11 ms·

Honda-Waymo Talks Are Said to Have Faltered on Tech Access

111 points by Fricken 8y ago

ams6110 8y ago
Honda had an existing partnership with GM to develop fuel cells. The Detroit automaker has its Chevrolet Bolt EV in showrooms and has developed a battery pack that will be used in 20 new EVs globally by 2023. In June, the companies announced a deal that would have Honda using GM’s cells and battery pack. GM’s battery not only had good range, but by working together the two automakers figured they could lower costs. The thing about companies like Honda and GM -- they have a lot of momentum. That means they aren't likely to be on the forefront of innovation, but when they turn towards a new target, they will hit with massive resources and established global production capacity that a start-up can only dream of.
- dsfyu404ed 8y ago
  >The thing about companies like Honda and GM -- they have a lot of momentum. That means they aren't likely to be on the forefront of innovation, but when they turn towards a new target, they will hit with massive resources and established global production capacity that a start-up can only dream of. Exactly. It's the difference between a handful of dudes in a speedboat with some explosives and an aircraft carrier. Once the latter is aware of the former you can be reasonably assured who of will win. At most the former can hope to land a good sucker punch before the latter knows they're even fighting. The core competency of GM, Honda, etc. is building cars. Once they decide what kind of cars they want to build they will do a good job building them as they intend to build them. They don't make rookie mistakes, especially in the logistics of spinning up production lines to build what they want to build. They've re-tool their factories every time a new generation or a new model comes out. They know how to do it right the first time, knowledge that comes from experience.
  - leesec 8y ago
    They are good at building cars, but I would argue they are not good at building tech. Self driving is a technology issue. If the tech superstars at Waymo/Apple/whoever aren't even close to solving it, why would the software people at GM/Honda be?
    - deleted 8y ago
      [deleted]
    - dsfyu404ed 8y ago
      "Hi, this Jane from the procurement department of GM North America. We might be interested in licensing your software. Please give me a call back so we can set up a meeting." They don't need to build tech. They can buy it. GM can write some pretty big checks. They flat out bought Cruise just to cover their butts. When I was an intern at a defense contractor ~1/10th the size of GM my cube was across from procurement. I think a lot of people here don't understand the kind of scale companies like this play at. Your problem isn't "how do we pay for this" it's "will anyone sell me all this all at once or sign a contract to provide it all over the timetable we want". You make bets on how many times around the earth the welding wire you'll buy next quarter will go. GM shipped ~10 million vehicles in 2017. That means they had to sign a contract with someone to supply approximately an Exxon Valdez worth of motor oil and another of ATF just for their factories.
      - fastball 8y ago
        Isn't that exactly what a deal is? This wouldn't be a loss for Waymo if everyone was licensing their software.
        deleted 8y ago
        [deleted]
      - xiphias2 8y ago
        Waymo is far the best self driving tech and nobody has the money to buy it, as Alphabet is not selling (it's the first real diversification from ads revenue). GM is few years behind, but hopefully those few years are not enough for Waymo to create a monopoly.
  - fastbeef 8y ago
    >It's the difference between a handful of dudes in a speedboat with some explosives and an aircraft carrier. That’s uh... one helluva metaphor you got there.
    - stevenwoo 8y ago
      It's a somewhat infamous tactic used by a US leader in a war game simulation of war with a hypothetical mid east enemy (Iran of course), he used first a wave of cruise missiles, then a follow up attack of many small boats on suicide runs to overwhelm a carrier force (hypothetically) and won a two week planned exercise in one day, so the folks in charge re-ran the simulation and barred the tactics he used. https://en.wikipedia.org/wiki/Millennium_Challenge_2002 https://en.wikipedia.org/wiki/Millennium_Challenge_2002
      - hef19898 8y ago
        True that, if could with the pants down a carrier is nothing more than a big target. There is alo an example (no source, sorry) of a German sub surfacing next to a US carrier, within the inner defense ring, suring an exercise. But all that only works of the carrier is caught flat footed. To stay in the metaphor, the carrier "automotive industry" is no longer flat footed. Partol aircraft and choppers are deployed and the defenses are up. By the way, I like that image, fits the business world much bettwr than the proverbial tanker vessel for big co.
