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2019 Is Shaping Up to Be the Year of the Self-Driving Car Service

By Chris Neiger - Nov 9, 2018 at 7:00PM

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Several new autonomous vehicle services will launch next year, but investors still need to play the long game in this market.

Companies eager to prove they're on the cutting edge in the semi-autonomous and autonomous vehicle space seem to view 2019 as a pivotal year for bringing their self-driving technologies to the public through ride-hailing services -- even if those moves may be limited in scope at first.

Alphabet's ( GOOG 2.95% ) ( GOOGL 2.87% ) Waymo, General Motors ( GM 2.82% ), Volkswagen ( VWAGY 4.14% ), Uber, and Intel's ( INTC 3.10% ) autonomous vehicle tech subsidiary, Mobileye, have each laid out plans that will require significant strides by the end of 2019 as they jostle for position in the still-nascent ride-hailing arena. That business is forecast to grow into a $285 billion annual market by 2030 -- but investors should start taking notice now.  

Woman sitting in car with her hands off of the steering wheel.

Image source: Getty Images.

Waymo's self-driving service plans

Waymo is a clear leader in the driverless car race right now. Its autonomous vehicle fleet has racked up more than 10 million miles of experience on the road, and another 7 billion virtual miles in simulations. Some analysts project the Alphabet subsidiary could eventually be worth $175 billion.

It's also one of the only companies that has a permanent autonomous ride-sharing program already set up in a city. While other companies are testing limited routes in cities, Waymo's Early Rider Program allows people in Phoenix, Arizona, to use its self-driving vans the way they would use any other taxi service, to go back and forth to school, work, or the grocery store, and run errands. The company has also tested out pricing options, though it isn't charging its volunteer riders.

It's one of the first programs of its kind, and in 2019, Waymo will ramp it up. The company says it will launch a commercial version of the Early Rider program at the very end of 2018 in multiple cities. If Waymo meets its timeline, it will likely have the largest self-driving ride-hailing service in operation next year. 

General Motors' big moves

GM already has a fleet of self-driving vehicles that it's been testing through its Cruise Automation subsidiary, and the automaker has plans to begin mass producing fully autonomous cars, without steering wheels or pedals, starting in 2019.

General Motors says it intends to launch its own commercial ride-hailing service in 2019, starting in San Francisco. The company hasn't shared all the details yet, but did say it plans to charge passengers about $1.50 per mile, which is about 40% lower than most human-operated ride-hailing services charge.

At an event hosted by Axios back in September, GM CEO Mary Barra said the company is still flexible on what the service will look like:

"We'll deploy the technology in an urban environment, a ride-share environment, next year. We've said we're either going to do that on our own [or] we're going to do that with one or more partners. We're keeping our options open right now."

Uber's return

Uber is no stranger to the ride-hailing business, of course, and it has always had its eye on developing self-driving technologies with the idea that it would eventually launch an autonomous version of its popular service. Those hopes were stalled after one of the company's autonomous vehicles was involved in a fatal cash in Arizona earlier this year. Shortly after that, Uber paused its program, which left its autonomous vehicle ambitions up in the air.

But recently the company applied for approval in Pennsylvania to begin testing its self-driving vehicles again. The company says it has improved its software, and that its systems now detect people and objects sooner, and react to them faster. The reboot of Uber's program comes on the heels of its recent deal to partner with Toyota on autonomous vehicles.

Uber CEO Dara Khosrowshahi said earlier this year at a Bloomberg event that his company plans to launch self-driving robo-taxis by mid-2019, and noted that they won't just be for testing, but for actual commercial use. It's still a bit unclear what Uber has planned for the coming year, but given that it's moving forward with an initial public offering in 2019, management likely believes the company will be ready to compete in this space soon, and is eager to show potential investors that autonomous ride-hailing revenues are on the horizon.

A line of Uber's autonomous SUVs with their trunks open.

Image source: Uber.

Volkswagen and Intel's plan

Volkswagen is the world's second-largest automaker, and it wants to position itself among the leaders in autonomous ride-hailing services as well. In pursuit of that goal, the company recently partnered with Intel's Mobileye to launch a self-driving ride-hailing service in Israel next year.

Volkswagen says it will provide the electric vehicles for the service, while Mobileye will provide the "turn-key hardware and software self-driving system" for Level 4 autonomy, meaning that the vehicles will be able to operate with no human involvement (though with some limits on where and under what conditions they can drive). The company says that development of the program will begin in 2019, and "full commercialization" will come in 2022.

Volkswagen and Mobileye's autonomous service will enter the market a bit later than both Waymo's and GM's, but it's worth watching because of Volkswagen's massive size, and because the turn-key solution Mobileye refines for it could easily be used by other automakers in the coming years.

Investor takeaway

The timelines for commercial deployment of autonomous vehicles -- and the ride-hailing services that will use them -- remain fluid, and investors should know that even if companies launch such services in a major way next year, it could still be years before they earn significant revenue from them.

But the two companies that I think will benefit the most, and probably the earliest, from autonomous ride-hailing services, are Waymo and GM. These two are leading the pack right now in autonomous vehicle testing, and they're laying the groundwork to begin charging for these services soon.

Intel projects that autonomous vehicles will underlay a $7 trillion passenger economy by 2050.   Given the enormous potential to be found in the combination of ride-hailing services and autonomous vehicles, investors would be well-advised to keep abreast of which companies are leading in this space, and to follow their progress over the next few years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Alphabet Inc. Stock Quote
Alphabet Inc.
$2,945.39 (2.87%) $82.29
Alphabet Inc. Stock Quote
Alphabet Inc.
$2,960.73 (2.95%) $84.80
Intel Corporation Stock Quote
Intel Corporation
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General Motors Company Stock Quote
General Motors Company
$61.53 (2.82%) $1.69
Volkswagen Aktiengesellschaft Stock Quote
Volkswagen Aktiengesellschaft
$29.67 (4.14%) $1.18

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