The Journal. - How Waymo Won Over San Francisco

Episode Date: October 31, 2024

After a rocky start, self-driving car company Waymo seems to have won over riders in San Francisco. WSJ’s Meghan Bobrowsky talks about the company’s push to convince the public its robotaxis are safe and the challenges of replicating that progress elsewhere. Further Reading: -How San Francisco Learned to Love Self-Driving Cars  -America’s Most Tech-Forward City Has Doubts About Self-Driving Cars  Further Listening: -The Future of Self-Driving Cars Is Here  Learn more about your ad choices. Visit megaphone.fm/adchoices

On a recent windy day in San Francisco, our colleague Megan Bobrowski watched as a bunch of cars whizzed around the city. Cars without drivers. And no, they weren't being driven by ghosts. They were self-driving cars called Waymos. I went to the Golden Gate Bridge Welcome Center, and I sat there and I counted how many Waymo's dropped off passengers in an hour. And it was half a dozen plus. And then I went over to the Ferry Building,

which is another famous location in San Francisco. And again, it was just Waymo after Waymo after Waymo. This was surprising. Just last year Megan and I had talked about how San Francisco really wasn't a fan of self-driving cars. And at the time your story was about people being pretty skeptical about it and even like organizing against these cars being on the roads. Yes, last year people were protesting the cars. They were demanding that the cars leave the city. One person told me they didn't want to be the quote,

guinea pigs for this unproven technology. The cars would stall in the middle of streets and cause traffic. They drove into construction zones. It was almost like they were a menace to the city last year. And it's taken a 180. Over the last year, Waymo, which is owned by Google's parent company, Alphabet, has been on a campaign to win over San Francisco, from slick marketing to smoother rides. And so far, its strategy is working.

The last time we spoke, Waymo was doing 10,000 rides a week. They're now doing 150,000 rides a week. And they also have more cars than the city. It's popular with tourists. People take it around town. Some people have switched from Lyft and Uber to exclusively Waymo. So there's been a very marked shift over the last year in terms of public sentiment around these vehicles.

Jessica Mendoza And now, Waymo hopes its playbook will work beyond California. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, October 31st. Coming up on the show, how Waymo reversed its fortunes in San Francisco. What does possible sound like for your business? It's having to spend to power your scale with no preset spending limit. Redefine possible with Business Platinum. That's the powerful backing of American Express.

Terms and conditions apply. Visit mx.ca slash Business Platinum. Visit amex.ca slash business platinum. Your group photos are likely missing someone important. You. With Ad Me on the new Google Pixel 9 Pro, never rely on a stranger again. Add yourself to any group photo through the magic of AI. Get yours with TELUS at telus.com slash pixel 9 Pro. Can you give us a brief description of what these cars look like? Yes.

So, Waymo uses Jaguar I-Paces, if you're familiar with those. Sounds fancy. Yes, they are luxury-esque electric vehicles, and they are large white cars, SUVs, and they have a sensor on top. They have sensors on the sides of the cars and a sensor in the back, and it's these little white things that are whirling all the time. So they're just going off. So it looks very futuristic.

How do they work, technologically speaking? So the cars know where they are, they know the settings, they've been programmed on how to respond to certain situations. At the same time, they are driving around with cameras and sensors, so they're analyzing things in real time, and they actually have a better view of the road that they're driving on than human drivers do because they can see 360 all at once. You can't see behind you, or as the cars can see, everything that's happening around them. Right now, Waymo operates about 300 of these robo-taxis in San Francisco, which is the company's biggest market. But it was a slow ride getting here.

Self-driving cars had a rocky start in San Francisco. They were causing a lot of accidents and issues. A Waymo at one point hit and killed a small dog. Waymo has said that that particular accident was unavoidable. These kinds of incidents led to enough public backlash that some city residents found ways to mess with the cars. People actually figured out that if you put a cone on top of the hood of the car, it gets confused because it thinks it's about to hit something.

I remember that. And it will stop and it actually caused a lot of issues for Waymo. But San Francisco is a city of early adopters, and there were a lot of people who were interested in trying out the cars. Self-driving car executives have long said that one of the biggest challenges is actually getting people in the car.

