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Waymo Is Setting Up A Production Facility In Detroit To Manufacture Self-Driving Cars

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Waymo Is Setting Up A Production Facility In Detroit To Manufacture Self-Driving Cars

 

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In January, Google Inc (NASDAQ: GOOG) self-driving car spinoff Waymo announced that it would be opening the world's first factory for the mass production of SAE Level 4 autonomous vehicles. The company scouted for a location in the state of Michigan and has finally zeroed in on Detroit, where it will partner with American Axle & Manufacturing to repurpose an existing manufacturing facility and bring back the jobs lost in the recent automotive industry slump in the region.

"By choosing to establish its new facility in Detroit, Waymo is continuing the city's momentum and further cementing Michigan as a leader in mobility and the epicenter of advanced automotive manufacturing," said Michigan Governor Gretchen Whitmer. "More and more Silicon Valley companies are looking to grow in Michigan as they realize the competitive advantages Michigan has to offer – high-tech engineering resources, top-notch research and design, and a highly skilled workforce matched with a low cost of living and low cost of doing business."

Waymo has invested $13.6 million in the facility and is expected to bring close to 400 jobs to the region. The facility will speed up Waymo's bid to make autonomous vehicles a commercial reality, with the startup maintaining a comfortable lead in the market ahead of players like General Motors Company (NYSE: GM), Uber and Tesla Inc (NASDAQ: TSLA).

That said, the autonomous driving space is fraught with competition as companies look towards gaining ground in the market, all with different approaches for profitability. On-demand cab hailing startups like Uber and Lyft have not turned a profit since their inception, and are now working hard to replace all their human-driven cabs with self-driving taxis. The idea is to cut the human element of its operations, thus driving up profit while maintaining aggressive pricing to gain market share.

Companies like Tesla and GM are betting on self-driving car technology because it will bring a new niche into their auto manufacturing segments. Tesla's CEO Elon Musk outlined his plans for introducing an autonomous taxi service, mentioning that he expects to see over a million Teslas with the self-driving software in them by 2020.

Waymo currently runs its autonomous taxi service in Phoenix, Arizona, with rides offered to a couple of hundred people in the company's test group. Nonetheless, these taxis come with a human at the wheel, always standing by to take control in case of an emergency situation. But with considerable success in its pilot test runs, Waymo is now ready to take the first step towards making Level 4 autonomous cars a reality.

Michigan is now witnessing a revival of its automobile industry through autonomous vehicle manufacturing. Apart from the new entrant Waymo, automakers Ford Motor Company (NYSE: F) and GM have already invested millions into mobility research and development across Detroit and Ann Arbor. One of the reasons for futuristic tech startups and spin-offs to move from Silicon Valley to Michigan is the relatively low cost of living and also the availability of skilled talent in the region.

State policymakers have also been enthusiastic about autonomous driving technology. Michigan became the first state in the U.S. to pass regulations that allowed companies to test their self-driving cars on public roads. Michigan's Economic Development Corporation (EDC) has taken an interest in autonomous driving technology, approving up to $8 million in tax breaks for Waymo to set shop in the state.

Waymo's new production facility provides space up to 200,000 square feet for its operations. The company announced plans last year to diversify its fleet by partnering with Jaguar, expecting to produce 20,000 vehicles by 2022. The startup also has contracts to buy 62,000 Pacifica Hybrids from Fiat Chrysler Automobiles (NYSE: FCAU). Waymo has used Pacifica Hybrid vans over the last three years for its test runs across Arizona.

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