Waymo's Self-Driving Triumph Sets the Stage For a New Phase as Fleets Grow
Plus, wildfires threaten Los Angeles' tech community
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Robotaxis Are Taking Over SF. Scaling Up Will Be a Different Challenge
The self-driving future is more or less here, at least in San Francisco.
A16z’s Alex Immerman posted data on X late last month showing that Waymo’s self-driving robotaxi service in the city is now carrying just as many passengers as Lyft, and is rapidly gaining on Uber.
Lyft CEO David Risher disputed the data, saying Lyft was growing in San Francisco and that it still held 30.6% of the market as of this past November. It’s also worth noting that Waymo only operates in the city proper. Still, it appears that Waymo has crossed a threshold in its flagship city, becoming a routine choice for many of those who might have called Lyft or Uber.
Waymo’s technical and operational achievement is a monumental one, hard-earned over fifteen years.
Running big robotaxi fleets, though, will offer challenges of its own. Uber is jockeying to manage the fleets in some cities while Waymo is seeing if they can do it on their own in others. Profit margins, or the potential lack thereof, remain a daunting issue too.
Now that it’s enjoyed a smooth growth spurt, Waymo has to demonstrate that it can keep its vehicles clean, for one. Since Waymo opened rides up to the general public in mid-2024, complaints about dirty cars have been popping up regularly.
“No matter what, someone has to take care of the cars,” said Josh Mohrer, a former Uber executive who managed the company’s first push into New York. Mohrer told us he’s skeptical of Waymo’s ability to scale, in no small part because of the messy-car issue. In contrast to a house-sharing platform like Airbnb, the turnover between Waymo users is minutes, not days, which doesn’t leave much room for cleaning, he noted.
One solution could be increased monitoring, Menlo Ventures’ Deedy Das speculated, incorporating smart cameras that could detect all kinds of anti-social behavior during a ride. AI computer vision technology could be particularly useful for flagging riders who behave poorly, though it might take away some of the charm.
There are other aspects of fleet logistics too. Cars need to be inspected, insured, and maintained. If they have issues, they’ll need to be decommissioned for repairs.
Building routes and networks requires a lot of relationships with local regulators, and moving fast and deploying self-driving in new cities carries high risks if something goes wrong. Bad accidents were enough to take both Uber’s self-driving effort and Cruise off the road, helping give Waymo its big lead.
Fleet logistics and local knowledge would explain why Waymo is tapping Uber, with its existing network of fleet managers, to be its operating partner in Austin and Atlanta. This kind of outsourcing could point the way to a model where Waymo is a technology provider to various robotaxi services run by others.
The business model question continues to loom large. Configuring a Waymo car is very expensive: its fifth-generation Jaguar taxis cost around $100,000 when accounting for all of the robotics and LIDAR involved. Its newer 6th generation version is reportedly much cheaper, though it relies on Hyundai and a Chinese electric car partner that could be vulnerable to President-elect Trump’s promised tariffs.
Waymo is competing against ride-hailing companies that have no capital costs for vehicles at all, since the cars are provided by the drivers. Ride share apps like Uber take 20% to 40% per ride on average; Waymo of course takes 100% of the fare, but it’s still not clear if the cost of the car and the technology, amortized over time, is lower than what would otherwise be paid to a driver. Uber itself has only recently seen profits.
With all these challenges, it’s no surprise that competitors are still entering various parts of the market despite Waymo’s formidable technical lead. Nvidia, for one, showed off its brand new GB10 chip at CES this week, designed to power self-driving trucks, and announced new partnerships with the autonomous trucking company Aurora, as well as Uber.
Alphabet said last year that it expected to invest an additional $5 billion in Waymo. The company in October closed a $5.6 billion funding round, which included existing outside investors such as Andreessen Horowitz and Silver Lake, at what Bloomberg reported was a $45 billion valuation.
It will need that war chest, and maybe more, for the next phase of our self-driving future.
Listen to the latest episode of the Newcomer podcast for more on why we think Waymo is still in a good position to expand outside of San Francisco, despite some challenges:
