Tesla Will Need Riders for Its Robotaxis

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[00:00:33] [SPEAKER_02]: Welcome to Tech News Briefing. It's Thursday, October 10th.

[00:00:37] [SPEAKER_02]: I'm Zoe Thomas for The Wall Street Journal.

[00:00:40] [SPEAKER_02]: Tesla is expected to announce its entry into the robo-taxi market at an event later today.

[00:00:46] [SPEAKER_02]: And while these cars may not need drivers, to make the economics work, they will need a lot of passengers.

[00:00:53] [SPEAKER_02]: We'll explain how investors seem to be approaching Tesla's entrance into this space and how that's impacting shares of another company.

[00:01:01] [SPEAKER_02]: Plus, striking dock workers are back on the job on East Coast ports.

[00:01:06] [SPEAKER_02]: But the latest agreement only gives the union and employers until January to work out one of the thorniest issues in contract negotiations.

[00:01:15] [SPEAKER_02]: What to do about automation at U.S. ports.

[00:01:18] [SPEAKER_02]: Our reporter Paul Berger will tell us about both sides' arguments.

[00:01:26] [SPEAKER_02]: But first, later today, Elon Musk is expected to announce Tesla's self-driving taxi plans.

[00:01:34] [SPEAKER_02]: In the past, he's called the company's plan a combination of Airbnb and Uber.

[00:01:40] [SPEAKER_02]: Investors seem to be betting that Tesla's entry into the robo-taxi space could come at the expense of Uber.

[00:01:46] [SPEAKER_02]: Our Heard on the Street columnist Dan Gallagher is here to tell us more.

[00:01:51] [SPEAKER_02]: So Dan, tell us a little bit about what we expect to learn from Tesla.

[00:01:54] [SPEAKER_04]: Well, one, we'll see what this robo-taxi actually looks like.

[00:01:58] [SPEAKER_04]: Elon Musk has said publicly in various formats that it's going to be like a full-on built-for-purpose driverless car.

[00:02:05] [SPEAKER_04]: So like no pedals, no steering wheel.

[00:02:07] [SPEAKER_04]: We've not really seen a lot of stuff out there like that before.

[00:02:10] [SPEAKER_04]: There's been some other robo-taxi startups that are testing those types of vehicles.

[00:02:14] [SPEAKER_04]: But like the most common ones we see from like Waymo and Cruise are essentially actual like cars that have been repurposed for driverless.

[00:02:23] [SPEAKER_04]: So they have a wheel and everything, but now they drive around without anybody at the wheel.

[00:02:28] [SPEAKER_02]: You mentioned Waymo and Cruise.

[00:02:31] [SPEAKER_02]: There are some other companies in this driverless vehicle space.

[00:02:33] [SPEAKER_02]: Uber once wanted to have its own self-driving taxi service.

[00:02:37] [SPEAKER_02]: What changed for Uber?

[00:02:38] [SPEAKER_04]: They realized, you know, it's a hard technology to do and they were racing against at the time Apple was trying to do it.

[00:02:44] [SPEAKER_04]: Google was trying to do it with Waymo and these really much bigger companies that had even deeper pockets and more resources, you know, and they had mishaps on their own.

[00:02:53] [SPEAKER_04]: There was this fatal accident in 2018 in Arizona.

[00:02:57] [SPEAKER_04]: They realized that their strength was really having a platform of riders that they could bring to a robo-taxi service rather than building this thing up from scratch on their own.

[00:03:06] [SPEAKER_02]: Okay.

[00:03:07] [SPEAKER_02]: So then why do investors seem to be betting that Tesla's stock will go up at the expense of Uber's stock?

[00:03:15] [SPEAKER_04]: Well, it already went up a lot.

[00:03:17] [SPEAKER_04]: You can look at them in isolation and think, okay, is this going to really change the game for Tesla?

[00:03:21] [SPEAKER_04]: It might or might not.

