Inside Zoox’s Race to Scale Up Across the U.S.

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0:33Welcome to Tech News Briefing. It's Wednesday, November 11th. I'm Julie Chang for The Wall Street Journal. Amazon-owned Zoox doesn't look like your typical robo-taxi. Some have described it as a toaster on wheels. Now, this contender in the autonomous vehicle space is gearing up for broader expansion here in the States, but also overseas. WSJ columnist Tim Higgins sat down with Zook's CEO Aisha Evans at a recent WSJ tech event to discuss that expansion, as well as the company's vertical integration service strategy, regulation around its unique vehicle design, and more. Here are some highlights from their conversation.

1:17So I live in San Francisco. I see these all the time. What cities are you in? Okay, so currently we are in Las Vegas, commercial, open. That means you're charging. Anybody can go there and use it. Anybody can download the app. Lord knows when you land at the airport, you'll see a lot of advertising to remind you. So anybody can download the app. And we go to about 18 locations or so. And we'll soon be doubling that. And yeah, we tell you, you say, I want to go from point A to point B. We say, okay, and here's the cost. Then we send you a robot, sliding doors. You know it's yours through the colors.

1:53You step in, you buckle up, off you go, and then you drop off. And we're also in San Francisco, where we're preparing to expand very, very soon. And you're testing there, and you're in other markets testing in the U.S. Where else? In Miami and Austin, and soon also in Atlanta and L.A. How much do you charge in Vegas? Is it competitive? I mean, is it competitive with an Uber or competitive with another robot taxi? How do you think about pricing? If you have Uber and you're familiar with the comfort tier, it's not quite X. It's around the Uber comfort pricing right now. Including tip or not including tip?

2:30I asked them to do tips and give them to me, but they said no. So no tips. Well, so you kind of alluded to this. There's no steering wheel in there. This is just two bench. There's two rows of seats here. You're looking at each other. It's very much like a lounge kind of situation. It's got music. It's got lights and whatnot. So not having a steering wheel is an issue, though. And regulatory, what did that do for you? So we had to work very closely with the regulatory agencies at the federal level, also at the state and city level. And we're proud that we're the first one to get what's called an exemption, Part 555, which allows us...

3:10Ooh, 555, that sounds very technical. That's what they call it. And that allows us to operate it on public roads. and also charge customers. But that's the federal level. Then you still have to go state by state. One of the things we're hoping for is actually a national standard, because right now after you get the federal approval, you have to go state by state and city by city for permitting. And that's very complicated in a place like California that has a lot of different rules than say Texas where the rules are different and much less. I would say I am grateful to the state of California that They are pro-AV.

3:43That's a good thing. But yes, it is an involved permitting process. And how much more, how longer is it going to be until you can charge in San Francisco? So right now we're waiting for an expansion that will allow us to cover all of San Francisco. We expect that very soon, famous last words. After that, we will have to go get a permit from the CPUC, which is the California Public Utility Commission. I remembered. and they are the ones who basically regulate charging for ride hailing and we hope to get that early next year. So early next year you expect to have Zoox on the streets in San Francisco charging customers.

4:23They are there now for testing and early riders but if I just want to download the app and call a car, I've got to wait until early next year. Not for you, for me. I'm waiting to do that too. I can't wait to charge myself. Yeah, can you just get a car whenever you want or are you just driving around San Francisco? this is really sad but my children have said to me you sure you work there you sure you have some pool your app says 45 minutes can't you do something don't you know somebody i mean what is the issue you just don't have enough cars for all the demand even though you're just still testing the supply is limited how many cars do you have on the roadway we have quite a few few hundred oh no no we have nationally somewhere a little bit over around 150 or so but But the majority of them are in Las Vegas.

5:08And in San Francisco, the supply is limited. The good news is that we have a serial production factory in Hayward. We've built a lot of robots to the point where sometimes I go to the factory. I'm like, where are we going to put them all? They are ready to go. They are shipped and on locations at the depots. We just need to get our permits before we start deploying. Let's unpack that a little bit. So you basically build your vehicles. Yes. In California. How many have you made so far? All right, so we're building about, we're up to about 12 a day. 12 a day. Yeah, and right now they get built, they come off the factory, get tested, and then go in sort of a staging area, and then we ship them to locations I've talked about earlier.

5:50And we, at full capacity, we can go two shifts a day, 10 ,000 a year. And we could push to 15 ,000, but we'll probably be around 10 ,000 a year. Have you taken a ride in a robotaxi? What did you think? If you're a listener on Spotify, let us know in the comments. Coming up, how Evans thinks about Zoox's competitors, like market leader Waymo, plus its plans for an overseas expansion. That's after the break.

