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For those not in/near the automotive industry, this is very interesting for several reasons: 1) With this move, Alphabet is basically saying they a) don't want

For those not in/near the automotive industry, this is very interesting for several reasons: 1) With this move, Alphabet is basically saying they a) don't want to continue funding the autonomous moonshot on their own, and b) want some partners to come on board for various reasons 2) $2.25B is a big round, and speaks to the level of confidence in Waymo as well as the massive cost to get to market 3) Magna is effectively an outsourced automotive production company. You can give them a vehicle design spec and they will spin up a production line to make it for you. This points to the possibility of Waymo stepping outside the "buy from an OEM and retrofit" plan, or of outsourcing the retrofit entirely to Magna for scale at some point 4) AutoNation is also an interesting investor here given that they are effectively an OEM-agnostic dealership network and they have a pretty strong fleet sales arm. This is another indicator that Waymo might be looking to sidestep the traditional OEM channels entirely.

subsubzero 7y ago
I feel like with Google, once something gets into the hardware/infrastructure space and needs support, large amounts of money(they have 121.2 billion in cash!) and any bit of customer service they get lazy and either shut it down or try to have others do the heavy lifting/hard work. Shuttered: - Google glass - Google fiber(mostly shut down) - Google Express Given this its not surprising that a majority of their workforce is contractors.
rsp1984 7y ago
1) With this move, Alphabet is basically saying they a) don't want to continue funding the autonomous moonshot on their own, and b) want some partners to come on board for various reasons They need external investors to provide validation to the business and its valuation. Those $2.25B would have been a piece of cake for Alphabet (sitting on > $100B in cash). But if it is Alphabet that's funding Waymo, everyone else (and in particular Alphabet investors) are left to guess what a fair valuation for Waymo would be.
- xmprt 7y ago
  Potentially also trying to take funding away from other self-driving tech companies?
- mxschumacher 7y ago
  Just because they have the money, doesn't mean they would take any deal. Think of all the companies they could buy with a $100bn+; they prefer to hold cash at -2% real return. Expected returns are the crucial factor here. Alphabet is sharing risks, waiting for better opportunities to deploy the cash. There's a realization that beating services like Uber and Lyft on cost per ride (to undercut on price) will be hard and require significant capital without a clear path to sustained profitability. The economics aren't hard to understand: You can either pay one person (out of a - growing- pool of tens of millions of willing drivers) ~$15 an hour (depending on geography) in a $20k car or you can pay very little per hour in a 250k for the car + a gigantic engineering team + compute infrastructure. It can make sense on a large scale, but it'll be hard to do. Alphabet is sitting on a golden goose: their ad & search business (and the network they've built around that) is the perfect monopoly. Close to unbreakable and getting stronger over time (you won't be able to build a better search engine than Google unless you have as much data as Google). Why would they dilute their superb EBIT margins, rapid growth and extreme salability with the low-margin, ultra-high competition ride-sharing market? Think of paying a driver as renting compute on a extremely capable vision processing, decision making, robotic driver that costs you very little. As unemployment (eventually) increases again, the market will be flooded with unbelievable amounts of idle human minds. There's a general theme here: It's not enough to teach a computer to do something as good as a human, you have to undercut on price as well. For this reason, I believe that hair dressers have less to fear from automation than Radiologists. The "we need to sell to a third party so that our shareholders can figure out the valuation of this division"-argument is mute because it isn't applied to the countless other parts of Alphabet (or any other company). E.g. Youtube and Google Cloud can be valued based on financial data given to the SEC, though I admit, sometimes spinoffs do unlock value.
  - jnathsf 7y ago
    Mute or moot? I thought it was moot
BigBubbleButt 7y ago
> 2) $2.25B is a big round, and speaks to the level of confidence in Waymo as well as the massive cost to get to market It's a lot of money, but self-driving cars are notoriously overhyped. As someone who used to work in the industry and has worked at more than one of the "top" companies (Waymo, Zoox, Cruise, Argo, Nuro, etcetera), you don't have to talk to many engineers to realize there is a looooong way to go before a meaningful product is ready for market. I'm not saying it'll never happen, but it's not going to happen before my kid is old enough to drive - and I don't have a kid yet. Before people bring up "we overestimate 1 year out and underestimate 10 years out," I was actually working on self-driving cars over a decade ago.
- immy 7y ago
  Your decade of experience doesn't support your projection. 10 years ago, AI didn't show a clear path toward meaningful products either. IMO product innovation isn't on a curve, it's a staircase.
  - outworlder 7y ago
    > 10 years ago, AI didn't show a clear path toward meaningful products either That's not entirely correct. It's just that, as techniques become mainstream, they tend to fall out of what's considered to be "AI". As an example, speech recognition used to be firmly in the AI camp. Now that it is commonplace, it is only ever mentioned in the AI context if it is paired with ML. Regardless, there are lots of useful products using that technology. Same goes for many others.
- tim333 7y ago
  People underestimate how the exponential improvements in computing hardware creep up though. It's like computers were rubbish at facial recognition, chess, go and the like for years until suddenly they were not.
- bryanlarsen 7y ago
  Waymo is already doing rides without a safety driver to passengers who have signed their NDA. Which means they're confident of their behaviour on some really difficult problems, like pedestrians. Sure, it'll be at least a decade (if ever) before they can do everything a human driver can do, but a "meaningful product" they pretty much already have. They don't have to support driving in blizzards or on unmapped roads to be a meaningful product. Uber is useful even though it's only available in large Metro areas, Waymo can be a meaningful product even if it doesn't work in many places.
bryanlarsen 7y ago
Magna builds the Jaguar iPace and the Toyota Supra and several others. Definitely the obvious partner for a Google branded car.
- notatoad 7y ago
  Magna also builds individual components for countless other cars. They could just as easily be onboard as a parts supplier for some sensor hardware or onboard computer componentry.
williamDafoe 7y ago
It may be spelled Alphabet but it's pronounced Awfulbet.
Animats 7y ago
Waymo has been spending about a billion dollars a year, with zero revenue. Over 15 years ago, I had an entry in the DARPA Grand Challenge. I never dreamed that 15 year later, after all parties had spent about $18 billion, the self-driving industry would be at zero revenue.
- Fricken 7y ago
  Waymo one has been charging for rides. It's chump change, but technically they do collect revenue.
- jpm_sd 7y ago
  This one claims "200,000 revenue-generating rides" https://www.latimes.com/business/story/2020-02-17/self-driving-startups https://www.latimes.com/business/story/2020-02-17/self-drivi... I think if you said "zero profit" you'd undoubtedly be correct
  - techlover14159 7y ago
    That "revenue" is a rounding error compared to investment in fully autonomous technology. I am fairly confident that revenue will still be a rounding error in the next 3-5 years. Investors are betting on a really long game here. This is another indicator of capital being really cheap in the current environment.
  - Animats 7y ago
    "revealing a safety driver..." If it has a "safety driver", it's not self-driving. No cost advantage.
- deleted 7y ago
  [deleted]
rajnathani 7y ago
Another noteworthy point about Magna, from their Wikipedia page [0] it states that they've previously partnered with a LIDAR company: > It partnered with Innoviz Technologies to produce solid-state lidar for autonomous vehicles for BMW Group. Also an interesting note cited from 2018 on their Wikipedia page: > it introduced an Icon radar system to help automakers reach Level 5 autonomy as well as automatic emergency braking systems. [0] https://en.wikipedia.org/wiki/Magna_International https://en.wikipedia.org/wiki/Magna_International