[00:03:22] [SPEAKER_04]: But to sell off Uber's stock and Uber stock, in fact, went down like a quarter of its value over the next few months after Tesla first announced they were going to have this event.

[00:03:33] [SPEAKER_04]: So based on no knowledge, people thought, oh, that's just bad for Uber.

[00:03:37] [SPEAKER_04]: Tesla may not choose to do business with them.

[00:03:39] [SPEAKER_04]: In fact, Elon Musk has hinted that they're going to have kind of their own platform.

[00:03:43] [SPEAKER_04]: We'll see if that actually works for them or not.

[00:03:45] [SPEAKER_04]: But ever since then, Uber's made all these deals with these robo-taxi companies, including Waymo.

[00:03:52] [SPEAKER_04]: That's proved the point of the value they have in this.

[00:03:55] [SPEAKER_02]: So Waymo Alphabet self-driving company has a deal with Uber in a few cities.

[00:04:00] [SPEAKER_02]: What does that mean for passengers?

[00:04:02] [SPEAKER_04]: For passengers, the idea is it's really simple.

[00:04:04] [SPEAKER_04]: So let's say you're in one of these cities is going to be Atlanta when Waymo launches there next year.

[00:04:09] [SPEAKER_04]: So there'll be basically a choice on the Uber app as opposed to like right now here in San Francisco, if you want to take a Waymo ride, you have to have the Waymo app.

[00:04:17] [SPEAKER_02]: Has either Waymo or Uber said what they expect this partnership will mean for their growth?

[00:04:22] [SPEAKER_04]: They're both optimistic about it.

[00:04:24] [SPEAKER_04]: They haven't put out like specific financial projections.

[00:04:27] [SPEAKER_04]: They both see it as like a win-win for them.

[00:04:29] [SPEAKER_04]: Obviously, with Uber, it kind of counters this idea that robo-taxis are really bad for their business.

[00:04:36] [SPEAKER_04]: For Waymo, it's a way to get into new markets without kind of having to build a base from scratch of potential riders.

[00:04:43] [SPEAKER_02]: Dan, just to take us back to Tesla for a second, what challenges is it going to face in setting up a robo-taxi company?

[00:04:50] [SPEAKER_04]: Well, I mean, obviously, they'll have to get the necessary approvals.

[00:04:55] [SPEAKER_04]: And right now, based on what analysts have looked at, they don't have yet the permits to run that kind of service, at least here in California.

[00:05:01] [SPEAKER_04]: You know, it could be a multi-year process, in fact, before Tesla actually has an actual robo-taxi fleet out that people can hail and use.

[00:05:10] [SPEAKER_04]: And in that time, they have to have a base of users that are willing to do that.

[00:05:13] [SPEAKER_04]: Now, there's been speculation that what they're going to do is combine it into like a broader, almost car-sharing type thing,

[00:05:20] [SPEAKER_04]: where if you own a Tesla, you might make it available on this app, where you write out your car to use for somebody.

[00:05:26] [SPEAKER_02]: That was our Heard-on-the-Street-Columnist Dan Gallagher.

[00:05:30] [SPEAKER_02]: Coming up, dock workers at East Coast Ports are back on the job after a three-day strike.

[00:05:35] [SPEAKER_02]: But the battle over automation at US Ports continues.

[00:05:40] [SPEAKER_02]: We'll tell you about it after the break.

[00:06:19] [SPEAKER_02]: Tens of thousands of dock workers returned to their jobs on East Coast Ports last week after a three-day strike.

[00:06:26] [SPEAKER_02]: Port employers agreed to a 62% pay increase for workers.

[00:06:31] [SPEAKER_02]: But this new agreement only extends to mid-January.

[00:06:35] [SPEAKER_02]: And there is another thorny issue for the union and companies to work out.

[00:06:40] [SPEAKER_02]: Automation.

[00:06:41] [SPEAKER_02]: Here to tell us more is our reporter, Paul Berger.

[00:06:44] [SPEAKER_02]: So, Paul, how much dock work is handled by automation now?