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6:59Waymo, which I think arguably is the market leader at this point just because how far along they are in development but also how many cities they are and how many rides they're doing on a weekly basis hundreds of thousands of rides supposedly they have talked that they have about 4 ,000 vehicles out there they want to double that by the end of the year reportedly they want to get to 20 ,000 vehicles on the roadway by next year is this a race to build vehicles or is this a race to set up in cities how do you view that competition it's both first of all I don't really think about it as competition it's more fellow travelers the numbers were just given to you before I stepped on stage it's a huge market I mean building vehicles you have to do that but you also have to be able to deploy them run the service operate safe safe on the roads and so we call them fellow travelers and I would say they've started the scaling journey whereas we're entering the scaling journey that's how I look at it but I think there's room for both as far as the vehicle we chose to have a vertically integrated solution where all aspects of the rider experience and safety are under our control and where also we can provide a consistent magical experience and not be changing vehicles every so often.

8:11I think the nuance here is that you're building your vehicles whereas Waymo is buying vehicles from car makers and adapting them with their sensors. Exactly. So that gives you some flexibility. It also gives you a lot of headaches in the manufacturing process. When you look at a market, what's the right number of vehicles to deploy to a city like San Francisco? So today, most of us start with the current demand. This is not a new market. It's just served differently by traditional ride hail. We look at the demand, and then we also look at the possibility of what we call time expansion, i.e. are there people who today are not part of the demand?

8:47And then in general, the robotaxi doesn't get tired, doesn't stop at 7-Eleven for coffee, So they do a full shift. We also don't have to incentivize the robotaxi to go to certain locations. You have another layer of fleet orchestration where you can stage, prepare, you know where the demand is. So that's what we work down to. But obviously, it's a lot less people than if you take traditional ride hail in terms of supply. Because it's a machine. She works all the time. She can run all the time. So we're talking about maybe a couple thousand per market for big cities. That's a good number. And so if you're able to crank out 15 ,000 to 20 ,000 a year, I mean, that's a potential, a lot of growth.

9:30Where are the next cities you want to start expanding into? We'd like to cover all of the United States. Oh, geez, okay. Yeah, all of the major centers and more. And one of the things that actually I'm happy to announce here is we're also going to send our test fleet in Europe and Asia to start essentially collecting data and scenarios there and to prepare for an international expansion. Europe and Asia, any place a little bit more, like we're talking London, Southeast Asia? I think it'd be fair to say that in Europe there's London and then there are EU countries, right? And then it'd be fair to say that in Asia, countries like Korea, Japan, and so on would be a target list.

10:11But we're first, this is not a commercial announcement. We're first going to go do some pathfinding, do some driving, some collecting of data. And there are some modifications, for example, in emergency vehicles is going to look different there. Some of the rules are different, so we're going to prepare, and then we'll send a robotaxi afterwards. Yeah, so these are the kind of vehicles that if you're in San Francisco, you see they don't look like your toaster vehicles, right? These are like maybe some Toyotas that are driving around with sensors on the top, picking up data to understand that, to understand the roadways.

10:41Yes, basically the sensor and compute architecture that's on the robotaxi is outfitted on those of their Toyota Highlanders right now, and we use those as our testers and data collectors. Autonomous vehicles have been rolling out for many years now. Traditionally, it seems like companies were picking a market and going all in to figure out the market, and then going city to city, and basically having to reimagine the system as they did that. You're in several cities right now. Has something changed with the technology that makes you feel confident that you can handle testing in Europe and Asia, as well as deploying in multiple cities in the U.S.?

11:15Couple things happen. First of all, the stack is generalizing really well. The stack being the... Sorry, the software stack, i.e. the software that has the AI algorithm that run on the vehicle to control the vehicle. It's generalizing well. Second of all, you have all of the advances in machine learning and LLMs, which are helping us with simulation. An example of that is you can take a scene in one city and feed it to the simulator and basically make it snow, make it rain, make it have smoke, make it have a slightly different road. And so the speed at which we're able to generalize is increasing.

11:50And then last but not least, you start running out of things you haven't seen before. So essentially the same kind of advances in AI that Anthropic and OpenAI are benefiting from, you're able to take those learnings and apply it to your technology. Absolutely. This past year has been fantastic in terms of the speed at which we can simulate and the type of variety we can quickly have access to without necessarily having to do more physical driving. That was Journal columnist Tim Higgins speaking with Zook's CEO Aisha Evans. You can watch the full interview on wsj.com. And that's it for Tech News Briefing.

12:31If you're a listener on Spotify, be sure to leave us a comment. Today's show was produced by me, Julie Chang, with supervising producer Katie Ferguson. We'll be back tomorrow with a new episode. Thanks for listening.

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