        stevenwoo 8y ago
        Sweden produces short range diesel electric subs that were able to sink a US carrier in a similar war game so the US Navy leased one to learn how to adapt to the previously unknown weakness. IIRC China was making these kinds of subs but they have pretty short range, compared to most attack subs. https://www.popularmechanics.com/military/navy-ships/a19784775/gotland-class-sub-ronald-reagan-war-games/ https://www.popularmechanics.com/military/navy-ships/a197847...
      - bluGill 8y ago
        The point of a simulation is to find vulnerabilities. When something works the correct thing is to rerun it with the assumption that you have mitigated that attack to see what your next vulnerability is. You of course also make sure the mitigation actually happens. Lawyers run practice trials all the time, if their opponent in practice comes up with an argument they can't destroy on the spot they know where they need to focus.
  - nostrademons 8y ago
    The thing is - self-driving cars fundamentally change the structure of the automobile market in a way that negates many of the advantages of existing automakers. Instead of private ownership of cars, they encourage ride-sharing services, because the car can pick up a different passenger on the return trip and no longer has to park. Instead of internal combustion engines, they encourage EVs, both because of the power-draw of the self-driving hardware and because refueling becomes the responsibility of the service, which can program them to return to base and not pick up any new passengers once they're getting low on charge. Instead of servicing being a huge pain that encourages buyers to put a premium on reliable cars, maintenance is handled by a centralized maintenance department full of professionals. Instead of family cars, they encourage small motorcycle-like "pods" sized for a single occupant (with a smaller number of family cars or trucks available for family trips). Already, that negates the advantages of consumer brand, reliability, dealer networks, internal combustion engines, ergonomics, and bodywork. There's not all that much left to the auto industry, once all that changes.
    - hef19898 8y ago
      Even if you are right with everything you predicted (some of it, all of it is doubtfull), that does not negate the core competencies of traditional car makers. You still need someone to buold cars -> existing car makers EVs are actually easier to built than EVs -> inceeasing the advantage they have on production Maintenance -> to be done locally, there is no way to centralize it on a full continent, car makers and their existing network are king Fleet management -> see above, plus existing fleet mgt serives, only real competition are large rental car companies Ride sharing -> acquisitions, mytaxi in the case of Mercendes, drivenow and car2go in the case of Mercedes and BMW, VW with an in-house solution Self-driving -> acquisition of the provider (GM and Cruise) or sourcing the tech, alternative is a partnership (Jaguar) Traditional car makers slept into these developments, a few years ago I would have bet a lot on disruptors in that industry. Now that changed, the only "tech" (as in software) companies that can compete are the likes of Google and maybe Uber as long as VC money doesn't run out. The same is true for certain smaller manufacturers of automobiles, but this market cleaning is gling on for while now so they are used to it. And let's fave it, the automotive sector is well entrenched in politics (Europe, Japan and the US, Chine, too) and money generally is not a rwal problem. So, yeah, now I would say Google / Wymo might become a major Tier one supplier. But hardly more.
  - barrkel 8y ago
    FWIW, Honda builds more two-wheeled vehicles (scooters and motorcycles) than it does cars. About 19 million motorcycles a year vs about 5 million cars. Their core competency is probably engines, especially small engines. They make more engines than anyone else globally. (I agree with your point generally on momentum. Just saying because I was somewhat surprised to learn it.)
samfisher83 8y ago
>One person familiar with the talks said that Waymo wanted Honda to supply electric vehicles -- an area where the automaker is just beginning to establish itself. All of Waymo’s existing partnerships supply EVs or plug-in hybrids because its autonomous driving system needs more power than the puny 12-volt batteries in conventional cars. I hope they realize that there is an alternator generating power.
- bluGill 8y ago
