Waymo Expands Its Fleet to Launch Ride-Hailing Service

MarketsMotley Fool

It appears that Waymo, the self-driving division of Google parent Alphabet Inc. (NASDAQ: GOOGL) (NASDAQ: GOOG), is moving its program into the fast lane. In a joint statement with Fiat Chrysler Automobiles N.V. (NYSE: FCAU), Waymo revealed that it will be adding "thousands" of Chrysler Pacifica minivans to its fleet.

This increase comes in advance of Waymo's plans to roll out "the world's first driverless ride-hailing service" in Phoenix later this year as a commercial enterprise. The company has plans to expand the service to "more cities across the United States."

Continue Reading Below

"With the world's first fleet of fully self-driving vehicles on the road, we've moved from research and development to operations and deployment," said John Krafcik, CEO of Waymo. "The Pacifica Hybrid minivans offer a versatile interior and a comfortable ride experience, and these additional vehicles will help us scale."

A vehicle with a roomy interior like a minivan is an essential part of Waymo's long-term ride-hailing plans, as it has the capacity to transport numerous passengers in one ride.

The future is now

Since late last year, Waymo has been testing Pacifica minivans in a pilot program designed to educate the public about self-driving cars. "With this technical milestone, the hybrid minivans became the first vehicle to attain Level 4 autonomy," Waymo said in a statement. Level 4 indicates that a vehicle requires no human intervention, but it is limited by the maps within its systems.

Riders boarding the vehicle are greeted by screens welcoming them and inviting them to push a blue "start ride" button located on an overhead console when they're ready. Passengers ride in the back seats, and rear-facing screens portray a digital display of the route.

Waymo has tested its self-driving technology in 25 cities across the U.S., including Atlanta, San Francisco, Metro Detroit, Phoenix, and Kirkland, Wash. -- and it's recorded more than 4 million driving miles on U.S. roads, on top of billions of simulated miles.

A growing, if unlikely, partnership

"Our partnership with Waymo continues to grow and strengthen; this represents the latest sign of our commitment to this technology," said Sergio Marchionne, CEO of Fiat Chrysler.

Chrysler minivans were an early addition to Waymo's fleet with the first delivery of 100 vehicles occurring in December 2016, after an initial agreement in May of that year. Engineers from the two companies then joined forces at a facility in southeastern Michigan to speed up the development process.

An additional order of 500 minivans came last April, which coincided with an announcement to kick off Waymo's Early Rider Program. The pilot program, which was conducted in the area around Phoenix, offered local residents rides for everyday trips to the grocery store, school, taking kids to soccer practice, and commuting to work. At the time, there was always a test driver behind the wheel.

What's it worth?

It's difficult to estimate what Waymo could be worth in the long run, but that hasn't stopped a couple of Wall Street hot shots from trying. Analysts Brian Nowak and Adam Jonas of Morgan Stanley presented their assumptions in a note to clients last May, theorizing that if Waymo's fleet expanded to 3 million cars over time, with each vehicle covering 65,000 miles annually, and producing $1.25 of revenue for each mile, it would result in a company with an enterprise value of $70 billion.

It's important to note that this is all fun with numbers and there are many more obstacles on the road to a fully self-driving society. It does, however, give an indication of just how big an opportunity this could be -- and the future is closer than you think.

10 stocks we like better than Alphabet (A shares)When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Alphabet (A shares) wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of January 2, 2018

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Danny Vena owns shares of Alphabet (A shares). The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy.