Waymo sketches out long-range business plan

For Waymo, the driverless age isn't imminent — it's here.

During a keynote speech this month at the Web Summit technology conference in Lisbon, Portugal, Waymo CEO John Krafcik said his company's pilot fleet in Arizona has removed drivers and will expand into a paid service available to the public in the coming months.

"Because we see so much potential in shared mobility, the first way people will get to experience Waymo's full self-driving technology will be as a driverless service," Krafcik said.

The announcement is part of an effort to prepare the public for commercial self-driving vehicles. The effort also includes an informational campaign with Mothers Against Drunk Driving, technology demonstrations for journalists at its California test grounds, a vehicle servicing partnership with AutoNation and plans to expand its fleet's operating area in Chandler, Ariz., to 600 square miles, roughly the size of greater London.

Commercializing its technology is a pivot point for a company that only a few years ago abandoned plans to build its own vehicles. The choice of implementing a ride-hailing fleet is significant, experts say, as it means Waymo can scale quickly, capitalize on vehicle use and continue research into how regular people interact with its technology.

Waymo is "beyond the need to prove this technology works," said Michael Harley, group managing editor for Autotrader and Kelley Blue Book. "They're proving the business model. They've moved to the next level."

Some carmakers' advanced safety systems — Nissan's ProPilot Assist, Tesla's Autopilot and Volvo's City Safety, for instance — include autonomous features. But no advanced self-driving vehicles, with Level 4 or Level 5 automation that require no human intervention, are on the market.

Ride hailing offers an attractive proposition for companies that want to be first to market with high-priced technology. Uber is testing an autonomous ride-hailing fleet in Pittsburgh with Volvo vehicles and General Motors' Cruise Automation operates an autonomous fleet for its employees in San Francisco.

Self-driving technology's cost can vary depending on what sensors are used. It is expected to add thousands or tens of thousands to a vehicle's sticker price. The advanced version of Tesla's Enhanced Autopilot, which the company advertises as fully self-driving upon validation and regulatory approval, costs $8,000.

"Waymo understands that the technology is not inexpensive," said Harley. Personal cars are used no more than 5 percent of the time, he said, making the technology too costly for such limited use. "You don't want to own it," he said. "You want to borrow it."

Autonomous ride hailing is also attractive for its scalability. Waymo's self-driving Chrysler Pacificas operate within a defined area, which controls where the vehicles can travel and can be altered via software updates. Expanding the service to more states and regions with differing demands on the autonomous system, such as heavy snow, could be approached slowly and methodically through collaboration with local authorities.

For Waymo, which has been developing its autonomous technology for nearly a decade, first under Google and now as an independent company, simply making self-driving cars for a ride-hailing network similar to Lyft may not be the goal.

Waymo says its paid ride-hailing service is the natural next step in understanding the technology. Questions linger on how passengers and human-driven vehicles will operate with these cars on the road.

This information is difficult to gather by simply continuing targeted fleet testing.

"For us, having more people experience fully self-driving vehicles early is valuable," Krafcik said at Web Summit. "It will let us learn about how people want to use this technology — and those insights will inform our future work."

That future work could hint at Waymo's larger vision: becoming the market leader in integrating self-driving technology into carmakers' vehicles, similar to what it has done with the Pacifica.

"In today's conventional world, it's better to be the company that supplies the brakes to all the automakers," Harley said. "They'll eventually roll this out on everything: sports cars, crossovers. They're going to be leaders in the [autonomous] experience."