(The Big Disrupt) Why Google may end up selling Waymo (position rating C-)

Driverless cars have long been promised to be future of how we all get from A to B and no company in the last decade has positioned itself to make good on these promises than Google/Alphabet but a closer look at the company’s self-driving car outfit Waymo and the potential market for level 4 and/or 5 autonomous vehicles suggest Google may cut its losses and start looking for buyers.  

There are a number of reasons why Google may end up selling Waymo but (some of them we’ve covered in the past) but a key reason why Google may end up selling Waymo is quite simple: Google is not a car company. 

We like everybody else a decade ago were caught up in the prospect of self-driving cars revolutionizing how we travel but upon reflection, our initial excitement was tempered as we looked at the huge technical and economic challenges players in the autonomous vehicles space face, challenges that would  test Google’s commitment to bring self-driving cars to market.  

Whether it’s the technical challenge teaching AI enabled cars to negotiate human drivers in dynamic environments or the thin margin of error (mistakes can and have led to injury or death) self-driving cars seemed doomed to development hell outside of the odd test case that keep the technology relevant. However, the most troubling issue that plague the nascent self-driving car industry is the dwindling business case.

Even back in the early to mid 10’s when hopes for self-driving cars where high, the business of self-driving cars didn’t make much sense. Sure, there was a proliferation of potential use cases but the actual business case didn’t make sense because of one simple reason, self-driving cars, in our opinion, has a limited business case because it’s a glorified infrastructure project. self-driving cars have little in the way of product market fit and is only viable when autonomous cars are produced to the point that they become ubiquitous. 

There’s no way Google are going to commit the capital it would take to make this possible and Google know it as it recently for the first time opened Waymo to outside investment and our opinion, won’t be the last. In our opinion, the only way Google doesn’t sell Waymo outright is that come to its senses and commercializes the only thing valuable about Waymo, the technology itself. 

Google is one of greatest companies in history but it’s increasingly looking desperate to find a second pitch as its search ad business is coming under pressure from other players (Amazon and Bytedance) and is now waking up to the face that it can’t shoot for the moon forever while powerful players are slowly but surely bringing it back to earth.  

In sum, While Google will fight hard and do everything to bring driverless cars to market but ultimately the financial and operational commitments the Mountain View based company would have to make will force Google to sell Waymo and focus its efforts elsewhere.