How AV companies are picking their U.S. launch markets
As autonomous vehicle companies plan for commercial robotaxi deployments, they're weighing everything from city layout to weather in selecting launch markets.
Why it matters: Robotaxis will not be available everywhere at the same time. AV companies must choose cities to start with — a critical business decision that will determine which populations are first exposed to this technology and how it further develops.
Details: Companies must balance a range of factors to determine which cities are most attractive.
- Market size: The larger the city, the greater the business opportunity.
- City layout: Densely populated cities enable ride-hailing fleets to serve the entire passenger base more efficiently. Simple city layouts and nearby airports are also advantageous.
- Regulations: U.S. states vary widely in their receptiveness to AVs, from extremely permissive (Arizona, Florida) to more demanding (California) to downright hostile (New York).
- Climate: Since sensors and computer vision systems still struggle with inclement weather, expect the first AVs in markets with no snow and little rain.
- Energy infrastructure: A robust electric grid is a key consideration for companies deploying EV fleets.
- Competition: City infrastructure and regulators may not support more than one major AV player in any given market, at least initially.
Where it stands: These criteria are already shaping deployment plans.
- Large populations, sunny weather and lax state regulatory regimes have led Waymo to Phoenix and lured Ford to Miami.
- Aptiv has made a big bet on Las Vegas. Though a smaller market, Las Vegas' ideal climate, strong tourist economy and flat gridlike layout make it a logical beachhead.
- Both Zoox and General Motors subsidiary Cruise have gone all-in on the more complicated San Francisco market, whose unofficial status as the global tech capital no doubt played a role. Its large metropolitan area and good weather are offset by challenging local regulations and a notoriously difficult driving environment.
What to watch: These companies will ramp up their presence in their chosen markets over time as they gradually push from testing to commercialization. Expect larger fleets, a bigger real estate footprint and, eventually, heavy advertising to consumers.
Rob Toews is an investor at Highland Capital. Previously, he worked on strategy at Zoox.