Seven years ago, hype about self-driving cars was off the charts. It wasn’t just Tesla CEO Elon Musk, who has been making outlandish predictions about self-driving technology since 2015. In 2016, Ford set a goal to start selling cars without steering wheels by 2021. The same year, Lyft predicted that a majority of rides on its network would be autonomous by 2021.

None of that happened. Instead, the last few years have seen brutal consolidation. Uber sold off its self-driving project in 2020 and Lyft shut down its effort in 2021. Then last October Ford and Volkswagen announced they were shutting down their self-driving joint venture called Argo AI.

Today a lot of people view self-driving technology as an expensive failure whose moment has passed. The Wall Street Journal’s Chris Mims argued in 2021 that self-driving cars “could be decades away.” Last year, Bloomberg’s Max Chafkin declared that “self-driving cars are going nowhere.”

But a handful of well-funded projects have continued to plug away at the problem. The leaders are Waymo—formerly the Google self-driving car project—and Cruise, a startup that is majority owned by GM.

These companies don’t believe self-driving technology is “decades away” because they’re already testing it in Phoenix and San Francisco. And they are preparing to launch in additional cities in the coming months. Waymo expects to increase passenger rides 10-fold between now and the summer of 2024. Cruise is aiming for $1 billion dollars of revenue in 2025, which would require something like a 50-fold expansion of its current service.

There is no guarantee they will succeed. Even if they iron out all the technical problems, it will take many years to make these services profitable.

But I think the pendulum of public opinion has now swung too far in the pessimistic direction. Self-driving technology has steadily improved over the last few years, and there’s every reason to expect that progress to continue.

“It’s definitely happening a lot slower than people anticipated back in 2017,” industry analyst Sam Abuelsamid told me. “But that doesn’t mean that there isn’t progress being made.”

“I would not be surprised if by the end of 2025 each of those companies is operating in 10 to 12 cities across the US to varying degrees of scale,” Abuelsamid added.

Alex Roy has had a colorful career. He’s been a rally racer and a journalist. He joined Argo AI in 2019 and stayed until it was shut down last year. Roy now lives in the Phoenix area doing consulting work related to self-driving cars. He also hosts an excellent podcast about the self-driving sector.

In short, Roy knows a lot about cars in general and self-driving cars in particular. And he has nothing but good things to say about Waymo’s driverless taxi service in the Phoenix area.

“I’ve now taken several Waymo rides and they’re exceptionally good,” Roy told me.

When I talked to Roy last Thursday, he had just taken a Waymo ride from the Phoenix airport to his home in Scottsdale. Technically, Waymo cars don’t pick people up at the airport—airport pickup areas are still too chaotic for that—but they do the next best thing, serving two stops along the airport’s fast and free Sky Train.

I also recently talked to Joel Johnson, a Phoenix area college student who has created dozens of YouTube videos of his rides in driverless Waymo vehicles. Johnson told me that Waymo’s service has been steadily improving over the last three years.

A big step came late last year with the debut of Jaguar I-PACE SUVs outfitted with Waymo’s fifth generation hardware. Johnson told me that the new vehicles represented “a huge leap” in performance over Waymo’s previous Chrysler Pacifica minivans and were “measurably better in many respects.”

The new driverless Jaguars were “much smoother and more confident,” Johnson said. An added bonus: whereas the Pacifica’s trunk was filled with computer hardware, the Jaguar’s trunk was empty and available for passenger use.

Earlier this month, Waymo announced it was doubling the size of its Phoenix taxi service to 180 square miles. Waymo also offers driverless rides to a hand-picked group of passengers in San Francisco. And last October, Waymo announced it was preparing to expand to Los Angeles. Overall, the company is aiming to grow the business 10-fold—from 10,000 to 100,000 weekly trips—by the summer of 2024.

For its part, Cruise operates a driverless commercial taxi service in a portion of San Francisco during the overnight hours. Cruise has begun testing a driverless taxi service that operates 24/7 across the city of San Francisco and is now awaiting regulatory approval to open it to paying customers. In the Phoenix area, a small number of driverless Cruise vehicles are providing both taxi rides and Walmart grocery deliveries. Cruise also runs a small driverless taxi service for paying customers in Austin.

Last week Cruise announced it had completed two million driverless miles just three months after reaching one million miles in March. Earlier this month, Cruise announced plans to expand to Dallas and Houston.

This isn’t the first time self-driving companies have announced optimistic growth forecasts. Back in 2018, I wrote about Waymo ordering 62,000 Chrysler Pacificas, a sign that the company thought it was ready for large-scale deployment back in 2018.

Instead, Waymo spent several more years testing its service in a small corner of the Phoenix metro area and didn’t start offering driverless rides to paying customers until 2020. Today its commercial fleet numbers in the hundreds of vehicles—far fewer than 62,000.

Cruise, too, has rolled out its service more slowly than expected. Back in 2018, Cruise was planning to launch a driverless commercial service in 2019. In reality, Cruise didn’t begin driverless operations until 2021 and didn’t start charging for the service until last year.

So are gullible journalists like me about to be disappointed again? It’s possible, but this time feels different. Waymo and Cruise are already running driverless commercial services, so they have a much better idea of what’s required than they did in 2018. I expect to see significant expansion over the next year or two—though it’s certainly possible they won’t meet their aggressive growth targets.

The challenges they’ll face in the next phase of the expansion will be different than those they faced in the past. Until now, Waymo and Cruise have been almost exclusively focusing on safety. Now they need to figure out how to turn a profit—without compromising safety in the process. That won’t be easy, but it seems doable.

On March 18, 2018, a prototype Uber self-driving car slammed into Elaine Herzberg as she walked her bike across a road in Tempe, Arizona. First and foremost, Herzberg’s death was a tragedy for her family. But it was also a catastrophe for Uber’s self-driving project and a turning point for the broader self-driving industry.

Uber’s self-driving division never really recovered from the crash, and Uber sold it off in 2020. The rest of the industry vowed not to repeat Uber’s mistake. This focus on safety explains a lot about the evolution of the industry over the last five years.

During the industry’s early years, every self-driving vehicle had a safety driver behind the wheel. If a car encountered a situation it wasn’t sure it could negotiate safely, it would signal to the driver to take over.

Once cars went fully driverless, this was no longer an option. Instead, when a Waymo or Cruise vehicle encounters a situation it isn’t sure how to handle, it will slow down and stop. Sometimes, the situation will resolve itself and the car can move again on its own. Othe