The Zhitong Finance App learned that Waymo, a subsidiary of US tech giant Google (GOOGL.US), announced earlier this month that it plans to begin testing autonomous taxis in Tokyo, Japan in early 2025. This is the first step for the company to expand into the international market. However, Bloomberg columnist Catherine Thorbecke believes that Waymo's autonomous vehicle tests should be carried out outside of Tokyo.

Thorbecke said autonomous vehicles will face technical difficulties when operating in densely populated urban areas. But autonomous cars can have a place in Japan. As the population ages and the Japanese government prioritizes addressing labor shortages, driverless technology has great potential. Thorbecke said Waymo could start by providing services to rural communities. Waymo's autonomous vehicles will operate more easily in these sparsely populated regions, while also filling gaps in public transportation.

Waymo is wise to slow down in Tokyo. The company said it currently has no plans to serve customers in Tokyo, but is working closely with local taxi giant Japan Transport and ride-hailing app GO to prepare for testing its Jaguar I-PACE autonomous vehicle on the streets of Tokyo. Initially, these cars will be operated by taxi drivers manually to map areas such as Minato, Shinjuku, and Shibuya.

Waymo's ride-hailing service currently operates in Phoenix, San Francisco, and parts of Los Angeles. Even Los Angeles, which has the largest population of any of these US cities (population less than 4 million), is hard to compare to Tokyo, which has 14 million residents. Introducing Waymo vehicles to small and medium-sized cities in Japan will provide a more comparable testing ground for their first international tests.

Thorbecke remains cautiously optimistic about the future of autonomous vehicles, despite the fact that the technology is sometimes criticized, and industry executives such as Elon Musk have repeatedly failed to promise when it will be realized. In theory, autonomous taxis seem like the ideal choice in Japan. However, the industry faces a series of obstacles both at home and abroad, leaving Waymo with little room for error when entering Japan.

GM announced earlier this month that it would discontinue Cruise's autonomous taxi business due to excessive development costs. Meanwhile, its partner Honda Motor Japan also announced that it will stop funding Cruise. Honda previously revealed that it plans to deploy an autonomous vehicle in central Tokyo by 2026, but later postponed that schedule.

In the US, collisions and safety accidents involving driverless cars tend to be national news, but Waymo's current safety data shows that autonomous cars are safer than human-driven cars. Globally, driving while texting or drunk driving is the most common cause of traffic accidents. But building public trust will take time. At a time when developing autonomous taxi technology is already difficult and expensive, a high-profile accident could have a devastating impact on a company's ambition and reputation. Japan has historically taken a particularly cautious approach to emerging technologies.

Despite the shortage of taxi drivers, even non-autonomous ride-hailing companies like Uber are facing challenges in the regulatory environment in Japan. Currently, Uber can only connect customers with taxi drivers. However, Uber Eats, the takeout division of Uber, successfully cooperated closely with local businesses and stakeholders to integrate into the Japanese market and meet consumer needs.

Thorbecke emphasized that Waymo can also fill these gaps by meeting the needs of local residents and working closely with policy makers. It can start in rural and semi-rural areas, where residents need to replace dwindling public transportation services. These regions may not be the big cities Waymo is looking for, but they may present unexpected surprises.