  What is startup time? People get into their car, start the engine, buckle their seat belt, put the car in gear and go - from the time the engine is running until the car is moving is < 5 seconds. In some cases the alternator is setup to not start charging for 1 minute (so the engine doesn't see as much load until it has warmed a little). Waymo gets 5 seconds to start moving from the time someone gets in the seat - this includes time to programs the route (you have don't need the full destination, until you get out of the garage). Most computers need longer than this to start. However if you have good batteries you can cheat - go to warm shutdown and keep memory active even when the car is off for example.
- bryanlarsen 8y ago
  But 12V alternators are less efficient than the 48-Volt starter/generators used in modern "mild hybrids". Volvo, Volkswagen, Mercedes-Benz and PSA plan on introducing these in every new model moving forward, so that doesn't seem like much of an ask from Waymo.
  - kalleboo 8y ago
    Honda also has a bunch of mild hybrids though. First one I pulled up on Wikipedia from 2012 apparently does 144 volt.
- deleted 8y ago
  [deleted]
- danans 8y ago
  > I hope they realize that there is an alternator generating power The power output of an alternator is a function of the engine RPM, so it can't be relied on to provide consistent power, even when the engine isn't running, as needed by autonomous driving systems. You need a sufficiently specced battery (capacity, power output,etc) in between the ultimate power source (alternator, grid) and the autonomous system, something that EVs and PHEVs provide by default. Most electrical functions in a car (radio, windows, fans) are designed to operate within the power output of the battery, not the maximum output of the alternator. The functions that can't fit within that capacity (i.e A/C compressor) are mechanically coupled to the engine output, and therefore shut off when the engine shuts off. EDIT: wording
harigov 8y ago
It seems to me that Waymo is following a model similar to Android albeit charging for it instead of giving it away for free. Anyone with basic understanding of technology knows that its not a sustainable model, in the long term. I wouldn't blame Honda for thinking for itself.
- zmarty 8y ago
  "Anyone with basic understanding of technology knows that its not a sustainable model" -> Please explain this. I have a basic understanding of technology and this is not obvious to me.
  - runako 8y ago
    The model being described is one where the company at the center of the network eventually captures ~100%+ of the profits deriving from the products that OEMs build on that platform. The reason is that the traits that define the product for the consumer are all controlled (or eventually co-opted) by the platform, leaving OEMs (what Google wanted Honda to be in this example) no room to differentiate. This leaves the OEMs with very little pricing power, which drives margins lower. Lower margins lead to less innovation. This is why it's hard to sustainably be an OEM in a market like this. Examples: -- Wintel --> Microsoft + Intel financially did much better financially than the legions of PC makers who designed, built, and sold products using the Wintel foundation -- Android --> Similar, with Google reaping the profits.
  - martythemaniak 8y ago
    Right now, Waymo looks like it wants other companies (Honda, Chrysler, Jaguar) to provide it with dumb boxes on wheels. Waymo wants to play different dumb-box-on-wheels providers against each other so it can get the cheapest box-on-wheels. Waymo then installs it's fancy software on these boxes and uses it's Google connection (Maps, Waze, etc) to put people in those boxes and charge them a hefty profit, at least for a few years while it's the only provider. Waymo wants to be in control and collecting profits, while manufacturers subsist on small margins. Obviously, this isn't a good situation to be in for Honda etc
dwighttk 8y ago
saved you a click: Waymo didn't want to share any of its software with Honda... Honda may not have been ready to provide EVs on the scale Waymo needed.
- noja 8y ago
  So Waymo dumped Honda? They both dumped each other? Weird headline.
  - dwighttk 8y ago
    Seems like Honda dumped Waymo due to the tech sharing issue (that was presented as the breaking point, I guess you could say Waymo dumped Honda because they demanded sharing Waymo was never going to give, but it was Honda that signed a new deal with another company.) Perhaps Waymo would have been willing to bend on sharing if Honda were geared up and ready to provide EVs. It's not clear.
romed 8y ago
Tl;dr: Waymo did not need them and Honda needed somebody.
perpetualcrayon 8y ago
