Waymos Lyft partnership will help it scale AV ride hailing

This is an excerpt from a story delivered exclusively to Business Insider Intelligence Transportation & Logistics Briefing subscribers. To receive the full story plus other insights each morning, click here.Waymo CEO John Krafcik recently revealed that later this year a small number of his company's autonomous vehicles (AVs) will be made available through the Lyft app. Waymo and Lyft first announcedplans to work together back in 2017, but didn't disclose many details at the time.Now, Waymo will make 10 of its AVs available for riders to book through Lyft's app in the Phoenix, Arizona, metro area. Waymo's trained safety drivers will still be present in the vehicles, and all fleet maintenance and upkeep will be conducted by Waymo.Here's what it means: The agreement shows Waymo is taking a two-pronged approach to advancing its AV strategy.The firm has been operating a proprietary ride-hailing service called Waymo One in Arizona since last year. Waymo One made history last year as the first commercial autonomous ride-hailing service to launch in the US. In the lead-up, Waymo struckagreements with legacy automakers to buy cars that it'll equip with its technologies and deploy in the service beginning in 2020. The company has shown no indication that it will go back on this agreement or phase out Waymo One in favor of its Lyft partnership.With the Lyft partnership, Waymo will now operate two core AV ride-hailing channels, giving itanother pathway to generate revenue from its investments in AV technologies.Waymo now has more opportunities to get riders in its cars. It's worth noting that Waymo will likely share revenue earned via Lyft's platform with the ride-hailing firm, though neither company disclosed any such details.The big picture: Partnering with Lyft should enable Waymo to scale its AV ride-hailing business.The Lyft deal indicates that Waymo feels it's necessary to turn to third parties to reach more customers and maximize the revenue-generating potential of its AVs. Acquiring new customers is an expensive proposition, especially for a service like AV ride-hailing: Many consumers distrust AVs.Waymo could assuage some such fears by partnering with a trusted, well-established brand like Lyft, and it will also be able to reach more customers by making its AVs available to Lyft's large user base. Most importantly, it won't have to spend significant cash to do so.While the firm will still have to dedicate resources to Waymo One, adding its cars to Lyft's network shows that Waymo is willing to cede ownership over part of the customer experience to a partner in the name of ultimately trying to maximize the revenue-generating potential of its AVs.Waymo's move is one that other AV ride-hailing players — specifically legacy automakers like GM — should consider to keep up with Waymo.Ride-hailing firms beyond Lyft have amassed massive user bases — Uber has 91 million monthly active platform users, for example — something that would take AV startups and legacy automakers alike significant time and resources to build.That may not be feasible for companies like GM's Cruise, for example, which had to spend significant dollars building AV technologies before ever approaching the customer acquisition phase for a ride-hailing service. Partnering with an established fleet operator is a way to circumvent some of the costs and get companies more quickly on the road to scaling AV ride-hailing services.Interested in getting the full story？ Here are two ways to get access: 1. Sign up for the Transportation & Logistics Briefing to get it delivered to your inbox 4x a week. >> Get Started2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to the Transportation & Logistics Briefing, plus more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now