With the current Robotaxi market in the U.S. being dominated by Alphabet Inc.‘s (NASDAQ:GOOGL) (NASDAQ:GOOG) Waymo, Frank McCleary, who is a Partner at Arthur D Little, shared his insight with Benzinga on the gap between Waymo and Tesla Inc. (NASDAQ:TSLA) and how ride-hailing companies like Uber Technologies Inc. (NYSE:UBER) could actually dictate the Robotaxi market.
Tesla And Waymo Aren’t In The Same Playing Field
“I wouldn’t put the two currently in the same playing field, because Waymo is above and beyond in multiple markets,” McCleary said, adding that the company had established a “rhythm” of undertaking testing and deploying driverless vehicles “pretty quickly” across cities.
Tesla, on the other hand, was still on a level 2+ system. McCleary said he was unsure if the regulators would “go for it or not,” outlining doubts over the system’s capabilities in its current iteration. He then shared that Tesla could be painted as a disruptor in the sector, but acknowledged that it has “worked sometimes” with the Model 3 and Model Y, but at times, it also hasn’t, like with the Cybertruck, he said.
Uber’s Role
Speaking on ride-hailing companies, McCleary said that operators like Uber and Lyft Inc. (NASDAQ:LYFT) had “built such a captive audience that getting a customer to add another app is a bit tough,” he said, adding that in the current scenario, partnerships could be the way to go because of the ride-hailing companies’ reach and market penetration.
McCleary sees Uber as an “orchestrator” of Robotaxis. However, he does not think that the company could spend time acquiring its own fleet in the near future. “I don’t think they’re going to all of a sudden go from an asset-light business to an asset-heavy business,” he said.
The Importance Of Screen Real Estate
When asked if Amazon.com Inc.‘s (NASDAQ:AMZN) Zoox could fill in the gaps created by Tesla in the Robotaxi space, McCleary said that it wasn’t as much about “one disruptor vs the other” as about “the demand of how you book [Robotaxi rides],” which was likely going to “continue to be Uber or Lyft.”
Another challenge for Robotaxi operators when competing against the likes of Uber was convincing customers to shift to a proprietary platform. He said that users have “ceded to those two apps,” and it was about “screen real estate” and whether manufacturers were meeting the demand on ride-hailing platforms or not.
Lack Of Fleet
“If Uber wants to push me [Robotaxi operator] out, they can just blunt the market with more drivers that are available and increase availability,” he said, outlining how Uber/Lyft can influence customer behavior and how that presents another challenge for operators trying to scale due to the difference in fleet sizes.
Robotaxi operators could use their own app/platform in the pilot phase and then get onto a larger demand generation platform like Uber once they’re ready to scale operations, he said. “I think that’s going to continue,” McCleary added, highlighting the importance of Uber’s reach.
But McCleary pointed out that fleet size continues to remain a major challenge for companies. The fleet “limitation is going to constrain any robo-taxi player until they’re truly, truly at scale,” McCleary said.
Transparency Could Be Key
Crash reporting and safety information can help boost consumer confidence in Robotaxis, McCleary shared. “Transparency on the number of disengagements per X amount of miles,” or similar data that “consumers can easily understand, will help adoption,” McCleary outlined.
He then said that as OEMs start rolling out Level 3 or Level 4 systems, “they’re going to have to report on disengagements and on incidents caused by the technology versus the driver.”
He also said that the existing system may “force” Robotaxi providers to report crash data, which would increase transparency. McCleary also shared that he did not see a single safety standard for AVs being implemented in the near future.
China’s Entry Is ‘Inevitable’
“I think it’s inevitable. At some point, whether it’s just administration, it’s the next administration,” McCleary said on Chinese automakers entering the U.S. market. He outlined talks of Stellantis NV (NYSE:STLA) partnering with Leapmotor to establish production in Europe.
“If your product is not competitive, you’re just gonna lose market share, and then you just become a U.S. brand,” he said, adding that U.S. OEMs are going to be “significantly pressured” due to the Chinese automakers.
On the other hand, Robotaxis are still a level playing field of sorts as Waymo was expanding across some countries, he said. “It’s more regulated,” McCleary said, adding that it was “a bit harder” for Chinese OEMs to enter the market and “all of a sudden show up.”
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Photo courtesy: Jonathan Weiss / Shutterstock.com
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