[00:06:49] [SPEAKER_00]: Not very much.

[00:06:50] [SPEAKER_00]: Dock work is still a pretty manual process.

[00:06:53] [SPEAKER_00]: In terms of you still, by and large, have humans in cranes lifting containers off ships.

[00:07:00] [SPEAKER_00]: You still have humans on the docks driving trucks that pull the containers across the yard.

[00:07:06] [SPEAKER_00]: And you still have lots of clerical workers checking off boxes, making sure the right boxes are going into the right places,

[00:07:12] [SPEAKER_00]: and keeping control of the stacks of containers on the ports.

[00:07:16] [SPEAKER_02]: And for those of us who don't work on docks or aren't familiar with how ports operate, what kinds of jobs is automation capable of handling?

[00:07:25] [SPEAKER_00]: At a number of the country's most important ports, you do have cranes that can operate semi-autonomously,

[00:07:33] [SPEAKER_00]: so largely without the help of human beings.

[00:07:35] [SPEAKER_00]: You have autonomous vehicles on the docks that carry containers from the side of the ship over to other container stacks.

[00:07:44] [SPEAKER_00]: Some of those are even electric vehicles that will actually drive to another part of the docks when the battery's low,

[00:07:51] [SPEAKER_00]: and a robot will remove the battery, place a new battery in it, and then it will go back to work.

[00:07:56] [SPEAKER_00]: Then you get on to the areas of automation that many people don't think of as automation,

[00:08:01] [SPEAKER_00]: but that dock workers think of as automation.

[00:08:03] [SPEAKER_00]: So they don't like cameras in vehicles that are facing the drivers,

[00:08:07] [SPEAKER_00]: so that when a truck comes into a port, in some cases you will have cameras and computers

[00:08:15] [SPEAKER_00]: that read the kind of truck and trailer that's coming in, the boxes and where they're going,

[00:08:20] [SPEAKER_00]: and keeping track of them.

[00:08:21] [SPEAKER_00]: And a lot of those jobs at other ports are currently done by human beings,

[00:08:25] [SPEAKER_00]: but could in the future be done more automatically.

[00:08:29] [SPEAKER_02]: Tell us more about the arguments for using or not using automation at ports.

[00:08:33] [SPEAKER_00]: It's a really interesting debate, really, because you will actually find a number of operators

[00:08:39] [SPEAKER_00]: of the cargo handling facilities at ports who say they don't want automation.

[00:08:44] [SPEAKER_00]: Even the people who like automation will fully admit that human beings can move containers more quickly

[00:08:50] [SPEAKER_00]: than a machine can.

[00:08:51] [SPEAKER_00]: But the problem with some U.S. ports is they are constrained by the towns and cities around them.

[00:08:57] [SPEAKER_00]: They have no room to grow.

[00:08:59] [SPEAKER_00]: And they're basically filling up.

[00:09:02] [SPEAKER_00]: And automation allows some of those ports to actually move more containers through their facility.

[00:09:08] [SPEAKER_00]: It's a process that they call densification.

[00:09:11] [SPEAKER_00]: So the idea is you can squeeze more boxes into a finite space

[00:09:15] [SPEAKER_00]: by using artificial intelligence and other technologies to manage the containers.

[00:09:21] [SPEAKER_02]: What are some of the drawbacks to adding automation at ports?

[00:09:24] [SPEAKER_00]: So there are a number of significant challenges for automation in the United States.

[00:09:30] [SPEAKER_00]: Number one is it's very expensive.

[00:09:32] [SPEAKER_00]: We're talking hundreds of millions or billions of dollars for an automation project.

[00:09:36] [SPEAKER_00]: So, you know, for many companies, that's just not possible for them.

[00:09:41] [SPEAKER_00]: On top of that, if you think of a port not as a single entity,

[00:09:46] [SPEAKER_00]: but almost like an airport with a number of different terminals at,

[00:09:50] [SPEAKER_00]: it's each of the terminal operators that have to decide if they can or want to implement automation.