Most people, when they ride in a Waymo or a self-driving car, tend to have a good experience. And so, for Waymo, it's a matter of getting people to take their first ride. On social media, people have shared videos of their first Waymo experience. I was nervous from my first ride. It is freaky seeing a car approach you without a driver.

So many people I talk to are scared of Waymo, but they haven't tried it. And I'm telling you, once you try it, after five minutes, you will be on your phone. You want to be paying attention to what it's doing driver. But they couldn't launch the whole city at once because that was too many people and they didn't have enough cars and the demand would have been crazy. And so they had a waitlist. At one point they had 300,000 people on this waitlist. Okay, so more people were interested, but there was still skepticism around these cars.

What did the company do to get to where it is? So I think a couple things went in Waymo's favor. One, their main competitor left. That competitor was a company called Cruise. It's a self-driving car company that's majority controlled by General Motors. Cruise and Waymo were both operating robo-taxis in San Francisco last year. And Cruise actually ended up getting into an incident where it dragged a woman 20 feet

after she had been hit by a human-driven car. And so after this incident happened, there was some back and forth with regulators, and Cruz ultimately ended up getting permits pulled in California. At the time, Cruz said that it would take steps to rebuild public trust, and it has plans to reenter the market. So I think Waymo then, after that happened, got to control the narrative a bit more.

They weren't having to rush to compete with Cruz. So that helped. Another thing that helped is like any technology, the longer you work on it, the better it's going to get. And so I think just Waymo doing more rides in San Francisco certainly helped. And they have another year under their belt. And then this summer, Waymo made a big move

that gave more people a chance to try out their cars. In June, Waymo lifted its wait list. And so anyone in the city could now take a ride in a Waymo, including tourists. And so once that happened, I think that was a big turning point for Waymo because all these people who were maybe skeptical of it got to take a ride in it. And once they did that, you know, retention rates, at least according to one study, have been pretty decent.

Waymo also added more cars to the road. And with the wait list gone, the company went on a marketing blitz. They put Waymo download codes and fortune cookies in Chinatown restaurants. Wow. Yeah. They took out, you know, ads on social media. So to be sure, Waymo has been marketing these cars and trying to get people excited about them

and kind of trying to change public sentiment about them. What do people say they like about Waymos? So some of the things that people say they like, there's no one in the car. Which is something that writers talk about a lot on social media, especially when it comes to privacy and to feeling safe. You order your Waymo, no one talks to you, you don't fear for your life. Yes, the robot could fail, however, I'm not going to get kidnapped by a man.

Because of Waymo, now I don't have to interact with nobody. And we don't have to be quiet because there's an Uber driver. We can play whatever music we want. It's amazing. Another reason is people like them because they think that the cars drive more smooth and safely than Lyft or Uber drivers who can sometimes drive erratically or, you know. Like humans do. Like humans drive, yes, exactly.

It makes the easiest turns, it goes the exact speed limit, follows all the traffic rules, it was awesome. The best part is like this driverless car drive way better than me. So I'm much safer riding this than driving myself. And what about cost? How much does a Waymo ride compared to other rideshares? Cost is relatively similar.

Waymo tends to be a little more expensive than Lyft or Uber, but you don't have to tip. There's actually no way to tip with Waymo. How, yeah, who would you be tipping anyway? Like your robot driver, like that doesn't- Yeah, exactly. Don't want to take advantage of the robots, but they don't have the same needs to provide for their families or anything.

They're not like coming home to little Waymos. Exactly, yeah, exactly, exactly. In San Francisco, the tide is turning in Waymo's favor. But as the company's ambitions grow, it's facing a number of obstacles along the way. That's next. Your group photos are likely missing someone important. You! With Ad Me on the new Google Pixel 9 Pro, never rely on a stranger again. Add yourself to any group photo through the magic of AI. Get yours with TELUS at TELUS.com slash Pixel 9 Pro. Having broken through in San Francisco, Waymo is now trying to do the same in other cities.

