Waymo, one of the leading forces in self-driving technology, is enlisting the largest auto retailer in the U.S., AutoNation, to maintain and repair the growing number of driverless vehicles Waymo is testing around the country. Waymo — a unit of Google’s parent, Alphabet — is moving a step closer to putting driverless vehicles into ride-hailing fleets that would serve the general public, not just its own employees. Maintaining expensive and technology-packed self-driving vehicles is a main challenge for using them in moneymaking businesses, like ride-hailing fleets, writes The New York Times (Nov. 3, 2017).
Says AutoNation’s CEO. “In most cases, driverless vehicles in such fleets will have to be on the road almost around the clock to offset the cost of the sensors, computer chips, software and other systems that allow them to drive safely and reach their destinations without human operators. These vehicles need to be in service for hundreds of thousands of miles, much more than personal-use vehicles, to make them economically viable. To do that, you have to do much more proactive, preventative maintenance than what a normal person would do on a car.”
Because the vehicles are intended to operate without drivers, breakdowns have to be avoided and parts replaced when signs of wear first appear, not when they fail or when a warning light comes on. They need to work not 99% of the time, but 100% of the time.
Auto dealers, like AutoNation, sell cars, but a big chunk of their profits comes from servicing vehicles. They are looking for ways to become more relevant if car usage becomes more of a shared service.
Classroom discussion questions:
- How is this an OM decision by Waymo?
- How will the auto industry be impacted by driverless cars?