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Waymo's self-driving technology can make it a $70 billion company

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【Summary】Waymo's self-driving technology can make it a $70 billion company

Original Eric Walz    May 23, 2017 3:43 PM PT
Waymo's self-driving technology can make it a $70 billion company

According to a recent report by Morgan Stanley equity analysts Brian Nowak and Adam Jonas, Waymo may be worth $70 billion. The firm's $70 billion estimate for Waymo comes if they assume Waymo can grow to ~1% of global miles driven by 2030 (based on a fleet of ~3mn cars each driving ~65k miles/year) and that Waymo can generate on average~$1.25 in revenue per mile driven.

Waymo Lyft Partnership

Waymo, Google's self-driving car project, recently announced a partnership with the ridesharing company Lyft, which could be its first step towards becoming a major contributor to Google's overall value.

"We are encouraged by Waymo's new partnership with Lyft as it gives Waymo access to more miles driven - which," write Nowak and Jonas, "is important to building/optimizing the autonomous business and data set." Waymo's partnership with ride-sharing company Lyft will make it a stronger rival of Tesla according to the Morgan Stanley report, as both companies step up investments for growth. Morgan Stanley last week downgraded Tesla to hold on views that well-capitalized companies like Google and Apple could be formidable rivals in autonomous vehicles, although Apple's autonomous car plans are still unknown.

Alphabet should spin off Waymo

The Morgan Stanley report also suggests that Google-parent company Alphabet should spin off Waymo, its autonomous driving subsidiary. The reasoning behind it is that a spinoff would enable Google to deal with the legal risks associated with self-driving cars, according to the report, which also claims Waymo could be worth $70 billion by 2030. Google may not want to bear the burden of legal action against the company stemming from any accidents involving Waymo's self-driving vehicles.

Other Bets

When internet giant Google restructured into tech conglomerate Alphabet in 2015, Waymo was included in the category of "Other Bets" in financial reports along with Google Fiber, life sciences company Verily, and smart home company Nest. Waymo is also Google's most likely spin out from its "other bets," a group of investments the web company has made in different industries such as home automation and mobile hardware, according to Nowak and Jonas.

Waymo was formerly called Google X, has already rebranded itself and carries significant room for growth, making it an enticing spin out candidate.

"Even assuming Waymo's cars are involved in 90% fewer crashes than the average human driven car would still involve 5 per year (roughly 1 every 10 weeks)," wrote Nowak and Jones.

If Waymo can find a way to improve on the Morgan Stanley's modeled revenue of $1.25 per mile and 1% of global miles driven, Nowak and Jonas see a scenario in which the company's value could increase to a staggering $140 billion, which would add roughly 12% to Google's current enterprise value.


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