~100M cars are made a year
If 10% of those are self driving, and if they have $1,000 in gross margin due to self driving features, that's $10B a year to cover past R&D. Over 20 years this adds up to $200B. Optimistically, if the tech eventually reaches 80% of new cars and $3,000 margin, then we're talking $4,800 BILLION in profit over 20 years to cover R&D. Waymo is probably spending like $1-$2B/yr right now. Their engineering headcount is not huge, it's like under 1,000 based on a LinkedIn search I did last year.
Really the potential market is so huge that it can justify many many billions spent on R&D. I am relatively bearish on the technology, and doubt it will be commercialized in 10 years, but I still think the investment is justified.
Apologies for the poor writing - typed from my phone. I have more thoughts here: http://www.tedsanders.com/on-self-driving-cars/
This is a common trap novice founders fall into. They see that a market is huge, and simply say "well if we can just get a piece of the pie we'll be great!" It's like saying you only need to take 1% of search from Google. Yes, that is a huge opportunity, but how are you going to do it besides hopes and dreams?
If ~$10 billion invested turned into an actual self-driving technology that could be generalized, it would almost certainly (if competition also develops it you essentially have a commodity and are now in the airline industry where there's a huge moat but the margins are still awful) be worth it. But people are becoming more cognizant that maybe that technology just isn't ready yet and nobody knows when the next breakthrough will occur. Is it possible one of the competing companies already has it and just hasn't shared it? Technically...but I am very confident that right now the state of the art just isn't good enough and the people in charge are naively throwing money at the problem hoping it bears fruit.
I realize the person I am responding to largely shares my opinions on self-driving cars not being ready for prime time yet (I'm familiar with his website), I just wanted to point out a common fallacy that leads people to work on fruitless endeavors. In my opinion an AI winter is coming before self-driving cars are "real" - by which I mean a profitable solution that can be scaled.
Personally I think given the prior that we can achieve self-driving tech, there's a ~75% probability people won't want that tech.
We've seen it so many times before, companies spending $$$ on R&D of some cool new thing and people just go "meh." I don't see a compelling argument for why this won't just join the ranks of 3D-TVs, Google Glass and flying cars.
I think you underestimate what a difference riding in back makes.
Yes, yes, when you drive, you get angry and aggressive. I do too; my observation from taking ride share (I gave away my car and now almost exclusively use the rideshare) is that almost everyone rages out from time to time when they drive.
Sitting in back with a book is such a different experience. "Wow, I used to be like that?" I mean, it seems so weird to see someone get mad about traffic when you haven't taken the wheel for a month yourself.
Edit:
To be sure, if we don't get full level-4; if you still need to be the 'safety driver' and actually pay attention, that's a different thing, and yeah, that's a whole lot less useful.
And to be clear, I am not saying that I think we are close to full level-4. I'm just saying that if we get there? it will be wonderful in ways that weren't obvious to me until I switched from driving to being driven for quite some time.
The potential there is quite remarkable. But it gets even more tempting because of some issues with self driving vehicles. Because of above the the biggest company will not only be able to operate for much cheaper than anybody else, but they'll also be able to offer a better service. They can have more regular cleaning/maintenance, and most importantly you'll be able to get a ride more reliably from them than from any other player and in the widest array of locations.
And consider the lobbying that will inevitably happen. The instant that self driving vehicles can show a higher average safety rating, companies such as Google/Waymo will lobby governments to start banning non-autonomous vehicles in urban areas, "for consumer safety." Pair all of these facts with rapidly declining vehicle ownership among the younger generations. Things could end up changing incredibly rapidly. And whoever ends up on top is going to control what might end up becoming the most profitable business to ever exist. We talked about 10% at a $0.05/mile profit margin. That meager $16 billion is an extremely conservative estimate for a single country.
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And then you get into meta-aspects. Getting from A to B is one of the most important parts of basic modern living. It's hard to even imagine the implications if a single company was able to start gaining some significant degree of control on this aspect of life. And then there's the data. Not only would you know where huge chunks of the population is going to and fro at all times, but you'd also have a massive real time surveillance network of practically all of 'real life' society as each and every vehicle you control would need to be constantly autonomously surveilling everything around it. The possibilities there are mostly dystopic, but that sort of knowledge and power is going to be a major driver here.