- The German carmaker is preparing to enter the market for autonomous ride-hailing services next year with its Volkswagen ID. Buzz AD. But instead of competing against existing transportation providers, it aims to work with them as a partner. The different approach comes amid continued popular resentment towards robotaxis.
When Big Tech first began deploying self-driving cars to San Francisco two years ago, companies encountered something unusual—popular resistance.
Angry residents would sabotage the robotaxis with the help of traffic cones, while the city’s fire department chief herself would regularly malign them as a dangerous nuisance. Even today, during the recent outbreak of civil unrest in Los Angeles over mass deportations, protesters caused hundreds of thousands of dollars when they deliberately torched Waymo cars.
One old economy company preparing to enter the autonomous ride-hailing space is taking a completely different approach when it launches next year. Germany’s Volkswagen is wagering society at large is increasingly fed up with the collateral damage left behind by Silicon Valley’s move-fast-and-break-things mentality.
“Our approach is different—we deliberately want to act as partners that build upon existing infrastructure,” VW Group executive Sascha Meyer told Coins2Day during a test drive of its robotaxi. “A key point for social acceptance we believe is being a service provider whose presence is desired precisely because we will not be competing with systems already in place.”
This week, VW revealed the series production version of its autonomous ride-hailing cab based on its retro-styled VW ID. Buzz EV microbus. Packaged together with the requisite fleet management software and digital customer booking platform, it wants to offer local transportation authorities and other commercial fleets a turnkey solution that can be integrated effortlessly into their service.
While a Waymo or a Tesla plan to compete with existing providers, the German carmaker aims to be an equal partner working hand in glove with communities that want their help.
Enormous growth projected for autonomous ride-hailing over the next 10 years
Even if the first roughly 500 vehicles won’t be deployed to Uber for use in Los Angeles until next year, VW believes the race for market share is only just beginning.
It’s convinced there will be more than enough demand to grab a bite out of the €350 billion-€450 billion in revenue McKinsey projects for autonomous ride-hailing services in North America and Europe by 2035. That’s more than half a trillion dollars worth of growth over the next 10 years, potentially.
Meyer runs MOIA, the mobility services subsidiary of the VW Group which will offer a high-tech version of the zero-emission Volkswagen ID. Buzz electric minivan complete with the backend software ecosystem around it.
Coins2Day had a chance to ride along with Meyer in one as the robotaxi navigated its way—with a safety driver behind the wheel at all times—through the busy streets of Hamburg. Here in Germany’s second-largest city, Volkswagen has quietly been testing the technology for several years now thanks to the active support of city officials.
Europe’s public transit authorities difficult to displace
The white label service Volkswagen has in mind means all customers need to do is slap their logo on the vehicle and adorn the customer-facing front end with their respective corporate identity and they are ready to go.
The group’s go-to-market strategy heavily incorporates public transit authorities, an approach influenced by its European roots. With their extensive wealth of well-built mass transit networks, these mainly state and municipal-owned companies play a role in urban, suburban and ex-urban mobility so crucial it would be difficult to displace them.
Take for example the BVG authority operated by the German capital of Berlin, with whom VW Group already has signed a letter of intent. Three million people entrust their everyday transportation needs to its fine meshed web of buses, streetcars, subways and commuter trains to get back and forth in the greater metropolitan area every day. A BVG-branded robotaxi integrated into its service should see far faster adoption than were Volkswagen to compete alongside it.
Partnering a natural fit for automakers used to working with state officials
In a way, VW’s partnership approach to the market is a natural fit. Carmakers have decades of experience working closely with regulators from various agencies, state and federal, to ensure their cars conform with traffic safety and environmental standards.
In Silicon Valley, however, regulators are often viewed with suspicion—at best an irritant, at worst the enemy. The debacle around robotaxi developer Cruise proved that: following a fateful October 2023 accident in San Francisco, the tech startup deliberately withheld crucial information from crash investigators, shattering what trust was placed in them by the state of California only weeks earlier.
When Cruise owner General Motors found out, it acted swiftly to sideline the CEO, but by then it was too late and the reputational damage was done. Cruise ceased all operations and GM pulled out of the autonomous ride-hailing race in December.
With crosstown rival Ford already giving up even earlier, only Volkswagen and Hyundai, through its Motional subsidiary, still remain in contention from the legacy car industry. The rest are AI tech companies like Waymo, Tesla, Amazon subsidiary Zoox as well as their foreign equivalents like China’s Baidu and Wayve in the UK.
Not a winner-takes-all market
Of course, Meyer knows that the competition has a head start they won’t hand over willingly.
“Waymo has an indisputable lead, that’s clear, and I don’t believe they’re going to slow down in any way,” he told Coins2Day.
Then there’s Tesla, which is gearing up to launch its own pilot in Austin due to launch Sunday. While Meyer readily admits it’s likely only a matter of time until Tesla can graduate to a full commercial robotaxi service, he believes all is not lost.
For one, neither is present in Europe, a market known for being far more risk-averse towards unproven technologies and quick to regulate against threats towards public safety. Tesla’s vaunted Full Self-Driving (FSD) feature, a software stack that will imbue its robotaxis with the requisite intelligence, hasn’t yet been approved for use anywhere on the continent. In fact, it’s not even available as an advanced driver assist.
This offers enough of an opportunity for Volkswagen to greenlight the production of at least 10,000 robotaxi vehicles, potentially more. And even if Waymo and Tesla do retain their lead by the time VW is ready, Meyer believes communities will demand some degree of healthy competition among autonomous ride hailing providers in order to ensure an optimum service for a low cost.
“No one, not even in the United States, will be happy if there’s a monopoly,” he said. “We don’t believe it will be a winner-takes-all market.”
