They’re making 50,000+ rides per week already, with a very limited rollout.
They only have to match the cost and convenience of Uber in order to utterly dominate the market.
Once they fully solve self driving, which they inch ever closer towards doing, they can focus on cost reductions. Given that they don’t have to pay drivers, the potential profit margin is incredible.
They will be fully uncontested soon. The only possible competition is Tesla, which has very impressive models, but is still far away from deploying actual robotaxis.
The total investment is now approx $10B, with a revenue of $ 50 million (projection). Not great.
Yeah, they don't pay drivers, but their cars' hardware costs mean that they won't break even with human-driven taxis for quite some time (unless they manage to decentralise the computing).
To put some rough numbers to this, the sensor set in each car, is probably ~$75K (was initially $150K).
> Imagine thinking a 0.5% return on investment is a good use of money
What is waymo's valuation? How much has alphabet invested in waymo? $10 billion? What could they sell it off for today? $30 billion? More? What would the ROI be?
> when treasury bonds return almost 5%
And yet alphabet invests in waymo? I wonder why? Oh that's right. Alphabet created waymo as tax write off scheme. Absolute genius.
It's insane how ingnorant hn commentors are when it comes to finance, investment and technology. Every earnings and every financial news, it's the most ignorant who rant about nonsense confidently. But then again, according to the geniuses of hn, tesla, meta, bitcoin, etc would have imploded years ago.
If it were publicly traded, it would have a P/E of 600.
I'll help you out since you don't read, a normal P/E is 20-30. To say it is not a great financial investment is unequivocal. It is effectively a write-off for the foreseeable future.
But that is not to say you shouldn't invest in difficult problems and try to solve them, even if they don't make money. This is one of them. I hope people do the same for other challenging problems.
P/E is a good measure for value stocks, where you're looking for consistent returns.
Waymo still has to scale, the number means nothing.
Tesla for example had a P/E ratio of 1000 two years ago. Okay it's still potentially overvalued and the share price has declined but their P/E ratio has dropped dramatically.
Waymo has had a stellar year. 50,000+ rides per week across 3 major cities is nothing to scoff at, their users give overwhelmingly positive reviews. They are now testing their new purpose built robotaxis [1], which are supposed to be cheaper and get them to scale.
They also don't seem to have any real competition right now. Cruise kind of self destructed and it came out today that GM is scrapping plans to build their 'Origin' robotaxis [2]. Tesla pushed out its robotaxi reveal and going by their track record, it won't exist for a long time (they are also nowhere close to doing fully autonomous rides [3], so there's that).
Fully deserved, IMO. It's interesting how this funding round doesn't include external investors, but the previous two did. What's the calculation by Alphabet here?
>Fully deserved, IMO. It's interesting how this funding round doesn't include external investors, but the previous two did. What's the calculation by Alphabet here?
Prediction: Google/Waymo will buy the smallest, yet capable, manufacturer of vehicles (electric or not), and vertically integrate.
That seems plausible. A lot of their current lineup gets dinged, but it's for things like "refinement" or styling, or underpowered, and so on. They have a good reputation for reliability, safety, and other things that are harder to improve.
That’s what their new vehicle platform is. It’s from Zeekr. But there are concerns around tariffs on Chinese built vehicles. I don’t know if Waymo gets an exception because technically they “assemble” their sensors in the US.
One thing I'll be curious about here over the long run is what winds up being the actual effective cost per mile of a taxi-style ride - my understanding is counting deprecation and repair costs, Uber's pricing has already been at or below cost, and most drivers are effectively underwater when you price in the cost of wear and tear on the vehicle itself. Custom-built ultra-high-duty-cycle vehicles a la the mail trucks and the London cabs should help here, but I think it's an open question just how cheap you can really make a ride, and I'm not sure the meat in the drivers seat is the primary driver of cost at this point.
Vehicle depreciation doesn’t matter unless you’re selling the thing.
Wear and tear will be reduced with an all-electric drivetrain, which is uncommon for Ubers outside of California.
