Alphabet Inc. Class C (GOOGL.US) Waymo's self-driving test settles in Tokyo, but experts suggest focusing on rural areas first.

U.S. tech giant Alphabet Inc. Class C (GOOGL.US) announced earlier this month that its subsidiary Waymo plans to start testing autonomous taxis in Tokyo, Japan in early 2025, marking the company's first step towards expanding into the international market. However, Bloomberg columnist Catherine Thorbecke believes that Waymo's autonomous vehicle testing should take place outside of Tokyo. Thorbecke suggests that running autonomous vehicles in densely populated city areas poses technical challenges. However, autonomous vehicles could have a place in Japan. With an aging population and the Japanese government prioritizing addressing labor shortages, there is great potential for self-driving technology. Thorbecke suggests that Waymo could start by providing services to rural communities. Autonomous vehicles from Waymo could operate more easily in these sparsely populated areas, while also filling gaps in public transportation. Slowing down in Tokyo is a wise move for Waymo. The company has stated that there are currently no plans to offer services to customers in Tokyo. Instead, they are working closely with local taxi giant Japan Taxi and ride-hailing app GO to prepare for testing their Jaguar I-PACE autonomous vehicles on the streets of Tokyo. Initially, these vehicles will be manually operated by taxi drivers to map out areas like the Minato ward, Shinjuku, and Shibuya. Waymo's ride-hailing service is currently operating in parts of Phoenix, San Francisco, and Los Angeles. Even in the largest of these U.S. cities, Los Angeles (with a population of just under 4 million), it is difficult to compare to Tokyo's 14 million residents. Introducing Waymo vehicles into medium-sized cities in Japan will provide a more comparable testing ground for their first international experiment. Thorbecke remains cautiously optimistic about the prospects of autonomous vehicles, despite occasional criticism and industry executives like Elon Musk repeatedly falling short on promises of when this technology will be realized. In theory, autonomous taxi services seem like an ideal choice for Japan. However, the industry faces a series of obstacles both domestically and internationally, giving Waymo little room for error in entering Japan. Earlier this month, General Motors Company announced that it is discontinuing its Cruise autonomous taxi business due to high development costs. Meanwhile, their partner Honda also announced that they will stop funding Cruise. Honda had previously revealed plans to deploy an autonomous vehicle in central Tokyo by 2026, but later postponed this timeline. In the U.S., incidents involving autonomous vehicles often become national news, but Waymo's current safety data shows that autonomous vehicles are safer than human-driven vehicles. Globally, texting while driving and drunk driving are the most common causes of traffic accidents. However, building public trust will still take time. At a time when developing autonomous taxi technology is extremely challenging and costly, a high-profile accident could have a devastating impact on a company's ambitions and reputation. Japan has historically taken a particularly cautious approach to emerging technologies. While there is a shortage of taxi drivers, even non-autonomous ride-hailing companies like Uber Technologies, Inc. face regulatory challenges in Japan. Currently, Uber Technologies, Inc. can only connect customers with taxi drivers. However, Uber Eats, their food delivery service, has successfully collaborated with local businesses and stakeholders to integrate into the Japanese market and meet consumer needs. Thorbecke emphasizes that Waymo could also fill these gaps by meeting the needs of local residents and working closely with policymakers. They could start in rural and semi-rural areas where residents need alternatives to dwindling public transportation services. These areas may not be the big cities Waymo is targeting, but they could bring unexpected surprises.