I think sure, there might have been a better deal between GM and Honda, but I think at a deeper level it's probably different industries trying to "circle the wagons" so to speak. My guess is only outsiders in the auto industry will create deep partnerships with big tech. I think big tech will probably end up being forced to move into manufacturing through grass roots efforts or acquisitions if they truly want to compete in this space.
djanogo 8y ago
No hardware manufacturer should partner with Alphabet unless they have exclusivity contract or equity in tech, otherwise Alphabet would just use to subsidize proof of concept first production relationship to sign up more manufacturers.
HillaryBriss 8y ago
> a deal announced this week in which Honda pledged to put $2.75 billion into Cruise in exchange for a 5.7 percent stake, valuing the company at about $14.5 billion. I'm not seeing how their arithmetic works. 2.75/14.5 =~ 19%
- tyingq 8y ago
  They omitted some info. "Honda will take a stake in GM Cruise for $750 million and spend $2 billion more over 12 years to develop a self-driving vehicle for the GM unit that can be "manufactured at high volume for global deployment" Although 750/14500 isn't 5.7% either, but at least in the ballpark.
  - HillaryBriss 8y ago
    thanks for clarifying that. so, the equity stake was at a much more reasonable price than i initially thought. elsewhere in the article they mention that JP Morgan valued Waymo at something like $100 billion. also they say that Alphabet has plenty of cash. so, it seems reasonable to assume that Waymo didn't need cash from Honda. more interestingly, Waymo doesn't seem to place much value on Honda's production capabilities and other expertise. is Waymo embracing a sort of scorched-earth business plan? does Waymo have any true equity partners?
    - count 8y ago
      Alphabet is historically horrible at dealing with enterprise businesses...
- deleted 8y ago
  [deleted]
dphack 8y ago
Normally with new technology, I'd expect hungry entrepreneurs to jump in the fray and develop alternatives to these huge established companies, but with self-driving cars, it seems that the barriers to entry would be too high. I'm hoping I'm wrong though and we see more Elon Musks types out there in the next decade giving us self-driving cars and competing with these giants.
dev_dull 8y ago
> For one, Waymo wasn’t willing to share the substantial technology it had already developed to run autonomous vehicles, and was seeking to cut a deal that would focus on Honda providing the cars Oddly enough, what they walked away from is exactly what I want! I want Google to be the OS for the car, not some snowflake solution from each car manufacturer.
Animats 8y ago
Waymo seems to be linked with FCA right now. They've picked their auto company for this round and they are headed for first operational vehicles with no safety driver around the end of 2018. Dealing with Honda would be a distraction at this moment, just before shipping product.
- kqr2 8y ago
  Why do you think Waymo chose FCA (Fiat Chrysler Automobiles) since they are only the 8th world's largest car maker? Is Waymo really the leader in the field (valuation over $100 billion vs Cruise at ~$15 billion)? Should they be partnering more with car companies ala Cruise / Argo?
  - mattnewton 8y ago
    Probably because as the 8th place, they will take more favorable terms to Waymo. Only history will tell if this is a mistake or it is like negotiating the iPhone on AT&T first.
  - jhayward 8y ago
    FCA is somewhat infamous for not funding R&D so it's likely that in order to stay in the game they gave Waymo extremely generous terms with respect to IP and data.
remir 8y ago
That may be a bit naive on my part, but perhaps automakers should form some kind of alliance and develop self-driving tech together instead of buying it from another company.
Eridrus 8y ago
Its pretty obvious that Waymo wants to make car hardware a commodity, and car companies don't like that and want autonomy to be a commodity. I don't really know where Cruise is at, but it's not crazy to believe that both things will become commodified and competition will be on cost of rides, at least in rich urban markets. At that point, the question becomes: who survives that transition?
glenrivard 8y ago
Would be pretty amazing to see the car makers gang up and basically not sell Waymo cars at scale. Hard to imagine that happening. Ten years ago Jaguar and Land Rover was sold to Tata for $2.8B USD. Waymo parent, Alphabet, has over $100B in cash with less than $5B debt. So if they want could just buy a car line. Ultimately cars will change for self driving and you really want to ultimately be making those cars. Safety and durability will be far better when you align ROI with running a large fleet of cars.