Costs will be further reduced by bulk maintenance and solar charging.
Autonomous vehicles will also have extremely high utilization rates since they can run 24 hours a day, versus a cab or Uber vehicle which sits idle, losing money.
> Autonomous vehicles will also have extremely high utilization rates since they can run 24 hours a day, versus a cab or Uber vehicle which sits idle, losing money.
Math doesn't work out there.
You need N number of vehicles to give good service (low wait times) during peak hours and special events, and a much smaller number of vehicles the rest of the time.
Only a small portion of a fleet will need to run 24/7.
Now that said, they can cycle vehicles in and out of 24 hour shifts to spread the wear and tear more evenly across the fleet, assuming there is a benefit to doing that.
The vehicles can also be redeployed during off-peak hours for delivery services. They’ve previously also talked about private subscriptions for individuals.
I expect some tuning around torque curves and the like, but electric drivetrains aren’t a pure positive for wear and tear - the heavier weight plus torque and general drivetrain characteristics are murder on tires, suspension, and several other wear items on the vehicle. High duty, and especially high duty from taxi-style driving, is likely to impact wear as well.
You’re right about the benefits of bulk maintenance, although I’m skeptical that a taxi operator will be able to pull off pure solar charging - typical electric car batteries are on the order of 40-60kWh, which is about what an average home uses in a day or two. Scale that up to a reasonably-sized fleet of electric vehicles, and I suspect any fleet operator will be buying their juice.
The utilization rate on the vehicles will be interesting - browsing around a bit looks like an average cab runs between 70-100k miles per year (the car, not the driver - most taxis run multiple shifts), so call it ~200-300mi per day, so they ought to be able to make it the whole day on a single charge.
Once you own the vehicle, though, it’s pay per use - as you note, if you’re not planning to sell it, it’s not really losing money sitting around. It’s not making money, but it’s also not incurring costs from operation.
Utilization will be higher but possibly not by much because demand is not constant but peaks when people move to or from work.
I wonder how does the higher utilization affect costs. For example, if you have a car that can last 400k miles, how much do you save if you finance it for 2 years vs for 6 years?
One thing to consider is that there's miles-driven depreciation and time depreciation. Time depreciation means that the vehicle loses value over time even if you don't use it. A brand new Waymo Chrysler Pacifica will have much less value in 20 years than today.
I wonder if you can save significant money on the vehicle itself. You could even design a one seat version, which I suspect would be the majority of rides. It would also save some gas.
I know it wouldn't be enormous, and probably zero savings on maintenance. But perhaps you could save 25 percent all told?
I would much prefer if the trend was multiple people sharing a vehicle because less traffic would make cities nicer places to live. This technology can shrink the comfort gap between public transport and using a taxi.
It's a good bet that vehicle form factors will proliferate. We are at the point of having the first purpose-built vehicles. When there are millions of them they will probably vary in size and capacity. But only if smaller ones can be cheaper and usage patterns support high capacity vehicles, which probably won't be uniformly true across different cities.
One of Waymo’s co-CEOs went over the estimates in a recent podcast:
Vehicle lifetime: 400,000 miles
Upper bound vehicle cost: $100,000 (though I expect Zeekr to manufacture it for way less)
Cost: $0.25 per mile
There’s room for margin compared to Uber since they can take advantage of economies of scale (high utilization, centralized operations/maintenance and so on).
I tried to calculate this a few months ago and the result was $0.7 with room for improvement over time.
I had $0.25/mi for vehicles, 0.14 for labor costs (remote and road-side assistance, charging, cleaning, management, etc.), 0.05 electricity, 0.05 for buildings and parking lots, 0.025 vehicle maintenance and insurance. That's 0.52 in total. Assuming 75% miles are paid, the cost per paid mile is $0.7.
I can imagine significant economies of scale, e.g. 20% cost reduction for each doubling of deployment, so maybe $0.1 after a few decades?
