Alphabet to invest another $5B into Waymo
techcrunch.com
techcrunch.com
They also don't seem to have any real competition right now. Cruise kind of self destructed and it came out today that GM is scrapping plans to build their 'Origin' robotaxis [2]. Tesla pushed out its robotaxi reveal and going by their track record, it won't exist for a long time (they are also nowhere close to doing fully autonomous rides [3], so there's that).
Fully deserved, IMO. It's interesting how this funding round doesn't include external investors, but the previous two did. What's the calculation by Alphabet here?
[1] https://techcrunch.com/2024/07/23/the-waymo-zeekr-robotaxi-h...
[2] https://techcrunch.com/2024/07/23/gms-cruise-abandons-origin...
Wear and tear will be reduced with an all-electric drivetrain, which is uncommon for Ubers outside of California.
Costs will be further reduced by bulk maintenance and solar charging.
Autonomous vehicles will also have extremely high utilization rates since they can run 24 hours a day, versus a cab or Uber vehicle which sits idle, losing money.
You’re right about the benefits of bulk maintenance, although I’m skeptical that a taxi operator will be able to pull off pure solar charging - typical electric car batteries are on the order of 40-60kWh, which is about what an average home uses in a day or two. Scale that up to a reasonably-sized fleet of electric vehicles, and I suspect any fleet operator will be buying their juice.
The utilization rate on the vehicles will be interesting - browsing around a bit looks like an average cab runs between 70-100k miles per year (the car, not the driver - most taxis run multiple shifts), so call it ~200-300mi per day, so they ought to be able to make it the whole day on a single charge.
Once you own the vehicle, though, it’s pay per use - as you note, if you’re not planning to sell it, it’s not really losing money sitting around. It’s not making money, but it’s also not incurring costs from operation.
Depreciation is replacement cost smoothed out. If a business is unprofitable after depreciation it cannot organically replace its capital equipment.
That said, I’m sceptical of the Uber and Lyft being unprofitable for drivers after depreciation. Doubly so in the cities Waymo targets.
I wonder how does the higher utilization affect costs. For example, if you have a car that can last 400k miles, how much do you save if you finance it for 2 years vs for 6 years?
One thing to consider is that there's miles-driven depreciation and time depreciation. Time depreciation means that the vehicle loses value over time even if you don't use it. A brand new Waymo Chrysler Pacifica will have much less value in 20 years than today.
Math doesn't work out there.
You need N number of vehicles to give good service (low wait times) during peak hours and special events, and a much smaller number of vehicles the rest of the time.
Only a small portion of a fleet will need to run 24/7.
Now that said, they can cycle vehicles in and out of 24 hour shifts to spread the wear and tear more evenly across the fleet, assuming there is a benefit to doing that.
Vehicle lifetime: 400,000 miles
Upper bound vehicle cost: $100,000 (though I expect Zeekr to manufacture it for way less)
Cost: $0.25 per mile
There’s room for margin compared to Uber since they can take advantage of economies of scale (high utilization, centralized operations/maintenance and so on).
I had $0.25/mi for vehicles, 0.14 for labor costs (remote and road-side assistance, charging, cleaning, management, etc.), 0.05 electricity, 0.05 for buildings and parking lots, 0.025 vehicle maintenance and insurance. That's 0.52 in total. Assuming 75% miles are paid, the cost per paid mile is $0.7.
I can imagine significant economies of scale, e.g. 20% cost reduction for each doubling of deployment, so maybe $0.1 after a few decades?
I know it wouldn't be enormous, and probably zero savings on maintenance. But perhaps you could save 25 percent all told?
Prediction: Google/Waymo will buy the smallest, yet capable, manufacturer of vehicles (electric or not), and vertically integrate.
* The first one, the driver made multiple racist remarks about different groups he observed as we drove.
* The second one, the driver talked at length about UFOs and how they are real, for the entire 50 minute drive.
Most drivers are totally normal and don't do things like that, but the tail end of negative experiences can be quite bad. Dirty cars, loud radios, body odor, and unsafe driving are all relatively common with human drivers. A Lyft driver I was riding with a few years back almost ran over a man in a wheelchair who had the right of way.
Wait times are also more reliable so far with Waymo. It's not uncommon for an Uber/Lyft driver to accept a ride but then not drive toward you for 5+ minutes. Waymo has the advantage of predictability - both in terms of arrival time and overall travel time (whereas there is variance among human drivers).
Sometimes I've had Waymos get stuck, but it usually resolves within 10-15 seconds.
Given how smooth, predictable, and safe Waymos are, I don't see a strong reason to risk a negative experience with a human driver (beyond ideological reasons). However, I hope another strong provider comes on the market soon to give them some competition.
