General Motors has two media magnets in CEO Mary Barra and Cruise Automation founder Kyle Vogt. Barra is praised for boosting GM profitability while streamlining operations and making strategic investments. Vogt, the beneficiary of one of those investments – in his autonomous vehicle technology company – embodies GM’s aspirations for tech leadership even as he burns cash at upwards of $200M/quarter.
GM has used this one-two punch to boost its stock in the context of an inchoate melodrama pitting GM/Cruise against Waymo in the battle for autonomous vehicle market leadership. Both companies make claims about delivering commercial (driverless) autonomous vehicle services some time in 2019 and each claims to have the advantage over the other.
The Waymo vs. Cruise story plays well in the popular press but is severely misleading. There are literally dozens of organizations around the world working on perfecting autonomous vehicle technology (just ask my colleague, Angelos Lakrintis) and there may be as many as a dozen already offering commercial autonomous vehicle solutions.
Ridecell, for one, acquired Auro last year – an operator of autonomous shuttles operating in fixed environments such as university campuses. Ridecell subsequently upped its game by registering to test autonomous vehicles on roads in California.
Waymo has been testing its technology in vehicles operating in sunny California and Arizona, just like Cruise. A massive delta has opened up between Waymo and Cruise based on reported disengagements – a yawning gap that Cruise attributes to its operating primarily in San Francisco vs. Waymo’s more forgiving suburban operating environment.
The comparisons regarding strategy are more salient as Cruise is targeting urban operation of an autonomous shuttle system, while Waymo appears to be focusing on a solution capable of operating between suburban and urban environments, including highways. This is a critically important distinction between these two operators and definitely under-appreciated.
First of all, to review, Ridecell is already operating autonomous shuttles in various locations and is now seeking to expand to public roads. Navya is already operating autonomous shuttles in Las Vegas. In this context it is hard to get overly excited at the progress of either Cruise or Waymo.
The status of technological development and the progress toward market adoption is even more complicated. All indications are that Waymo has an advantage that extends beyond its far lower disengagement rate relative to Cruise.
By focusing on inter-urban applications for automated driving, Waymo has fixed on the core differentiating factor of its potential future service offering. Organizations that are focused today on delivering people or products from one location to another will tell you that the most numerous and valuable routes are those delivering people and/or products into or out of cities.
Waymo is honing in on these use case scenarios as well as those relating to moving people around suburban areas – currently poorly served by taxis and other ad hoc transportation services. It’s easy to be seduced by the challenges of automating transportation solutions in a city such as San Francisco. Sadly, the reality is that the best revenue opportunities reside elsewhere.
Cruise’s focus on San Francisco highlights the work of other AV pioneers seeking to overcome the formidable challenge of intra-city transport. The only problem with prioritizing this proposition is that the competition – primarily in the form of public transport – is fierce.
Waymo’s advantage lies not only in its massive portfolio of miles driven and miles simulated. The company also has a fundamental business model and strategy advantage that Cruise is ill-equipped to overcome.
But this is why this story is so compelling, like the tortoise and hare parable that preceded it. Each operator has its advantages and each has a compelling story to tell.
Cruise appears to be the hare of this tale, as a startup and even with GM’s and SoftBank’s and Honda’s subsequent investments has doubled-down on its hare status. Oddly, GM has so far kept Cruise walled off from its own autonomous vehicle development activities manifest in Super Cruise – an enhanced cruise control system which integrates advanced vehicle positioning technology and driver monitoring to allow drivers of certain Cadillacs to take their hands off the wheel under appropriate circumstances.
My money is on the tortoise, Waymo. Waymo is boring. But boring is a virtue in this case. The company is publicity averse – certainly relative to Cruise – and its strategy appears to be relatively transparent. As a former journalist it is difficult for me to praise a company that seems to be avoiding the press – but it is an understandable affliction in the autonomous vehicle industry.
In fact, GM’s inclination to communicate Cruise-related developments to the press only makes its organization more suspicious. Is Cruise making legitimate progress or is the entire effort nothing more than a stock manipulation? I leave it to you, dear reader, to correlate Cruise announcements and press “reveals” to stock price movements.
Cruise may be on to something by focusing on urban AV operation, but even successful driverless operation of automated vehicles will require substantial populations of expensive human support personnel for monitoring, servicing, cleaning and retrieving autonomous vehicles. Cruise’s urban-centric battle plan faces serious unacknowledged headwinds.
Waymo, on the other hand, is mastering the art of operating in a range of environments, urban and otherwise. Both companies, though, will have to contend with the regional nature of AV operation and the challenges of variable weather.
The oddest thing of all, though, is the fact that Cruise and GM choose to compete with one arm tied behind their back. GM is the largest Mobileye customer on the planet. This means that GM has the most cars with built-in forward facing cameras connected to telecommunications control devices – called TCUs.
Like Tesla, GM could tune its forward facing cameras to gather data in support of automated driving development. GM does not do that. Where forward facing cameras are available on GM vehicles the company is applying them for recreational or simple safety purposes.
GM lets its customers use the forward facing cameras in Corvettes to record scenic drives or their latest visit to the race track. Forward facing cameras on other GM vehicles are used for surround view applications.
Like its groundbreaking OnStar vehicle connectivity technology, GM is under-leveraging its camera-based investments. OnStar might have been a crowdsourced traffic solution like Waze long before the existence of Waze, but the company chose to avoid the cost of wireless data collection implicated in that use case.
Like Tesla, GM could be collecting vehicle data in support of autonomous vehicle development activities. But the company is still obsessed with cost avoidance (regarding wireless data) – and privacy – which is beginning to look like avoiding value creation.
If GM fails to keep pace with or surpass Waymo it is because the company willfully failed to leverage its technological advantage inherent in its management of the largest connected fleet in the U.S. and the broadest deployment of connected forward facing cameras. It makes one wonder whether the media magnates at GM are more interested in the limelight and the stock price than transforming transportation.
Roger C. Lanctot is Director, Automotive Connected Mobility in the Global Automotive Practice at Strategy Analytics. More details about Strategy Analytics can be found here: https://www.strategyanalytics.com/access-services/automotive
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