Slightly off-topic and maybe against the typical viewpoint of the site, but if they spent this much money on bike lanes, e-bikes and public transport, self driving cars (and all cars) would get much better.
"They" spend a totally insane amount on roads. This year's Caltrans budget is $25 billion. They are planning to waste it all on widening roads that don't need it.
One obstacle to increasing the amount of bikes lanes isn't money, but opposition to reducing the amount of curbside space for parking.
My hope is AVs will reduce car ownership, which in turn reduces the amount of curbside space for required cars (Hopefully AVs can be parked at a few centralised parking lots). In turn this will allow for more bike lanes and bus lanes leading to improved active transport and public transport options.
“They” is a private profit-seeking corporation. Local governments claim monopolies on roads and public transport in the places Waymo operates. Existing public transportation infrastructure is also being heavily underused as both MUNI and BART in the Bay Area are facing financial shortfalls from a lack of ridership, and of the ridership they do have, there is a lot more fare evasion than there used to be.
There isn’t a single day that goes by when I’m passing through a station in San Francisco anymore that I don’t see someone (and usually multiple someones) hopping the gates into BART and several times a week I’ll see one of the fare gates to MUNI has been forced open and is out of service. MUNI and BART could probably stave off some of the losses if they just put actual police there to ticket and/or arrest fare evaders, at least when it’s busiest.
If you aren't paying drivers, that's a lot of margin, yeah? If you're the only driverless game in town all of your vehicles can potentially earn an the salary of a driver, like 20$ an hour. They'd pay for themselves within a year pretty easily.
Can it? You still need a ton of very expensive infra, engineering, ops to manage all of this.
Waymo has clearly been playing the “but it’ll be cheaper” game for a long, long time now. It makes sense if you squint really hard and fudge some numbers about unit economics.
If the expected outcome is for it to be eventually cheaper, then why when I open the app does it costs almost twice as much as an Uber or Lyft? You’d think they would want to at least convince investors and train customers that the savings are real and they’re going to prove it by passing it on.
Waymo obviously has nearly no economies of scale yet. We are just entering that part of the regime and it is going to be 2-3 years more before we are spreading those costs across a large fleet.
I'm so happy with Waymo, the current Waymo passenger experience is unparalleled. It's the future, for sure. It's true that there's no real competitor right now.
I've been watching Cruise fleet vehicles drive around in Phoenix, so maybe eventually they'll gain some ground again.
Waymo uses their own in-house lidar units as far as I know, but otherwise, it's a good time to be Ouster. VLP-16's cost about $5,000/unit right now.
I've mostly switched over to Waymo, but had to take Ubers twice in the last month:
* The first one, the driver made multiple racist remarks about different groups he observed as we drove.
* The second one, the driver talked at length about UFOs and how they are real, for the entire 50 minute drive.
Most drivers are totally normal and don't do things like that, but the tail end of negative experiences can be quite bad. Dirty cars, loud radios, body odor, and unsafe driving are all relatively common with human drivers. A Lyft driver I was riding with a few years back almost ran over a man in a wheelchair who had the right of way.
Wait times are also more reliable so far with Waymo. It's not uncommon for an Uber/Lyft driver to accept a ride but then not drive toward you for 5+ minutes. Waymo has the advantage of predictability - both in terms of arrival time and overall travel time (whereas there is variance among human drivers).
Sometimes I've had Waymos get stuck, but it usually resolves within 10-15 seconds.
Given how smooth, predictable, and safe Waymos are, I don't see a strong reason to risk a negative experience with a human driver (beyond ideological reasons). However, I hope another strong provider comes on the market soon to give them some competition.
Yeah, the whole "order an Uber/Lyft, but they don't move for 5 minutes" phenomenon. Had this happen for a trip from MTV to SF, I guess they sit at home and wait for a ride?
Uber and Lyft MUST be hurting in SF.