111 points by Fricken 8y ago

Honda had an existing partnership with GM to develop fuel cells. The Detroit automaker has its Chevrolet Bolt EV in showrooms and has developed a battery pack that will be used in 20 new EVs globally by 2023. In June, the companies announced a deal that would have Honda using GM’s cells and battery pack. GM’s battery not only had good range, but by working together the two automakers figured they could lower costs. The thing about companies like Honda and GM -- they have a lot of momentum. That means they aren't likely to be on the forefront of innovation, but when they turn towards a new target, they will hit with massive resources and established global production capacity that a start-up can only dream of.

dsfyu404ed 8y ago
>The thing about companies like Honda and GM -- they have a lot of momentum. That means they aren't likely to be on the forefront of innovation, but when they turn towards a new target, they will hit with massive resources and established global production capacity that a start-up can only dream of. Exactly. It's the difference between a handful of dudes in a speedboat with some explosives and an aircraft carrier. Once the latter is aware of the former you can be reasonably assured who of will win. At most the former can hope to land a good sucker punch before the latter knows they're even fighting. The core competency of GM, Honda, etc. is building cars. Once they decide what kind of cars they want to build they will do a good job building them as they intend to build them. They don't make rookie mistakes, especially in the logistics of spinning up production lines to build what they want to build. They've re-tool their factories every time a new generation or a new model comes out. They know how to do it right the first time, knowledge that comes from experience.
- leesec 8y ago
  They are good at building cars, but I would argue they are not good at building tech. Self driving is a technology issue. If the tech superstars at Waymo/Apple/whoever aren't even close to solving it, why would the software people at GM/Honda be?
  - deleted 8y ago
    [deleted]
  - dsfyu404ed 8y ago
    "Hi, this Jane from the procurement department of GM North America. We might be interested in licensing your software. Please give me a call back so we can set up a meeting." They don't need to build tech. They can buy it. GM can write some pretty big checks. They flat out bought Cruise just to cover their butts. When I was an intern at a defense contractor ~1/10th the size of GM my cube was across from procurement. I think a lot of people here don't understand the kind of scale companies like this play at. Your problem isn't "how do we pay for this" it's "will anyone sell me all this all at once or sign a contract to provide it all over the timetable we want". You make bets on how many times around the earth the welding wire you'll buy next quarter will go. GM shipped ~10 million vehicles in 2017. That means they had to sign a contract with someone to supply approximately an Exxon Valdez worth of motor oil and another of ATF just for their factories.
    - fastball 8y ago
      Isn't that exactly what a deal is? This wouldn't be a loss for Waymo if everyone was licensing their software.
      - deleted 8y ago
        [deleted]
    - xiphias2 8y ago
      Waymo is far the best self driving tech and nobody has the money to buy it, as Alphabet is not selling (it's the first real diversification from ads revenue). GM is few years behind, but hopefully those few years are not enough for Waymo to create a monopoly.
- fastbeef 8y ago
  >It's the difference between a handful of dudes in a speedboat with some explosives and an aircraft carrier. That’s uh... one helluva metaphor you got there.
  - stevenwoo 8y ago
    It's a somewhat infamous tactic used by a US leader in a war game simulation of war with a hypothetical mid east enemy (Iran of course), he used first a wave of cruise missiles, then a follow up attack of many small boats on suicide runs to overwhelm a carrier force (hypothetically) and won a two week planned exercise in one day, so the folks in charge re-ran the simulation and barred the tactics he used. https://en.wikipedia.org/wiki/Millennium_Challenge_2002 https://en.wikipedia.org/wiki/Millennium_Challenge_2002
    - hef19898 8y ago
      True that, if could with the pants down a carrier is nothing more than a big target. There is alo an example (no source, sorry) of a German sub surfacing next to a US carrier, within the inner defense ring, suring an exercise. But all that only works of the carrier is caught flat footed. To stay in the metaphor, the carrier "automotive industry" is no longer flat footed. Partol aircraft and choppers are deployed and the defenses are up. By the way, I like that image, fits the business world much bettwr than the proverbial tanker vessel for big co.