[00:09:58] [SPEAKER_00]: And what a lot of the terminal operators will tell you is that either the size of the land

[00:10:04] [SPEAKER_00]: or the shape of the land that they operate on just isn't a good fit for automation.

[00:10:08] [SPEAKER_00]: And that only a small number of ports and only a small number of terminals within those ports

[00:10:14] [SPEAKER_00]: are the best fit for automation.

[00:10:17] [SPEAKER_00]: But also, those are the ones that really, really need it.

[00:10:21] [SPEAKER_00]: Because if they can only process 2 million containers a year right now,

[00:10:25] [SPEAKER_00]: but the U.S. is importing 4, 5, 6 percent more containers every year,

[00:10:29] [SPEAKER_00]: those are the ones that need to be able to basically double their capacity.

[00:10:35] [SPEAKER_02]: I want to talk about the human impact.

[00:10:37] [SPEAKER_02]: You know, you often hear that automation will cut jobs in the short term,

[00:10:41] [SPEAKER_02]: but add new ones in the long run.

[00:10:43] [SPEAKER_02]: Now, how does this argument about adding new jobs shake out when we're talking about dock worker jobs?

[00:10:49] [SPEAKER_00]: The unions are pretty much opposed to automation.

[00:10:52] [SPEAKER_00]: The employers say that there are a number of benefits to automation.

[00:10:56] [SPEAKER_00]: One of them is safety.

[00:10:58] [SPEAKER_00]: Then on top of that, of course, it creates whole new swaths of jobs on the docks.

[00:11:03] [SPEAKER_00]: So if you have more robots and autonomous vehicles and autonomous cranes,

[00:11:07] [SPEAKER_00]: you need people who can service and maintain and upgrade that equipment.

[00:11:12] [SPEAKER_00]: According to the executives I've spoken to,

[00:11:15] [SPEAKER_00]: they say that those jobs can be even better paying than the ones the dock workers currently have.

[00:11:20] [SPEAKER_02]: What does the ILA, the union that represents dock workers on the East Coast,

[00:11:24] [SPEAKER_02]: say about that, the prospect that new jobs will be created with automation?

[00:11:29] [SPEAKER_00]: By and large, most of the automation that we've seen in the United States so far

[00:11:35] [SPEAKER_00]: has been implemented on the West Coast.

[00:11:37] [SPEAKER_00]: So they look at the West Coast, they see what's happening there,

[00:11:41] [SPEAKER_00]: and they don't like the look of it.

[00:11:43] [SPEAKER_00]: And so they're basically drawing a line in the sand here,

[00:11:45] [SPEAKER_00]: and they're saying, we're not going to allow any of it.

[00:11:49] [SPEAKER_00]: It's going to be interesting over the next few months to see how that plays out,

[00:11:53] [SPEAKER_00]: because the dock workers just won a tentative deal for a very, very large pay increase of almost 62%.

[00:12:00] [SPEAKER_00]: My understanding from talking to people familiar with the negotiations

[00:12:05] [SPEAKER_00]: is that wage offer has been made on condition

[00:12:08] [SPEAKER_00]: that the dock workers allow some kind of productivity and efficiency gains,

[00:12:13] [SPEAKER_00]: which basically is code for automation.

[00:12:17] [SPEAKER_02]: All right, that was our reporter, Paul Berger.

[00:12:18] [SPEAKER_02]: And that's it for Tech News Briefing.

[00:12:21] [SPEAKER_02]: Today's show was produced by Julie Chang with supervising producer Catherine Millsop

[00:12:26] [SPEAKER_02]: and deputy editor Scott Salloway.

[00:12:28] [SPEAKER_02]: I'm Zoe Thomas for The Wall Street Journal.

[00:12:31] [SPEAKER_02]: We'll be back this afternoon with TNB Tech Minute.

[00:12:34] [SPEAKER_02]: Thanks for listening.