Personally have switched to Waymo, most people I know have switched to Waymo. Find that it's induced a lot of personal demand. I'd rather wait a little longer and have a safe, comfortable ride, than drive in SF myself, circle around trying to find parking, and then be worried about my window being smashed, etc.
I assumed they could accept the next ride while close to dropping someone off, but the app limits their location while they drive the last bit to another customers house for privacy.
Those reasons are similar to why Americans aggressively dislike public transportation. A single digit percentage of experiences are horrible (or worse).
Trapped in a small space with sometimes psychotic, violent, smelly, modestly insane people. Somehow the proponents of public transport haven't figured out that's undesirable. It's not at all remotely worth the risks, unless you have no other good options.
I take busses, Bart and Caltrain every day in SF and San Jose, and I'm in Seattle a week per month and use busses and trains there extensively, and I've never been attacked by psychotic violent people.
You're not objecting to public transportation, you're objecting to the public. The people on the bus or the train are not any different from the people at the supermarket or at the park.
Many Americans, like myself, are ok with being around people in a city. But you're right that there is a group of fearful suburbanites who would rather sit in isolation miles away from the cities they drive to than risk catching a whiff of B.O.
Public transportation varies widely in the US. A few places have great subways and commuter rail, but most don't. A few places have reliable bus service that has enough capacity utilization to actually save pollution and money, but in a lot of cases bus service is supported only as a means of getting low wage workers to their jobs. In many many places on-demand rides are the only plausible thing that would reduce private car trips.
My prediction (dating back to 2015 when I was working at Uber) is that the cost per trip will never make sense for this to be a viable business model in the way Waymo presents itself as a product. I would really be curious to know how much Google has spent on this project over the last 15-20 years. There are many cheap Honda Civics and many unskilled people to drive them vs the custom real time hardware and software solutions required to power a Waymo trip.
They might be able to charge a premium for the unmanned experience. It’s at least more consistent, if not outright better, than a human-driven ride. In my city Uber costs nearly $100 per hour and the drivers are hit or miss; most are fine, but I’ve had a few near-collisions and wrong turns. Plus they cancel on me if I want to go somewhere they don’t like.
Back in 2015, the cost of lidar and compute was a bit higher. I'm curious what your estimates were. Their current hardware array is really expensive to replicate, and I have no idea how much cost savings they generate internally by buying their own inventory and building in-house.
Their investment is a sunk cost, at this point all looking at that number does is make it less attractive for others to enter the market and compete with them.
Those custom hardware costs and software maintenance costs should continue to reduce gradually as it is being commoditized.
The profit Uber make and the salary the drivers draw should eventually become the margin buffer/profit Google is able to extract.
81 comments
[ 22.0 ms ] story [ 352 ms ] threadThey’re making 50,000+ rides per week already, with a very limited rollout.
They only have to match the cost and convenience of Uber in order to utterly dominate the market.
Once they fully solve self driving, which they inch ever closer towards doing, they can focus on cost reductions. Given that they don’t have to pay drivers, the potential profit margin is incredible.
They will be fully uncontested soon. The only possible competition is Tesla, which has very impressive models, but is still far away from deploying actual robotaxis.
I wish I could invest.
Yeah, they don't pay drivers, but their cars' hardware costs mean that they won't break even with human-driven taxis for quite some time (unless they manage to decentralise the computing).
To put some rough numbers to this, the sensor set in each car, is probably ~$75K (was initially $150K).
What is waymo's valuation? How much has alphabet invested in waymo? $10 billion? What could they sell it off for today? $30 billion? More? What would the ROI be?
> when treasury bonds return almost 5%
And yet alphabet invests in waymo? I wonder why? Oh that's right. Alphabet created waymo as tax write off scheme. Absolute genius.
It's insane how ingnorant hn commentors are when it comes to finance, investment and technology. Every earnings and every financial news, it's the most ignorant who rant about nonsense confidently. But then again, according to the geniuses of hn, tesla, meta, bitcoin, etc would have imploded years ago.
I'll help you out since you don't read, a normal P/E is 20-30. To say it is not a great financial investment is unequivocal. It is effectively a write-off for the foreseeable future.