      - stevenwoo 8y ago
        Sweden produces short range diesel electric subs that were able to sink a US carrier in a similar war game so the US Navy leased one to learn how to adapt to the previously unknown weakness. IIRC China was making these kinds of subs but they have pretty short range, compared to most attack subs. https://www.popularmechanics.com/military/navy-ships/a19784775/gotland-class-sub-ronald-reagan-war-games/ https://www.popularmechanics.com/military/navy-ships/a197847...
    - bluGill 8y ago
      The point of a simulation is to find vulnerabilities. When something works the correct thing is to rerun it with the assumption that you have mitigated that attack to see what your next vulnerability is. You of course also make sure the mitigation actually happens. Lawyers run practice trials all the time, if their opponent in practice comes up with an argument they can't destroy on the spot they know where they need to focus.
- nostrademons 8y ago
  The thing is - self-driving cars fundamentally change the structure of the automobile market in a way that negates many of the advantages of existing automakers. Instead of private ownership of cars, they encourage ride-sharing services, because the car can pick up a different passenger on the return trip and no longer has to park. Instead of internal combustion engines, they encourage EVs, both because of the power-draw of the self-driving hardware and because refueling becomes the responsibility of the service, which can program them to return to base and not pick up any new passengers once they're getting low on charge. Instead of servicing being a huge pain that encourages buyers to put a premium on reliable cars, maintenance is handled by a centralized maintenance department full of professionals. Instead of family cars, they encourage small motorcycle-like "pods" sized for a single occupant (with a smaller number of family cars or trucks available for family trips). Already, that negates the advantages of consumer brand, reliability, dealer networks, internal combustion engines, ergonomics, and bodywork. There's not all that much left to the auto industry, once all that changes.
  - hef19898 8y ago
    Even if you are right with everything you predicted (some of it, all of it is doubtfull), that does not negate the core competencies of traditional car makers. You still need someone to buold cars -> existing car makers EVs are actually easier to built than EVs -> inceeasing the advantage they have on production Maintenance -> to be done locally, there is no way to centralize it on a full continent, car makers and their existing network are king Fleet management -> see above, plus existing fleet mgt serives, only real competition are large rental car companies Ride sharing -> acquisitions, mytaxi in the case of Mercendes, drivenow and car2go in the case of Mercedes and BMW, VW with an in-house solution Self-driving -> acquisition of the provider (GM and Cruise) or sourcing the tech, alternative is a partnership (Jaguar) Traditional car makers slept into these developments, a few years ago I would have bet a lot on disruptors in that industry. Now that changed, the only "tech" (as in software) companies that can compete are the likes of Google and maybe Uber as long as VC money doesn't run out. The same is true for certain smaller manufacturers of automobiles, but this market cleaning is gling on for while now so they are used to it. And let's fave it, the automotive sector is well entrenched in politics (Europe, Japan and the US, Chine, too) and money generally is not a rwal problem. So, yeah, now I would say Google / Wymo might become a major Tier one supplier. But hardly more.
- barrkel 8y ago
  FWIW, Honda builds more two-wheeled vehicles (scooters and motorcycles) than it does cars. About 19 million motorcycles a year vs about 5 million cars. Their core competency is probably engines, especially small engines. They make more engines than anyone else globally. (I agree with your point generally on momentum. Just saying because I was somewhat surprised to learn it.)

samfisher83 8y ago

>One person familiar with the talks said that Waymo wanted Honda to supply electric vehicles -- an area where the automaker is just beginning to establish itself. All of Waymo’s existing partnerships supply EVs or plug-in hybrids because its autonomous driving system needs more power than the puny 12-volt batteries in conventional cars. I hope they realize that there is an alternator generating power.