Outside of San Francisco, Waymo operates in three other markets. They are in the Phoenix metro area where they've been for years. They launched in Los Angeles in the last year and they just started doing rides in Austin, Texas, on a very limited scale. Why those markets? The main thing to think about with all these locations is it doesn't snow there. Waymo says that it can confidently drive through rain or fog, and they actually did have issues with fog at some point so they've mastered those two weather conditions but snow is not something that they have mastered. Waymo also plans to start offering rides in Atlanta next year and as it expands Megan anticipates that Waymo may run into new problems. Every

new driving city you're in, you have new challenges. Los Angeles is an interesting one. If you are in LA, a lot of places you want to go, you have to take the freeway. And Waymo is not giving rise to the public on freeways in Los Angeles right now. And so they're kind of limited in what they can do. You know, same thing here in San Francisco.

They can't drive anyone to the airport because you need to take the freeway to get to the airport. So Waymo cannot really scale until it masters freeway driving and is able to give rise to the public on freeways and feel confident about that. In San Francisco, Waymo does have permission from regulators to get on the freeway. But for now, it's choosing to stick to the suburbs and city streets. With freeways, because there's no pedestrians and you're going the same speed and not starting and stopping and going, once you're on the freeway it's safer.

But any incident you have is going to carry a higher risk or the injuries are going to be more serious because you're driving at higher speeds. So Waymo got its permits to take passengers on the freeway in San Francisco in March, back in March, and they still haven't done it. Waymo says its employees are currently testing rides on freeways. Some San Francisco Bay Area officials are still concerned about Waymo's safety and its impact on city congestion.

Just a few weeks ago, a Waymo stopped near a security perimeter set up for a visit from Vice President Kamala Harris. The car had to be moved by law enforcement. The next day, two Waymos blocked a bus and caused a traffic jam as people were trying to leave a music festival.

Waymo says it's frequently in touch with local, state, and federal officials, including the U.S. Secret Service. Another thing we should probably talk about is Waymo is facing a federal investigation over two dozen incidents or so of its cars colliding with parked cars or stationary objects and then also driving the wrong way down streets. So I'd be very curious to see how that plays out. Waymo said it's working with federal regulators and that it's proud of the performance of its vehicles and their safety record.

Despite all of its challenges, Waymo is ahead in the self-driving car race. Its competitors are still at the starting line. This month, Elon Musk revealed plans for two Tesla self-driving cars. And ZUX, which is Amazon's driverless car project, has only recently started inviting journalists to take rides in its vehicles. And what could have been Waymo's biggest competition has become a key partner. Uber had its own self-driving technology,

and in 2018, one of its cars that was testing self-driving technology hit and killed a woman in Arizona. And after this happened, public confidence in Uber's self-driving ambitions was not great. They kept testing for a few more years, but they ultimately ended up getting rid of it. They actually paid another company to take its self-driving technology. And so Uber has sort of positioned itself as a partner, and as they're trying to leverage this huge, huge market base they have or network of writers that they have to say, hey, you guys are building

this technology. Well, we have all the writers. Let's find a way to work together that's mutually beneficial. What do you mean? How would that work? Waymo has partnered with Uber in some markets to list Waymo only on the Uber app. It's a deal they've reached and we don't know the revenue split of that deal. But as part of it, Uber is taking on some of the maintenance costs for Waymo.

So they're going to be running the depots, repairing the cars, cleaning them. And in exchange, Waymo is getting access to the, I don't know how many riders Uber has. I mean, they do millions of rides every hour across the globe. Those are some of the ways that I think Waymo is trying to drive down its cost. And then obviously more riders, it's just going to be more money coming in. Customers can already use Uber to order Waymo rides in Phoenix, and they'll be able to do the same in Austin and Atlanta next year. So far it seems like Waymo has been able to avoid

any major accidents. Is there a concern that if something does happen, that that's going to shift public sentiment again about the company? I think this might be one of the biggest issues for Waymo. One bad accident can shut these companies down. It can set you back significantly. And so I think that is also the concern for Waymo. They have not yet had that huge incident that really tests public confidence in them. And it's not a matter of if a bad accident happens, it's a matter of when.

And so it's a question of when a bad accident happens, how do people respond? And are enough people going to go to bat for Waymo that the company can survive. That's all for today, Thursday October 31st. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Miles Krupa. Happy Halloween! See you tomorrow. I'm trying to picture you glamorously reporting on this, standing, like, at the curb, just counting them, tallying them up. Yeah, like, did it feel like way more than usual?

Is that a Waymo pun? Ha ha ha ha ha ha. It is now.