as we know) to create an AV specific vehicle for Waymo. I’ve speculated here that vehicle design will change radically with AVs, but that isn’t happening yet. Only GM has developed a production-ready vehicle that excludes the features necessary for human operation.

No pricing announcement yet

Unfortunately, how much Waymo will charge for its service is still unknown. This information is vitally important because it will dictate how quickly and thoroughly AVs disrupt the transportation sector. If it is priced comparably to Uber and Lyft, the impact will be minimal in the near-term. However, any price below a $1/mile will begin to have an impact on car ownership. If the costs are as low as some have predicted (< $0.20/mile) then the transportation revolution will come as quickly as the technology can be deployed, upending every aspect of transportation. GM has announced an anticipated price per mile of about $1.00. I wouldn’t be surprised if Waymo beat that price, but we’ll see soon enough.

 


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