bluGill 8y ago
What is startup time? People get into their car, start the engine, buckle their seat belt, put the car in gear and go - from the time the engine is running until the car is moving is < 5 seconds. In some cases the alternator is setup to not start charging for 1 minute (so the engine doesn't see as much load until it has warmed a little). Waymo gets 5 seconds to start moving from the time someone gets in the seat - this includes time to programs the route (you have don't need the full destination, until you get out of the garage). Most computers need longer than this to start. However if you have good batteries you can cheat - go to warm shutdown and keep memory active even when the car is off for example.
bryanlarsen 8y ago
But 12V alternators are less efficient than the 48-Volt starter/generators used in modern "mild hybrids". Volvo, Volkswagen, Mercedes-Benz and PSA plan on introducing these in every new model moving forward, so that doesn't seem like much of an ask from Waymo.
- kalleboo 8y ago
  Honda also has a bunch of mild hybrids though. First one I pulled up on Wikipedia from 2012 apparently does 144 volt.
deleted 8y ago
[deleted]
danans 8y ago
> I hope they realize that there is an alternator generating power The power output of an alternator is a function of the engine RPM, so it can't be relied on to provide consistent power, even when the engine isn't running, as needed by autonomous driving systems. You need a sufficiently specced battery (capacity, power output,etc) in between the ultimate power source (alternator, grid) and the autonomous system, something that EVs and PHEVs provide by default. Most electrical functions in a car (radio, windows, fans) are designed to operate within the power output of the battery, not the maximum output of the alternator. The functions that can't fit within that capacity (i.e A/C compressor) are mechanically coupled to the engine output, and therefore shut off when the engine shuts off. EDIT: wording

harigov 8y ago

It seems to me that Waymo is following a model similar to Android albeit charging for it instead of giving it away for free. Anyone with basic understanding of technology knows that its not a sustainable model, in the long term. I wouldn't blame Honda for thinking for itself.

zmarty 8y ago
"Anyone with basic understanding of technology knows that its not a sustainable model" -> Please explain this. I have a basic understanding of technology and this is not obvious to me.
- runako 8y ago
  The model being described is one where the company at the center of the network eventually captures ~100%+ of the profits deriving from the products that OEMs build on that platform. The reason is that the traits that define the product for the consumer are all controlled (or eventually co-opted) by the platform, leaving OEMs (what Google wanted Honda to be in this example) no room to differentiate. This leaves the OEMs with very little pricing power, which drives margins lower. Lower margins lead to less innovation. This is why it's hard to sustainably be an OEM in a market like this. Examples: -- Wintel --> Microsoft + Intel financially did much better financially than the legions of PC makers who designed, built, and sold products using the Wintel foundation -- Android --> Similar, with Google reaping the profits.
- martythemaniak 8y ago
  Right now, Waymo looks like it wants other companies (Honda, Chrysler, Jaguar) to provide it with dumb boxes on wheels. Waymo wants to play different dumb-box-on-wheels providers against each other so it can get the cheapest box-on-wheels. Waymo then installs it's fancy software on these boxes and uses it's Google connection (Maps, Waze, etc) to put people in those boxes and charge them a hefty profit, at least for a few years while it's the only provider. Waymo wants to be in control and collecting profits, while manufacturers subsist on small margins. Obviously, this isn't a good situation to be in for Honda etc

dwighttk 8y ago

saved you a click: Waymo didn't want to share any of its software with Honda... Honda may not have been ready to provide EVs on the scale Waymo needed.

noja 8y ago
So Waymo dumped Honda? They both dumped each other? Weird headline.
- dwighttk 8y ago
  Seems like Honda dumped Waymo due to the tech sharing issue (that was presented as the breaking point, I guess you could say Waymo dumped Honda because they demanded sharing Waymo was never going to give, but it was Honda that signed a new deal with another company.) Perhaps Waymo would have been willing to bend on sharing if Honda were geared up and ready to provide EVs. It's not clear.

romed 8y ago

Tl;dr: Waymo did not need them and Honda needed somebody.

perpetualcrayon 8y ago

I think sure, there might have been a better deal between GM and Honda, but I think at a deeper level it's probably different industries trying to "circle the wagons" so to speak. My guess is only outsiders in the auto industry will create deep partnerships with big tech. I think big tech will probably end up being forced to move into manufacturing through grass roots efforts or acquisitions if they truly want to compete in this space.

djanogo 8y ago

No hardware manufacturer should partner with Alphabet unless they have exclusivity contract or equity in tech, otherwise Alphabet would just use to subsidize proof of concept first production relationship to sign up more manufacturers.

