Google to Make Driverless Cars an Alphabet Company in 2016
Google to Make Driverless Cars an Alphabet Company in
2016
By John Lippert and Jack Clark
December 16, 2015 — 6:35 AM PST Updated on December 16,
2015 — 9:16 AM PST
Google Said to Make Driverless Car Unit Alphabet Company
Group said to plan transportation service in Uber
challenge
Autonomous vehicles seen reducing roadway fatalities
Google Inc. plans to make its self-driving cars unit,
which will offer rides for hire, a stand-alone business under the Alphabet Inc.
corporate umbrella next year, a person briefed on the company’s strategy said.
Google’s autonomous vehicles have logged more than 1
million miles (1.6 million kilometers) on public roads, mostly around San
Francisco and Austin, Texas, making these cities logical places for launching a
service, said the person, who asked not to be identified because the plans are
private. The fleets -- which would include a range of large and small vehicles
-- could be deployed first in confined areas like college campuses, military
bases or corporate office parks, the person said.
The race to develop a self-driving vehicle fleet has
intensified since February when Bloomberg reported that Google was developing a
rival to Uber Technologies Inc., most likely in conjunction with its
driverless-car project. Uber is pursuing its own autonomous capabilities, while
automakers are deploying semi-autonomous technologies while experimenting with
so-called shared mobility.
By challenging ride-sharing pioneers like Uber and Lyft
Inc., as well as traditional taxis, Google is providing the clearest indication
yet how it plans to make money from self-driving automotive technologies that
it began testing in 2009. Google spokeswoman Gina Scigliano declined to
comment.
While polls show a third of U.S. consumers are interested
in buying self-driving cars, the rest are skittish because they’re worried
about losing control, said Thilo Koslowski, vice president and automotive
practice leader at Gartner Inc.
“These potential ride-for-hire services could allow
consumers to experience the technology and embrace it in a bigger way,” he
said. “That would help not just Google but the entire industry.”
In August, the Mountain View, California-based company
reorganized itself into a conglomerate called Alphabet. The company said it
plans to spin out several of its advanced-technology units into stand-alone
companies within the Alphabet portfolio, including its robotics division, its
health-care company Verily, the Google Ventures and Google Capital investment
firms, Google Inc., the search-engine company, and Nest, which produces
intelligent smoke alarms and thermostats. The self-driving car unit now resides
in the research division called Google X.
Auto-Industry Veteran
In September, Google X hired John Krafcik, an
auto-industry veteran, as chief executive officer of its cars project. Krafcik
was then working as president of TrueCar Inc., the online auto-shopping
service. He’d previously been a senior sales executive at Hyundai Motor Co. and
a truck engineer at Ford Motor Co. He didn’t respond to an e-mailed request for
comment.
When announcing Krafcik’s hiring in September, Google
said it had no immediate plans to make self-driving cars a free-standing
business unit, but that it was “a good candidate to become one at some point in
the future.” Google executives have said they have no plans to mass-produce
cars and trucks.
In the meantime, Uber is spending some of the more than
$10 billion it has raised in private markets to develop self-driving cars. Uber
has recruited dozens of autonomous-vehicle researchers from Carnegie Mellon
University’s robotics program and in June hired Brian McClendon, Google’s
former vice president of engineering, to run Uber’s Advanced Technologies
Center. But Chief Executive Officer Travis Kalanick acknowledged at a
conference in October that Google has the lead in developing a robot car.
Google executives have said they’re interested in
self-driving cars primarily to reduce traffic accidents, which claim about
33,000 lives in the U.S. each year.
Service Strategy
Google and Alphabet co-founder Sergey Brin suggested in
September that self-driving cars could first appear in the form of a service,
saying it would let a lot of people try the technology and that having “the
vehicle come back to us every day” meant Google could rapidly update the
machines.
Besides offering its own ride-for-hire service, Google
probably will to try to capitalize on self-driving research in two other ways,
said Mark Boyadjis, an analyst at IHS Automotive. First, the company may pump
the same ads into self-driving cars that appear on Google’s search engine, and
second, it may be able to profit through licensing arrangements that let
traditional automakers participate in its ride-sharing and other self-driving
services, he said. That presents the automakers with a difficult choice,
Boyadjis said.
“There are reasons to work with Google and also reasons
to want to keep them out of the mix,” he said. “If the automakers aren’t
careful, customers won’t be having a Lexus experience. They’ll be having a
Google experience.”
Car Companies
Detroit automakers already are jumping into the fray.
Ford Motor Co. said yesterday it will begin testing fully autonomous Fusion
hybrid sedans on public roads in California next year. It’s also testing a
ride-hailing service called Go Ride on its Dearborn, Michigan, campus, using
customized Ford Transit vans with individual seats and Wi-Fi.
At the same time, automakers are bringing more pieces of
self-driving technology to market while insisting that the driver is
responsible for the vehicle’s operation and may need to take control of the
steering wheel in challenging situations. Tesla Motors Inc. in October rolled
out its Autopilot suite that can drive on well-tended highways and change lanes
safely without the driver taking the wheel. General Motors Co. will offer its
similar Super Cruise technology on the 2017 Cadillac CT6.
In August, Morgan Stanley analyst Adam Jonas said Tesla
could triple its revenue by 2029 by launching its own on-demand mobility
service. That prospect was enough for Jonas to boost his price target for Tesla
to $465 from $280. The stock closed Tuesday at $221.09. Musk declined to
discuss the idea when Jonas has brought it up in conference calls.
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