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Waymo Raises $2.25 billion in its First-Ever External Investment Round

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【Summary】Waymo, the self-driving division of Parent Alphabet, announced on Monday it raised $2.25 billion in its first ever external funding round. Waymo spun out of Google’s early self-driving car project, which was one of the first efforts to develop self-driving cars over a decade ago.

Eric Walz    Mar 02, 2020 3:30 PM PT
Waymo Raises $2.25 billion in its First-Ever External Investment Round
A self-driving Waymo minivan.

Waymo, the self-driving division of Parent Alphabet, announced on Monday it raised $2.25 billion in its first ever external funding round. Waymo spun out of Google's early self-driving car project, which was one of the first efforts to develop self-driving cars over a decade ago.

In addition to Alphabet, investors include auto parts supplier Magna International, AutoNation Inc, which operates a network of auto dealerships in the U.S., as well as technology investment firm Silver Lake and venture capital firm Andreessen Horowitz.

"We've always approached our mission as a team sport, collaborating with our OEM and supplier partners, our operations partners, and the communities we serve to build and deploy the world's most experienced driver," said John Krafcik, CEO, Waymo in a blog post.

WIth over a decade of experience developing self-driving technology, Waymo is considered an industry leader in a crowded field of automakers and startups working on self-driving cars. 

It seems that Waymo would not need to seek outside funding as a subsidiary of parent Alphabet, which made $46 billion in revenue in the last quarter of 2019.

However, although Waymo is part of parent Alphabet, it operates independently along with other "moonshot" projects DeepMind, Project Loon and X (formally Google X). Google officially became Alphabet in Oct 2015 after its corporate restructuring and Alphabet is divided into two main units, Google and "Other Bets." Waymo is a part of the company's Other Bets and each division of Alphabet has its own CEO.

The company's fleet of driverless vehicles have traveled over 20 million miles on public roads, a milestone it reached in January. Waymo's software is also being refined by driving billions of miles in computer simulation created from real world data collected by Waymo's fleet.

The company aims to be the first to deploy self-driving cars commercially.

Waymo plans to launch a ride-hailing service called Waymo One using a fleet of autonomous vehicles to pick up passengers. The company is testing its technology on public roads in Arizona, Michigan, Florida and California. Some of Waymo's vehicles in Arizona are already picking up riders without safety drivers behind the wheel. The Waymo One service has already provided thousands of fully driverless rides to early riders in Arizona.

"Waymo is the proven leader in self-driving technology, is the only autonomous vehicle company with a public ride-hailing service, and is successfully scaling its fully driverless experience," said Egon Durban, Co-CEO, Silver Lake, and nominee for Waymo's Operating Board. "We're deeply aligned with Waymo's commitment to making our roads safer, and look forward to working together to help advance and scale the Waymo Driver in the U.S. and beyond."

Last September, investment bank Morgan Stanley slashed its projected valuation of Waymo 40% to $105 million from its earlier estimate of $175 million, saying the commercialization of self-driving vehicles and technology was taking longer than expected. Waymo is also hampered by the lack of a regulatory framework for deploying its self-driving vehicles on public roads.

In addition to developing self-driving cars and a commercial robotaxi service, Waymo is developing driverless trucks for the shipping industry. The company also announced today its new shipping service called Waymo Via, which is focused on all forms of goods delivery. Waymo is already busy mapping highways in Arizona, New Mexico and Texas for its long-haul autonomous trucks.

"We're opening up routes along the I-10 corridor connecting Arizona, New Mexico and Texas with our class 8 trucks," Krafcik said to CNBC.

Waymo said it will use the new investment to hire more employees, as well as further investments in self-driving technology and global operations.

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