subsubzero 7y ago

I feel like with Google, once something gets into the hardware/infrastructure space and needs support, large amounts of money(they have 121.2 billion in cash!) and any bit of customer service they get lazy and either shut it down or try to have others do the heavy lifting/hard work. Shuttered: - Google glass - Google fiber(mostly shut down) - Google Express Given this its not surprising that a majority of their workforce is contractors.

rsp1984 7y ago

1) With this move, Alphabet is basically saying they a) don't want to continue funding the autonomous moonshot on their own, and b) want some partners to come on board for various reasons They need external investors to provide validation to the business and its valuation. Those $2.25B would have been a piece of cake for Alphabet (sitting on > $100B in cash). But if it is Alphabet that's funding Waymo, everyone else (and in particular Alphabet investors) are left to guess what a fair valuation for Waymo would be.

xmprt 7y ago
Potentially also trying to take funding away from other self-driving tech companies?
mxschumacher 7y ago
Just because they have the money, doesn't mean they would take any deal. Think of all the companies they could buy with a $100bn+; they prefer to hold cash at -2% real return. Expected returns are the crucial factor here. Alphabet is sharing risks, waiting for better opportunities to deploy the cash. There's a realization that beating services like Uber and Lyft on cost per ride (to undercut on price) will be hard and require significant capital without a clear path to sustained profitability. The economics aren't hard to understand: You can either pay one person (out of a - growing- pool of tens of millions of willing drivers) ~$15 an hour (depending on geography) in a $20k car or you can pay very little per hour in a 250k for the car + a gigantic engineering team + compute infrastructure. It can make sense on a large scale, but it'll be hard to do. Alphabet is sitting on a golden goose: their ad & search business (and the network they've built around that) is the perfect monopoly. Close to unbreakable and getting stronger over time (you won't be able to build a better search engine than Google unless you have as much data as Google). Why would they dilute their superb EBIT margins, rapid growth and extreme salability with the low-margin, ultra-high competition ride-sharing market? Think of paying a driver as renting compute on a extremely capable vision processing, decision making, robotic driver that costs you very little. As unemployment (eventually) increases again, the market will be flooded with unbelievable amounts of idle human minds. There's a general theme here: It's not enough to teach a computer to do something as good as a human, you have to undercut on price as well. For this reason, I believe that hair dressers have less to fear from automation than Radiologists. The "we need to sell to a third party so that our shareholders can figure out the valuation of this division"-argument is mute because it isn't applied to the countless other parts of Alphabet (or any other company). E.g. Youtube and Google Cloud can be valued based on financial data given to the SEC, though I admit, sometimes spinoffs do unlock value.
- jnathsf 7y ago
  Mute or moot? I thought it was moot

