Detroit Gets a Major Boost From the Self-Driving Car Business

April 23, 2019 by Paul Ausick

Source: JasonDoiy / Getty Images
The self-driving car business of Alphabet Inc. (NASDAQ: GOOGL), Waymo, has struck a deal with American Axle and Manufacturing to lease an idled plant in Detroit. Waymo plans to install its self-driving systems in vehicles supplied by Fiat Chrysler Automobiles N.V. (NYSE: FCAU) and Jaguar.

The company will invest $13.6 million in the vacant plant, which has the capacity to grow to 200,000 square feet and is expected to open later this year with an as yet unspecified footprint.

According to a report at Crain’s, Waymo is receiving a $2 million grant from the Michigan Strategic Fund to cover the first 100 jobs at the plant. In exchange, Waymo signed a three-year lease that expands the number of job subsidies to 400 and could result in a total payment of another $6 million. All told, Waymo’s subsidy payments could total $8 million.

Once work begins at the Detroit location, Waymo could install self-driving systems on as many as 62,000 Chrysler Pacifica hybrid vans and 20,000 Jaguar vehicles. Those are the numbers of vehicles on which Waymo has purchase options from each automaker.

The Chrysler vehicles are set to be built at FCA’s Windsor, Ontario, plant and will be shipped to Detroit for Waymo’s installation of Level 4 self-driving gear. The following chart from the Society of Automotive Engineers shows the different driver requirements and vehicle features at each of six automation levels.

Source: Society of Automotive Engineers

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In a Waymo blog post Tuesday, Detroit Mayor Mike Duggan said, “Today’s announcement by Waymo shows that the City of Detroit remains at the center of the future of the auto industry. Waymo could have located the world’s first 100% dedicated Level 4 autonomous vehicle factory anywhere.”

As with self-driving competitor Tesla Inc. (NASDAQ: TSLA), Waymo may be too far ahead of U.S. consumers in the companies’ rush to higher self-driving levels. More than half of drivers surveyed (54%) last August by Cox Automotive believe that technology makes people better drivers, but more than two-thirds (68%) said they would feel uncomfortable in a fully autonomous vehicle. In terms of the autonomy levels, that means drivers are comfortable with Level 2 autonomy but wary about Level 4.

Waymo kicked off its commercial self-driving taxi fleet last December in Phoenix. At present all the vehicles in the fleet have drivers and the service is limited to preapproved passengers.


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