Driveless cars are driving headlines. Here’s what you’ve missed

Sascha: [00:00:02] Welcome to The Dive, the podcast that asks who said business news needs to be all business? I'm your host, Sascha Kelly. Driverless cars. There's been a lot written about them and a lot of excitement, but recent developments suggest there may be a little further away than we previously hoped. In America, General Motors have had their driverless car trials suspended by regulators in Japan. The country has backtracked on its push towards self-driving vehicles after one hit a parked bicycle. And back in America, Tesla has won a landmark trial over its autopilot technology. Uber, they've decided if you can't beat them, join them. And they've partnered with a company that was at one stage its biggest rival, and that's Google's Waymo. It's Monday, the 6th of November. And today, I want to know what is the latest in the race to self-driving cars? To talk about this today, I'm joined by my colleague and the co-founder of Equity Mates. It's Alec Renehan. Alec, welcome to the Dive. 

Alec: [00:01:02] Sascha, good to be here. 

Sascha: [00:01:03] Excellent. So first of all, remind me of the lay of the landscape of driverless cars. Who are the big players that I'm looking out for? 

Alec: [00:01:11] Yes. So there's a number of start-ups in the space that are doing different types of the technology or that are trying to commercialise self-driving cars. There was an Australian Start-Up that was getting a lot of buzz Zoox Z-o-o-x was how it was spelt. It got acquired by Amazon a couple of years ago. So I think the first thing to acknowledge is there's heaps of companies working on this technology. But amongst all of those companies, the real leaders in the space of some of the biggest and most well known companies, you've got Waymo, which is a subsidiary of Google or Alphabet. You've got General Motors, the car company that bought Cruise, one of the self-driving Start-ups Tesla and their self-driving capabilities is a obvious name to think about. And then over in China, there's a couple of big names. China's equivalent of Google is Baidu. It's their big search engine company. They're a big leader in the space. And another company in China that is, I guess, progressing is pony.ai. So some of those names people may be familiar with, some not, but they're the biggest companies and they're also seemingly the most progressed at this point. 

Sascha: [00:02:24] Yeah, and generally over the past few years, we've seen a lot of momentum towards driverless cars, especially this focus on trying to get them to become a part of our lives. 

Alec: [00:02:33] Yeah, I think for people who haven't followed this story as closely, there's been a few key milestones that are worth being aware of. The first really big one was actually five years ago. Now, February 2018, Waymo, the subsidiary of Google, received a permit to run a robo taxi service in Arizona. And for the last five years, you could pull out your phone in Phoenix, Arizona, and order a driverless robo taxi to drive you around Arizona. So this has been a part of some people's lives for a while. In August 2023, the California government voted to allow both Waymo and Cruise, which is GM's subsidiary, to run a 24 hour service using driverless cars. Previously, they'd only been allowed to operate at night. Don't ask me why it's safer at night than during the day. And in this year in China, Baidu and Pony AI, I have both got permission to run or to trial Robotaxi services in parts of Beijing and Shanghai.

Sascha: [00:03:34] But let's get to the big news that we want to talk about and the reason that we're talking about this today, and that's after two accidents. About 600 of General Motors self-driving cars are being taken off the road and being investigated by the National Highway Traffic Safety Administration. I go all out in the U.S.. What's happening here? 

Alec: [00:03:55] Yes. So the National Highway Traffic Safety Administration, we might just say regulators from now on. 

Sascha: [00:04:00] Yeah, that's a good one. 

Alec: [00:04:01] Reported that they received two reports involving pedestrian injuries. The regulators said reports were related to self-driving cars hitting pedestrians on crossings in San Francisco.

Sascha: [00:04:12] Not ideal. 

Alec: [00:04:13] Not ideal is certainly one way to put it. Both of the reports submitted suggested that the pedestrians were crossing after the cars traffic light had turned green. But still, these robo taxis need to be programmed to avoid humans at all costs. Yes. The first incident from August 2023, the self-driving car hit someone at 1.4 miles per hour, so going very slowly. The other incident from October 2023, it's a bit horrific. So if you want to hear the details, skip forward 45 seconds.