Uber and Lyft MUST be hurting in SF.
Personally have switched to Waymo, most people I know have switched to Waymo. Find that it's induced a lot of personal demand. I'd rather wait a little longer and have a safe, comfortable ride, than drive in SF myself, circle around trying to find parking, and then be worried about my window being smashed, etc.
Trapped in a small space with sometimes psychotic, violent, smelly, modestly insane people. Somehow the proponents of public transport haven't figured out that's undesirable. It's not at all remotely worth the risks, unless you have no other good options.
Many Americans, like myself, are ok with being around people in a city. But you're right that there is a group of fearful suburbanites who would rather sit in isolation miles away from the cities they drive to than risk catching a whiff of B.O.
Perhaps it could trigger some other reflections?
I've been watching Cruise fleet vehicles drive around in Phoenix, so maybe eventually they'll gain some ground again.
Waymo uses their own in-house lidar units as far as I know, but otherwise, it's a good time to be Ouster. VLP-16's cost about $5,000/unit right now.
Meat-based drivers must be continually paid and don’t get any cheaper over time.
How do you figure?
In any case, Waymo is presently positioned as a premium product. That looks likely to remain true for at least half a decade.
Those custom hardware costs and software maintenance costs should continue to reduce gradually as it is being commoditized.
The profit Uber make and the salary the drivers draw should eventually become the margin buffer/profit Google is able to extract.
They’re making 50,000+ rides per week already, with a very limited rollout.
They only have to match the cost and convenience of Uber in order to utterly dominate the market.
Once they fully solve self driving, which they inch ever closer towards doing, they can focus on cost reductions. Given that they don’t have to pay drivers, the potential profit margin is incredible.
They will be fully uncontested soon. The only possible competition is Tesla, which has very impressive models, but is still far away from deploying actual robotaxis.
I wish I could invest.
Yeah, they don't pay drivers, but their cars' hardware costs mean that they won't break even with human-driven taxis for quite some time (unless they manage to decentralise the computing).
To put some rough numbers to this, the sensor set in each car, is probably ~$75K (was initially $150K).
What is waymo's valuation? How much has alphabet invested in waymo? $10 billion? What could they sell it off for today? $30 billion? More? What would the ROI be?
> when treasury bonds return almost 5%
And yet alphabet invests in waymo? I wonder why? Oh that's right. Alphabet created waymo as tax write off scheme. Absolute genius.
It's insane how ingnorant hn commentors are when it comes to finance, investment and technology. Every earnings and every financial news, it's the most ignorant who rant about nonsense confidently. But then again, according to the geniuses of hn, tesla, meta, bitcoin, etc would have imploded years ago.
I'll help you out since you don't read, a normal P/E is 20-30. To say it is not a great financial investment is unequivocal. It is effectively a write-off for the foreseeable future.
But that is not to say you shouldn't invest in difficult problems and try to solve them, even if they don't make money. This is one of them. I hope people do the same for other challenging problems.
Tesla for example had a P/E ratio of 1000 two years ago. Okay it's still potentially overvalued and the share price has declined but their P/E ratio has dropped dramatically.
Granted, it's "over the next few years".
“Alphabet _has to_ invest another $5B into Waymo”.
I’d like to remind everyone that it’s still a taxi business with taxi margins (best case).
But there's still not too much margin when the driver needs some comp.
Waymo, on the flip side, has a lot of capital equipment added to cars to depreciate, but it's gotten way cheaper and stands to get much cheaper still.
Waymo has clearly been playing the “but it’ll be cheaper” game for a long, long time now. It makes sense if you squint really hard and fudge some numbers about unit economics.
If the expected outcome is for it to be eventually cheaper, then why when I open the app does it costs almost twice as much as an Uber or Lyft? You’d think they would want to at least convince investors and train customers that the savings are real and they’re going to prove it by passing it on.
For me, costs have been comparable to Lyft.
There isn’t a single day that goes by when I’m passing through a station in San Francisco anymore that I don’t see someone (and usually multiple someones) hopping the gates into BART and several times a week I’ll see one of the fare gates to MUNI has been forced open and is out of service. MUNI and BART could probably stave off some of the losses if they just put actual police there to ticket and/or arrest fare evaders, at least when it’s busiest.
At least in New York it’s politically touchy to discuss penalising fare skippers. (Granted, our police are municipal while the subway is state.)
My hope is AVs will reduce car ownership, which in turn reduces the amount of curbside space for required cars (Hopefully AVs can be parked at a few centralised parking lots). In turn this will allow for more bike lanes and bus lanes leading to improved active transport and public transport options.