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Tesla under pressure to deliver on robotaxi promises

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Waymo prioritizes safety, mapping, and community relations

before expansion

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Tesla says its AI system bypasses extensive road testing

and

mapping

By Chris Kirkham, Norihiko Shirouzu and Rachael Levy

Aug 28 (Reuters) - A month after Tesla launched

a trial robotaxi service in Austin, Texas, in June for select

fans, CEO Elon Musk told investors that the company's driverless

taxis would likely be available to "half the population of the

U.S." by the end of this year.

Alphabet's Waymo - the U.S. leader in autonomous

ride-hailing - launched a similar test service in Phoenix more

than eight years ago. Today, it operates in areas with about 3%

of the U.S. population.

Musk's pronouncements about expanding Tesla's robotaxis at a

"hyper-exponential rate" stand in contrast to Waymo's deliberate

approach ahead of entering new markets.

Musk sees a faster path to scaling the business because of

Tesla's reliance on just cameras and artificial intelligence,

compared with Waymo's rules-based AI approach that uses more

sensors and high-definition mapping. The differing strategies

have far-reaching implications for the early pecking order in

the nascent autonomous-driving space, which some analysts and

investors say could become a multitrillion-dollar market over

the next 15 years.

Waymo's expansion playbook involves comprehensively mapping

new cities, and phasing in autonomous ride-hailing after testing

the technology with drivers in the front seat and employees as

passengers.

Tesla says its robotaxis use a different autonomous technology

from Waymo's, one that allows it to bypass much of that

painstaking prep work. The cars - still in the testing phase -

use AI that reacts to road conditions the way a human would.

Tesla says that requires less-extensive road testing and

mapping.

"Once we can make it basically work in a few cities in

America, we can make it work anywhere in America," Musk told

analysts on a conference call in April. He has called Waymo's

approach "fragile," saying its ability to expand is "limited."

Many investors have bought in to Musk's vision. Some analysts

attribute the vast majority of Tesla's stock-market value to

autonomous driving capabilities that investors are betting can

reach scale much faster than Waymo's efforts. If successful in a

rapid commercial expansion, the robotaxi business could solidify

a new growth engine for Tesla.

Reuters interviewed a dozen current and former industry

executives, regulators, law-enforcement officials and city

planners to contrast Tesla's early expansion efforts with those

of Waymo, revealing sharp contrasts in their technical and

go-to-market strategies.

Current and former Waymo executives say their

market-by-market approach of mapping and testing before

expansion is essential to ensuring safety, helping factor in the

peculiarities of each city's roads - for example, steep inclines

in San Francisco that make it difficult to see what's ahead.

"We really need to understand the core ingredients of each

of these cities," said Aman Nalavade, a Waymo product manager,

in an interview with Reuters. "There is a lot of risk in doing

this incorrectly."

Musk has also talked about the importance of safety. "We

don't want to take any chances, and so we are going to go

cautiously," he said last month.

Tesla did not respond to requests for comment.

CONTRASTING TECH

Tesla and Waymo both use AI in autonomous driving. But

Waymo's technology involves more of a step-by-step process,

where its system takes in data from high-definition maps and

advanced sensors to recognize objects and plan the vehicle's

path.

Tesla, by contrast, says its system makes driving decisions

more like a human. The company has said it uses an AI method

where video captured by the vehicle's cameras is interpreted by

software and instantly translated into driving decisions,

without the intermediate steps used by Waymo.

Waymo has experimented with aspects of Tesla's approach but

said in a research paper last year that there are "challenges

and limitations" with its performance.

Musk has set an ambitious timeline of having "millions of Teslas

operating autonomously" by the second half of next year, which

compares with Waymo's roughly 2,000-vehicle fleet currently.

After launching the pilot program in Texas in June, Tesla is

awaiting approval in Arizona and looking to expand to states

including Nevada and Florida.

The pressure is on for Tesla to deliver on those promises,

because its core electric-vehicle business faces headwinds. Its

vehicle sales have declined globally, including a sharp drop in

Europe. Falling behind Musk's robotaxi timeline would delay a

key new revenue stream.

Waymo is the only company in the United States offering a

paid, fully autonomous ride-hailing service open to anyone. It

operates in the San Francisco Bay Area, along with parts of Los

Angeles, Phoenix, Austin and Atlanta.