Audio Clip: [00:04:47] Cruise said that in that incident, a human driver, quote, tragically struck and propelled the pedestrian into the path of the autonomous vehicle, which struck the pedestrian.

Alec: [00:04:56] But the really unfortunate thing was the self-driving. Ha! Then the person over slammed on the brakes as a safety feature and stopped on top of the person's legs. But then, because there was no one in the car, the car wouldn't move. And so they actually had to like, winch the car up to get the person out. So. 

Sascha: [00:05:15] Oh, that's awful. 

Alec: [00:05:16] The the regulator, the National Highway Traffic Safety Administration, said, enough, stop. We're taking all your cars off the road until we can understand what's gone wrong here and what we can improve. GM through Cruise has said that the safety record, quote, continues to outperform comparable human drivers. But yet General Motors has suffered a pretty big setback in their race to get Robotaxi services out there. 

Sascha: [00:05:46] Yeah Alec, that's not a nice story. But that's also not the only recent accident in Japan. The government last year allowed level four self-driving vehicles, which is vehicles equipped with systems able to intervene in the instance of a malfunction without necessarily involving the driver. However, again, after a recent accident, this has also been suspended. 

Alec: [00:06:08] Yeah, that's right. So there are six levels of self-driving from 0 to 5. And so level four is the second most advanced. And Japan was piloting this level four self-driving. However, that pilot program has been suspended after the vehicle had an accident with a parked bicycle. It was only allowed to drive at a maximum speed of 12 kilometres an hour. So it was very much in the trial phase. But again, hitting a parked bicycle, not an ideal signal. And it came a week or two after the US regulators had pulled all of Cruise's vehicles. So it's just another headline that seem to be piling on the self-driving car story.

Sascha: [00:06:52] Yeah, I guess for context I am partial to those electric scooters and riding them around Melbourne and their top speed is about 20 kilometres an hour. So 12 isn't super fast, but you can still do some damage at that speed. But Alec, let's take a quick break here. But when we get back, there are quite a few headlines on this development. So we're going to focus on two companies that have kind of been developing that, and that's Tesla and Waymo. And I want to hear what's going on with them in just a minute. 

Audio Clip: [00:07:24] No hands on the wheel. No hands at all. More than 2000 self-driving cars are on the road in California. Most have a test driver inside who can take over when needed. But hundreds of cars have no one in the front seat as they make deliveries and shuttle passengers. 

Sascha: [00:07:40] Welcome back to the dive. I'm your host, Sascha Kelly. Thank you so much for joining us. And today we're talking all things driverless cars. Would you drive on? Let us know your contact at equity markets dot com. Always really curious I think I'd try it and then some of these stories Alec, I am not so sure. 

Alec: [00:07:59] Joe Biden has a famous saying compare me to the alternative not the almighty. It's essentially saying no one's perfect. Compare me to the alternative. I think self-driving car makers at some point are going to pick up that as their slogan. Compare me to the alternative, not the Almighty, because human drivers don't exactly have a spotless track record. But when we talk about this technology, we don't think about them in relation to human drivers. We think about them in relation to a perfect driving record. So, yeah, like the accident we spoke about earlier, it was horrific. The accidents were horrific. But as the self-driving makers keep trying to say their driving records are better than humans.

Sascha: [00:08:39] And unfortunately, when not a philosophy podcast where business forecasts so we don't have time to dig into the big questions about this, but we certainly can look at the headlines and the news that's happening. So take me through what's happening at Tesla.

Alec: [00:08:51] Tesla has been in court recently around a crash in 2019. This has to do with the autopilot semi-autonomous driving system. The passenger in a Tesla was killed and two of the other occupants were seriously injured in a crash in 2019. The occupants and their families allege that the Tesla autopilot system had caused the Tesla to veer off the highway in L.A. at 105 kilometres an hour, strike a tree and burst into flames, all in the span of seconds. As a result, the families were asking for 400 million in damages and obviously calling into question the safety of Tesla's autopilot feature. Tesla denied liability and really pointed to the driver as cause for the accident rather than the software. And in Tesla's second big win in court this year, the jury declined to find that the software was defective. Earlier this year, in another trial in California, Tesla was taken to court around the naming of the technology autopilot and full self-driving. The plaintiff in that case said that it suggested that this technology didn't require human monitoring. Full self-driving. Tesla argued that there was sufficient disclaimers and that again, in the case there where there was another accident, Tesla claimed it was again the driver that was to blame, and they also won that case. So two cases where Tesla's self-driving technology was challenged and two cases that Tesla won. 