BigBubbleButt 7y ago

> 2) $2.25B is a big round, and speaks to the level of confidence in Waymo as well as the massive cost to get to market It's a lot of money, but self-driving cars are notoriously overhyped. As someone who used to work in the industry and has worked at more than one of the "top" companies (Waymo, Zoox, Cruise, Argo, Nuro, etcetera), you don't have to talk to many engineers to realize there is a looooong way to go before a meaningful product is ready for market. I'm not saying it'll never happen, but it's not going to happen before my kid is old enough to drive - and I don't have a kid yet. Before people bring up "we overestimate 1 year out and underestimate 10 years out," I was actually working on self-driving cars over a decade ago.

immy 7y ago
Your decade of experience doesn't support your projection. 10 years ago, AI didn't show a clear path toward meaningful products either. IMO product innovation isn't on a curve, it's a staircase.
- outworlder 7y ago
  > 10 years ago, AI didn't show a clear path toward meaningful products either That's not entirely correct. It's just that, as techniques become mainstream, they tend to fall out of what's considered to be "AI". As an example, speech recognition used to be firmly in the AI camp. Now that it is commonplace, it is only ever mentioned in the AI context if it is paired with ML. Regardless, there are lots of useful products using that technology. Same goes for many others.
tim333 7y ago
People underestimate how the exponential improvements in computing hardware creep up though. It's like computers were rubbish at facial recognition, chess, go and the like for years until suddenly they were not.
bryanlarsen 7y ago
Waymo is already doing rides without a safety driver to passengers who have signed their NDA. Which means they're confident of their behaviour on some really difficult problems, like pedestrians. Sure, it'll be at least a decade (if ever) before they can do everything a human driver can do, but a "meaningful product" they pretty much already have. They don't have to support driving in blizzards or on unmapped roads to be a meaningful product. Uber is useful even though it's only available in large Metro areas, Waymo can be a meaningful product even if it doesn't work in many places.

bryanlarsen 7y ago

Magna builds the Jaguar iPace and the Toyota Supra and several others. Definitely the obvious partner for a Google branded car.

notatoad 7y ago
Magna also builds individual components for countless other cars. They could just as easily be onboard as a parts supplier for some sensor hardware or onboard computer componentry.

williamDafoe 7y ago

It may be spelled Alphabet but it's pronounced Awfulbet.

Animats 7y ago

Waymo has been spending about a billion dollars a year, with zero revenue. Over 15 years ago, I had an entry in the DARPA Grand Challenge. I never dreamed that 15 year later, after all parties had spent about $18 billion, the self-driving industry would be at zero revenue.

Fricken 7y ago
Waymo one has been charging for rides. It's chump change, but technically they do collect revenue.
jpm_sd 7y ago
This one claims "200,000 revenue-generating rides" https://www.latimes.com/business/story/2020-02-17/self-driving-startups https://www.latimes.com/business/story/2020-02-17/self-drivi... I think if you said "zero profit" you'd undoubtedly be correct
- techlover14159 7y ago
  That "revenue" is a rounding error compared to investment in fully autonomous technology. I am fairly confident that revenue will still be a rounding error in the next 3-5 years. Investors are betting on a really long game here. This is another indicator of capital being really cheap in the current environment.
- Animats 7y ago
  "revealing a safety driver..." If it has a "safety driver", it's not self-driving. No cost advantage.
deleted 7y ago
[deleted]

rajnathani 7y ago

Another noteworthy point about Magna, from their Wikipedia page [0] it states that they've previously partnered with a LIDAR company: > It partnered with Innoviz Technologies to produce solid-state lidar for autonomous vehicles for BMW Group. Also an interesting note cited from 2018 on their Wikipedia page: > it introduced an Icon radar system to help automakers reach Level 5 autonomy as well as automatic emergency braking systems. [0] https://en.wikipedia.org/wiki/Magna_International https://en.wikipedia.org/wiki/Magna_International