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Alphabet's self-driving car spinoff, Waymo, announced it's purchasing thousands of specially modified, hybrid Chrysler Pacifica minivans that it will outfit with its autonomous hardware and software for use in a commercial ride-hailing service.
It plans to launch the service near the end of 2018 in "several US cities," although it only named the Phoenix area specifically. The company initially ordered about 100 of these vehicles late in 2016, and purchased another 500 in 2017. So far, it's tested the vehicles in Arizona and Michigan, and will soon bring the cars to the Atlanta area.
The move will likely make Waymo the first company in the US to operate an autonomous ride-hailing service, affording it several key advantages. CEO John Krafcik said in a press release that this decision shows the company's efforts are moving from research and development to operations and deployment. That will give it two key advantages over later entrants into the autonomous ride-hailing space:
- Once launched, the service can help Waymo build a reputation as the go-to provider for autonomous ride-hailing. Uber and Lyft are by far the dominant players in the US ride-hailing market, controlling 74% and 22% of the market, respectively. Waymo's entrance will afford it an opportunity to build an image as the preeminent provider of autonomous ride-hailing, enabling it to win a valuable brand reputation before other companies enter the market. That could allow it to rapidly attract users willing to ride in a self-driving car, which a recent AAA survey found is 28% of US consumers.
- But, more importantly, it will get a head start in ironing out any logistical kinks that may arise from operating an autonomous ride-hailing service. Operating such a service will undoubtedly present Waymo with its fair share of challenges, including potential insurance, liability, and fleet maintenance issues. Additionally, the company will have to get in compliance with various state-level regulations across the US. An early launch will afford Waymo more time to sort out these potential hiccups before it has to contend with serious competition.
These advantages could leave Waymo particularly well positioned in the forthcoming battle to operate an autonomous ride-hailing service at scale. Waymo isn't the only company planning a commercial launch of self-driving cars in the next few years, as both Uber and GM hope to do the same by 2019, albeit in limited capacities. Once these launches occur, the companies will begin to scale up their services and come into direct, fierce competition with one another, which will only heat up when Ford, Toyota, and others enter the market around 2021.
However, if Waymo is able to use its head start to build a reputation for safety and cutting-edge innovation, as well as make headway in ironing out logistical and regulatory issues, it will gain two valuable advantages. That, in turn, could make it harder for later entrants to catch up, potentially allowing Waymo to build a secure market position by the time other companies initially launch their autonomous cars.
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