But that is not to say you shouldn't invest in difficult problems and try to solve them, even if they don't make money. This is one of them. I hope people do the same for other challenging problems.
Tesla for example had a P/E ratio of 1000 two years ago. Okay it's still potentially overvalued and the share price has declined but their P/E ratio has dropped dramatically.
They also don't seem to have any real competition right now. Cruise kind of self destructed and it came out today that GM is scrapping plans to build their 'Origin' robotaxis [2]. Tesla pushed out its robotaxi reveal and going by their track record, it won't exist for a long time (they are also nowhere close to doing fully autonomous rides [3], so there's that).
Fully deserved, IMO. It's interesting how this funding round doesn't include external investors, but the previous two did. What's the calculation by Alphabet here?
[1] https://techcrunch.com/2024/07/23/the-waymo-zeekr-robotaxi-h...
[2] https://techcrunch.com/2024/07/23/gms-cruise-abandons-origin...
[3] https://www.teslafsdtracker.com
Prediction: Google/Waymo will buy the smallest, yet capable, manufacturer of vehicles (electric or not), and vertically integrate.
Wear and tear will be reduced with an all-electric drivetrain, which is uncommon for Ubers outside of California.
Costs will be further reduced by bulk maintenance and solar charging.
Autonomous vehicles will also have extremely high utilization rates since they can run 24 hours a day, versus a cab or Uber vehicle which sits idle, losing money.
Math doesn't work out there.
You need N number of vehicles to give good service (low wait times) during peak hours and special events, and a much smaller number of vehicles the rest of the time.
Only a small portion of a fleet will need to run 24/7.
Now that said, they can cycle vehicles in and out of 24 hour shifts to spread the wear and tear more evenly across the fleet, assuming there is a benefit to doing that.
You’re right about the benefits of bulk maintenance, although I’m skeptical that a taxi operator will be able to pull off pure solar charging - typical electric car batteries are on the order of 40-60kWh, which is about what an average home uses in a day or two. Scale that up to a reasonably-sized fleet of electric vehicles, and I suspect any fleet operator will be buying their juice.
The utilization rate on the vehicles will be interesting - browsing around a bit looks like an average cab runs between 70-100k miles per year (the car, not the driver - most taxis run multiple shifts), so call it ~200-300mi per day, so they ought to be able to make it the whole day on a single charge.
Once you own the vehicle, though, it’s pay per use - as you note, if you’re not planning to sell it, it’s not really losing money sitting around. It’s not making money, but it’s also not incurring costs from operation.
Depreciation is replacement cost smoothed out. If a business is unprofitable after depreciation it cannot organically replace its capital equipment.
That said, I’m sceptical of the Uber and Lyft being unprofitable for drivers after depreciation. Doubly so in the cities Waymo targets.
I wonder how does the higher utilization affect costs. For example, if you have a car that can last 400k miles, how much do you save if you finance it for 2 years vs for 6 years?
One thing to consider is that there's miles-driven depreciation and time depreciation. Time depreciation means that the vehicle loses value over time even if you don't use it. A brand new Waymo Chrysler Pacifica will have much less value in 20 years than today.
I know it wouldn't be enormous, and probably zero savings on maintenance. But perhaps you could save 25 percent all told?
Vehicle lifetime: 400,000 miles
Upper bound vehicle cost: $100,000 (though I expect Zeekr to manufacture it for way less)
Cost: $0.25 per mile
There’s room for margin compared to Uber since they can take advantage of economies of scale (high utilization, centralized operations/maintenance and so on).
I had $0.25/mi for vehicles, 0.14 for labor costs (remote and road-side assistance, charging, cleaning, management, etc.), 0.05 electricity, 0.05 for buildings and parking lots, 0.025 vehicle maintenance and insurance. That's 0.52 in total. Assuming 75% miles are paid, the cost per paid mile is $0.7.