Before expanding into a new market, Waymo fine-tunes its

technology through testing in virtual simulators, on a closed

113-acre California course and on city streets where it plans to

launch.

In Phoenix, it started offering test rides with a driver in

the front seat more than three years before opening paid,

driverless ride-hailing to the general public in 2020. It took

nearly four years until Waymo opened up autonomous service any

time at Phoenix's airport terminals, in August 2024.

Waymo says it is reducing the testing time in new cities as

its autonomous technology gains more experience and applies

previous lessons to new geographies.

Paul Miller, an analyst at market research firm Forrester,

said Waymo's approach is safer and more realistic in the short

term, while Tesla's approach is a riskier bet but a "far cheaper

approach to scale globally."

Bank of America analysts estimate Waymo lost between $1.2

billion and $1.5 billion last year. But analysts expect that

Waymo's model will eventually be profitable as vehicle costs

come down and ridership grows.

Morningstar analysts projected in a March report that Waymo

would have a "rapid ramp-up period" over the next few years

while Tesla would have a "slower initial robotaxi rollout,"

because its software "will not be ready." Morningstar expects

Tesla to launch fully autonomous robotaxis by 2028 and surpass

Waymo's ride-hailing market share by the end of the decade.

'A HUGE CONCERN'

Even with Waymo's meticulous approach to studying new

markets, it has encountered problems and rankled some city

officials.

In Austin, where it started offering autonomous rides

through the Uber ( UBER ) app in March, authorities have often

seen Waymo vehicles ignore officers' hand signals and drive into

dangerous situations, said Austin Police Lieutenant William

White.

In May, a Waymo vehicle drove into flood waters and the

passenger had to find a way out. "Obviously that's a huge

concern to us," said White. "If that person had died, we could

have been looking at a serious criminal incident."

Last year, during a charity walk near downtown Austin, a

Waymo vehicle tried repeatedly to go around an officer who was

clearly blocking a roadway. Police eventually disabled the

vehicle by wrapping tape around one of its sensors, White said.

Austin police have had to create a new system of traffic

citations to handle repeated instances where Waymo vehicles

froze and blocked traffic, White said. Police have issued three

citations to Waymo since March. Officers have said the process

for citing a driverless vehicle is so time-consuming that they

often avoid it.

"If they decided to pursue it every time, we would be

talking about hundreds of citations by now," White said.

The department has had limited interactions with Tesla's

robotaxi service so far because it is just getting started.

Waymo spokesperson Chris Bonelli said the company has had

"robust engagement" with Austin police and fire officials for

more than two years. Waymo takes "all observations and concerns

seriously" and uses that feedback "to improve the performance of

our technology," he said.

SOOTHING SKEPTICS

Beyond technical challenges, autonomous-vehicle firms must

navigate a patchwork of regulations while also reassuring

community leaders who might be apprehensive about driverless

vehicles.

For example, Waymo started meeting with local officials more

than a year before its March launch and attended city-organized

meetings with representatives of the Texas School for the Deaf,

among other local organizations. School representatives took

demo rides in Waymo vehicles ahead of the launch.

School superintendent Peter Bailey said he briefly met

representatives from Tesla a few months before Tesla's June

launch, and learned about the timing from news reports. The day

of the launch, a Reuters reporter observed a Tesla robotaxi

speeding between 40 and 45 mph in a 35 mph zone near the school,

where a sign warned drivers to watch for deaf pedestrians.

Bailey declined to comment on Waymo and Tesla's approaches

to community outreach. He said he expects "all drivers,

including autonomous vehicles, to follow posted speed limits and

operate with caution around school zones."

Differing regulations around the country can also bog down

expansion plans, Waymo's experience shows. The company targeted

a 2026 launch in Washington, D.C., for example, but it is not

clear the city will pass needed regulations in time.

The D.C. city council has been waiting years for a report

from the city's transportation department on recommendations for

commercial driverless-vehicle rules before moving ahead. While

the regulations may be ready by the end of 2026, there is no

timeline for passage, said councilmember Charles Allen.

Waymo has hired three outside lobbying firms and is

circulating online petitions urging residents to "help bring

Waymo to DC!"

D.C.'s Department of Transportation said Tesla has not

reached out.