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It's very difficult for me to see how Waymo could actually become a profitable company. Trying to be an actual taxi company (using custom low volume, high cost

It's very difficult for me to see how Waymo could actually become a profitable company. Trying to be an actual taxi company (using custom low volume, high cost cars) seems capital intensive and low profit-margin (you're competing against every other form of transportation, along with uber and lyft with their low-paid employees that provide their own cars), and it seems like the number of major car companies that could license their software is rapidly falling (Tesla and GM definitely have their own in-house competitors, and other major car companies probably do as well). So how do they actually make money? They're billions of dollars into this project, and it just seems like they've missed their market window.

toast0 4y ago
> It's very difficult for me to see how Waymo could actually become a profitable company. Patent licensing or military contracts. Almost certainly not from running a taxi service.
lantry 4y ago
maybe the taxi service is just a way to gather more data, a stepping stone to a bigger market? I agree though, licensing it doesn't seem like it'll be enough, and idk what else they could be going for. Maybe last-mile delivery? Maybe they think conquering self-driving will help unlock AGI? or maybe they don't really have a plan for monetization yet
martindbp 4y ago
In the short to medium term they will keep bleeding cash, but in the long term as they scale, hardware and other costs will go down considerably. They will not only replace taxis but increase them by some factor, 10x? 100x? Who knows where the limit is when hardware, electricity and cleaning are the only marginal costs. That said I think self-driving ADAS subscriptions for personal vehicles is and will generate most of the profit in this space. By any measure Tesla's FSD is already profitable to the tune of $1+ billion a year, and it's not even widely released yet.
fshbbdssbbgdd 4y ago
> and it seems like the number of major car companies that could license their software is rapidly falling (Tesla and GM definitely have their own in-house competitors, and other major car companies probably do as well). So how do they actually make money? They're billions of dollars into this project, and it just seems like they've missed their market window. I think this argument answers itself. If you’re the only company with this technology, you get to license it to everyone. If you are the tenth company, you will have a hard time finding licensees, so why bother spending the billions? If it really costs so much to develop, the equilibrium is for only a few entities to make that investment and sell it to everyone else.
dehrmann 4y ago
If a car's life is 150,000 miles, averages 30 mph in the city, that's 5,000 hours of life. If the driver expects to make $20 per hour, you just have to keep the hardware to under $100,000. Even dividing that by 2 to account for unknowns and work the driver would otherwise do, there's a clear path to profitability once the volumes increase.
- pengaru 4y ago
  And this isn't even considering the obvious revenue stream opportunities an Alphabet company is ideally positioned to leverage from such a captive-on-our-conveyor audience.
- martindbp 4y ago
  EVs are expected to have a longer life than ICE, upwards of a million miles. That's why robotaxis and EVs are mutually reinforcing technologies, both together has the potential to be extremely profitable.
- lost_tourist 4y ago
  My regular ICE engine car has 200k miles on it and it still running fine. I don't know why this cars won't get triple that, and they don't have drivers ($20 an hour not necessary)
- mechagodzilla 4y ago
  But take Uber and Lyft for example - their drivers probably net well under $20/hr, and more importantly, both of those companies have been bleeding money for their entire existence. Now imagine we’re in a world where lots of people are actually willing to pay for rides in self-driving cars, and there is profit to be made - Tesla and GM and all the other car companies with lots of experience making millions of cars per year reliably and cheaply, and with their own self-driving capabilities in-house, are now competing with Waymo. Waymo doesn’t seem like they have a big competitive advantage in self-driving technology, car manufacturing or general transportation services - so where are their billions in future profit going to come from?
  - 4y ago
pengaru 4y ago
> It's very difficult for me to see how Waymo could actually become a profitable company. If the autonomy is consistently safe and reliable, profitability will be trivial. I don't think you've tried very hard.
peatmoss 4y ago
The average car sits around doing nothing except depreciate in value > 90% of the time. We spend enormous amounts on our cars. The opportunity frontier here is huge. This doesn't solve society's demand for mobility at peak travel times, but I could see "Better Lyft / Uber without labor costs" as a viable business very easily.

toast0 4y ago

> It's very difficult for me to see how Waymo could actually become a profitable company. Patent licensing or military contracts. Almost certainly not from running a taxi service.

lantry 4y ago

maybe the taxi service is just a way to gather more data, a stepping stone to a bigger market? I agree though, licensing it doesn't seem like it'll be enough, and idk what else they could be going for. Maybe last-mile delivery? Maybe they think conquering self-driving will help unlock AGI? or maybe they don't really have a plan for monetization yet

martindbp 4y ago

In the short to medium term they will keep bleeding cash, but in the long term as they scale, hardware and other costs will go down considerably. They will not only replace taxis but increase them by some factor, 10x? 100x? Who knows where the limit is when hardware, electricity and cleaning are the only marginal costs. That said I think self-driving ADAS subscriptions for personal vehicles is and will generate most of the profit in this space. By any measure Tesla's FSD is already profitable to the tune of $1+ billion a year, and it's not even widely released yet.

fshbbdssbbgdd 4y ago

> and it seems like the number of major car companies that could license their software is rapidly falling (Tesla and GM definitely have their own in-house competitors, and other major car companies probably do as well). So how do they actually make money? They're billions of dollars into this project, and it just seems like they've missed their market window. I think this argument answers itself. If you’re the only company with this technology, you get to license it to everyone. If you are the tenth company, you will have a hard time finding licensees, so why bother spending the billions? If it really costs so much to develop, the equilibrium is for only a few entities to make that investment and sell it to everyone else.

dehrmann 4y ago

If a car's life is 150,000 miles, averages 30 mph in the city, that's 5,000 hours of life. If the driver expects to make $20 per hour, you just have to keep the hardware to under $100,000. Even dividing that by 2 to account for unknowns and work the driver would otherwise do, there's a clear path to profitability once the volumes increase.

pengaru 4y ago
And this isn't even considering the obvious revenue stream opportunities an Alphabet company is ideally positioned to leverage from such a captive-on-our-conveyor audience.
martindbp 4y ago
EVs are expected to have a longer life than ICE, upwards of a million miles. That's why robotaxis and EVs are mutually reinforcing technologies, both together has the potential to be extremely profitable.
lost_tourist 4y ago
My regular ICE engine car has 200k miles on it and it still running fine. I don't know why this cars won't get triple that, and they don't have drivers ($20 an hour not necessary)
mechagodzilla 4y ago
But take Uber and Lyft for example - their drivers probably net well under $20/hr, and more importantly, both of those companies have been bleeding money for their entire existence. Now imagine we’re in a world where lots of people are actually willing to pay for rides in self-driving cars, and there is profit to be made - Tesla and GM and all the other car companies with lots of experience making millions of cars per year reliably and cheaply, and with their own self-driving capabilities in-house, are now competing with Waymo. Waymo doesn’t seem like they have a big competitive advantage in self-driving technology, car manufacturing or general transportation services - so where are their billions in future profit going to come from?
- 4y ago

pengaru 4y ago

> It's very difficult for me to see how Waymo could actually become a profitable company. If the autonomy is consistently safe and reliable, profitability will be trivial. I don't think you've tried very hard.

peatmoss 4y ago

The average car sits around doing nothing except depreciate in value > 90% of the time. We spend enormous amounts on our cars. The opportunity frontier here is huge. This doesn't solve society's demand for mobility at peak travel times, but I could see "Better Lyft / Uber without labor costs" as a viable business very easily.