I can imagine significant economies of scale, e.g. 20% cost reduction for each doubling of deployment, so maybe $0.1 after a few decades?
My hope is AVs will reduce car ownership, which in turn reduces the amount of curbside space for required cars (Hopefully AVs can be parked at a few centralised parking lots). In turn this will allow for more bike lanes and bus lanes leading to improved active transport and public transport options.
There isn’t a single day that goes by when I’m passing through a station in San Francisco anymore that I don’t see someone (and usually multiple someones) hopping the gates into BART and several times a week I’ll see one of the fare gates to MUNI has been forced open and is out of service. MUNI and BART could probably stave off some of the losses if they just put actual police there to ticket and/or arrest fare evaders, at least when it’s busiest.
At least in New York it’s politically touchy to discuss penalising fare skippers. (Granted, our police are municipal while the subway is state.)
Granted, it's "over the next few years".
“Alphabet _has to_ invest another $5B into Waymo”.
I’d like to remind everyone that it’s still a taxi business with taxi margins (best case).
But there's still not too much margin when the driver needs some comp.
Waymo, on the flip side, has a lot of capital equipment added to cars to depreciate, but it's gotten way cheaper and stands to get much cheaper still.
Waymo has clearly been playing the “but it’ll be cheaper” game for a long, long time now. It makes sense if you squint really hard and fudge some numbers about unit economics.
If the expected outcome is for it to be eventually cheaper, then why when I open the app does it costs almost twice as much as an Uber or Lyft? You’d think they would want to at least convince investors and train customers that the savings are real and they’re going to prove it by passing it on.
For me, costs have been comparable to Lyft.
I've been watching Cruise fleet vehicles drive around in Phoenix, so maybe eventually they'll gain some ground again.
Waymo uses their own in-house lidar units as far as I know, but otherwise, it's a good time to be Ouster. VLP-16's cost about $5,000/unit right now.
* The first one, the driver made multiple racist remarks about different groups he observed as we drove.
* The second one, the driver talked at length about UFOs and how they are real, for the entire 50 minute drive.
Most drivers are totally normal and don't do things like that, but the tail end of negative experiences can be quite bad. Dirty cars, loud radios, body odor, and unsafe driving are all relatively common with human drivers. A Lyft driver I was riding with a few years back almost ran over a man in a wheelchair who had the right of way.
Wait times are also more reliable so far with Waymo. It's not uncommon for an Uber/Lyft driver to accept a ride but then not drive toward you for 5+ minutes. Waymo has the advantage of predictability - both in terms of arrival time and overall travel time (whereas there is variance among human drivers).
Sometimes I've had Waymos get stuck, but it usually resolves within 10-15 seconds.
Given how smooth, predictable, and safe Waymos are, I don't see a strong reason to risk a negative experience with a human driver (beyond ideological reasons). However, I hope another strong provider comes on the market soon to give them some competition.
Uber and Lyft MUST be hurting in SF.
Personally have switched to Waymo, most people I know have switched to Waymo. Find that it's induced a lot of personal demand. I'd rather wait a little longer and have a safe, comfortable ride, than drive in SF myself, circle around trying to find parking, and then be worried about my window being smashed, etc.
Trapped in a small space with sometimes psychotic, violent, smelly, modestly insane people. Somehow the proponents of public transport haven't figured out that's undesirable. It's not at all remotely worth the risks, unless you have no other good options.
Many Americans, like myself, are ok with being around people in a city. But you're right that there is a group of fearful suburbanites who would rather sit in isolation miles away from the cities they drive to than risk catching a whiff of B.O.
Perhaps it could trigger some other reflections?
How do you figure?
In any case, Waymo is presently positioned as a premium product. That looks likely to remain true for at least half a decade.
Meat-based drivers must be continually paid and don’t get any cheaper over time.
Those custom hardware costs and software maintenance costs should continue to reduce gradually as it is being commoditized.
The profit Uber make and the salary the drivers draw should eventually become the margin buffer/profit Google is able to extract.