Sascha: [00:10:37] Interesting. So let's turn to the last partnership that we're going to talk about today, and that's Uber and Waymo, who previously were competitors and now have decided to partner up and work together. 

Alec: [00:10:49] Yeah, this is a really fascinating story because there was so much bad blood here. If people are familiar with the story, they might be familiar with how this started. Google's self-driving ambitions really started with one of the major people in the early days of Google's self-driving ambitions was an engineer, Anthony Levandowski. He was poached by the uber CEO Travis Kalanick. And when Travis had grand ambitions to develop self-driving technology as well, Google and Waymo took Uber to court, alleged that they stole IP and trade secrets, and that court case was ongoing. When Travis Kalanick got in trouble, Uber and eventually was forced to resign at Uber. So Kalanick resigned in June 2017. By early 2018, the new Uber CEO settled out of court with Waymo, and Uber gave Waymo $245 million in Uber shares as part of the settlement. So then Waymo became a part owner in Uber. And so fast forward five years, I guess a lot of water has got flown under that bridge. And the two companies, Uber and Waymo, have announced a partnership where now Uber users in Arizona will be able to order a self-driving robotaxi through the Uber app. Now for those that don't trust the technology they will be given. The option to reject the autonomous option. And Waymo and Uber are setting up a 24 seven helpline for passengers who are travelling in a Waymo car in case the technology malfunctions.

Audio Clip: [00:12:34] But if you're not ready to ride in a driverless vehicle, you can request a human driver through ride preferences. And for now, they look. To offer a balance of human and autonomous. Rides. Stepping into a ride where there's no human driver, that it's consistent, comfortable and quiet ride is a great option for a lot of people, and especially folks that don't feel comfortable getting into other forms of ride hailing. 

Alec: [00:13:00] But this is a big step for Uber because Travis Kalanick back in the day when he was leading Uber, saw drivers as their biggest expense. And if you could have autonomous vehicles, you could save that expense. That would be a lot more profit or a lot cheaper rides. Fast forward five years. Travis Kalanick is no longer at the company. Uber is no longer trying to develop self-driving technology themselves, but it's clear that they see the strategic opportunity to partner with a self-driving operator. And now Uber users in Phoenix, Arizona, can give it a try.

Sascha: [00:13:35] Well, Alec, I'm pretty curious. And last question for the day. You've ordered an Uber, you get the self-driving option. Are you hinting, accept or reject at this point? 

Alec: [00:13:44] I'm definitely hitting, except I think there's one key caveat because, you know, people might hear this story. They might hear that Waymo has been in Arizona for five years and they're now in San Francisco, in California as well. Don't expect Waymo to just be in every city in the blink of an eye. Their technology is a little bit different to Tesla and some of the other self-driving operators, whereas Tesla and the like are really trying to build technology that can go anywhere and has the sensors and the computing power to react on the fly and, you know, sort of learn as it goes. Waymo's technology really relies on having a really good understanding of the city, knowing where everything is, mapping out every stop sign and traffic light and all of that stuff. They chose Phoenix, Arizona as the first port of call, and it was four or five years before they went to the Second City and that was San Francisco. And again, it's mapped out really understand where every traffic choke point is, where every traffic sign or light is. So yeah, it's a different approach to the technology. You know, it means that they could get a robotaxi service in operation sooner. It does mean it's slower to scale. So I think that the takeaway here as we wrap up, what four or five different headlines into one self-driving car story is the technology is real and it exists. And you might drive past a self-driving car, especially if you're in the United States or in China, but it's probably a while before all of us can order a ride.

Sascha: [00:15:19] Yeah, fascinating. And I'm sure it's not the last time we're going to be talking about it on the dive. Thanks so much for joining me today, Alec. As a reminder, quick favour from me. Jump in your podcast player. Give us a five star review. I ask every time, but it does make all the difference. We'll be back in your feeds on Wednesday. Until then.