HillaryBriss 8y ago

> a deal announced this week in which Honda pledged to put $2.75 billion into Cruise in exchange for a 5.7 percent stake, valuing the company at about $14.5 billion. I'm not seeing how their arithmetic works. 2.75/14.5 =~ 19%

tyingq 8y ago
They omitted some info. "Honda will take a stake in GM Cruise for $750 million and spend $2 billion more over 12 years to develop a self-driving vehicle for the GM unit that can be "manufactured at high volume for global deployment" Although 750/14500 isn't 5.7% either, but at least in the ballpark.
- HillaryBriss 8y ago
  thanks for clarifying that. so, the equity stake was at a much more reasonable price than i initially thought. elsewhere in the article they mention that JP Morgan valued Waymo at something like $100 billion. also they say that Alphabet has plenty of cash. so, it seems reasonable to assume that Waymo didn't need cash from Honda. more interestingly, Waymo doesn't seem to place much value on Honda's production capabilities and other expertise. is Waymo embracing a sort of scorched-earth business plan? does Waymo have any true equity partners?
  - count 8y ago
    Alphabet is historically horrible at dealing with enterprise businesses...
deleted 8y ago
[deleted]

dphack 8y ago

Normally with new technology, I'd expect hungry entrepreneurs to jump in the fray and develop alternatives to these huge established companies, but with self-driving cars, it seems that the barriers to entry would be too high. I'm hoping I'm wrong though and we see more Elon Musks types out there in the next decade giving us self-driving cars and competing with these giants.

dev_dull 8y ago

> For one, Waymo wasn’t willing to share the substantial technology it had already developed to run autonomous vehicles, and was seeking to cut a deal that would focus on Honda providing the cars Oddly enough, what they walked away from is exactly what I want! I want Google to be the OS for the car, not some snowflake solution from each car manufacturer.

Animats 8y ago

Waymo seems to be linked with FCA right now. They've picked their auto company for this round and they are headed for first operational vehicles with no safety driver around the end of 2018. Dealing with Honda would be a distraction at this moment, just before shipping product.

kqr2 8y ago
Why do you think Waymo chose FCA (Fiat Chrysler Automobiles) since they are only the 8th world's largest car maker? Is Waymo really the leader in the field (valuation over $100 billion vs Cruise at ~$15 billion)? Should they be partnering more with car companies ala Cruise / Argo?
- mattnewton 8y ago
  Probably because as the 8th place, they will take more favorable terms to Waymo. Only history will tell if this is a mistake or it is like negotiating the iPhone on AT&T first.
- jhayward 8y ago
  FCA is somewhat infamous for not funding R&D so it's likely that in order to stay in the game they gave Waymo extremely generous terms with respect to IP and data.

remir 8y ago

That may be a bit naive on my part, but perhaps automakers should form some kind of alliance and develop self-driving tech together instead of buying it from another company.

Eridrus 8y ago

Its pretty obvious that Waymo wants to make car hardware a commodity, and car companies don't like that and want autonomy to be a commodity. I don't really know where Cruise is at, but it's not crazy to believe that both things will become commodified and competition will be on cost of rides, at least in rich urban markets. At that point, the question becomes: who survives that transition?

glenrivard 8y ago

Would be pretty amazing to see the car makers gang up and basically not sell Waymo cars at scale. Hard to imagine that happening. Ten years ago Jaguar and Land Rover was sold to Tata for $2.8B USD. Waymo parent, Alphabet, has over $100B in cash with less than $5B debt. So if they want could just buy a car line. Ultimately cars will change for self driving and you really want to ultimately be making those cars. Safety and durability will be far better when you align ROI with running a large fleet of cars.