Credit: (NASDAQ: GOOG) (NASDAQ: GOOGL) added a new company under its umbrella last week as Google spun out its self-driving car project into its own entity, now called Waymo, which stands for "a new way forward in mobility." The newly created company is more than just a name change for Google's well-known autonomous vehicle ambitions. It's a step forward for the company to start earning money from all the research and testing it's been doing for years.
(NASDAQ: GOOG) (NASDAQ: GOOGL) added a new company under its umbrella last week as Google spun out its self-driving car project into its own entity, now called Waymo, which stands for "a new way forward in mobility." The newly created company is more than just a name change for Google's well-known autonomous vehicle ambitions. It's a step forward for the company to start earning money from all the research and testing it's been doing for years.
Image source: Waymo.
Alphabet
Here are three things you should know about Alphabet's new company.
1. Closing in on commercial applications
Waymo CEO (and former Hyundai executive) John Krafcik said Waymo is pursuing options to use its hardware and software in things like ride-sharing, trucking, and public transportation and is looking at licensing the tech to automakers.
That last part isn't much of a surprise considering that Google announced earlier this year that it's working with Fiat Chrysler Automobiles (NYSE: FCAU) to test its technology in 100 of the automaker's Pacifica minivans. But a new report from Bloomberg last week indicated that Waymo is also pursuing a ride-sharing service (possibly with Fiat) that could launch by the end of next year.
And this is where things get really interesting for Waymo. Now that the project is officially its own company, Alphabet will be looking for it to be able to stand on its own and bring in its own revenue. Up until now, Google's self-driving project has been able to spend all of its time researching and testing; now it's time to pursue commercial avenues.
That means that we'll likely see more reports of Waymo developing new partnerships with automakers, and as Bloomberg said, seeing it launching actual driverless services.
2. This is about software, not new vehicles
Krafcik wrote in a post on Medium that the next step would be "to let people use our vehicles to do everyday things like run errands, commute to work, or get safely home after a night on the town." That's likely closer to reality than ever before, but Alphabet investors shouldn't expect the company to launch a fleet of cars without steering wheels or pedals.
Krafcik said recently that, "I think we've been really clear that we're not a car company. We're not in the business of making better cars, we're in the business of making better drivers."
That's just as well, considering that building a car for public use that lacks a steering wheel and pedals would be a regulatory nightmare in the U.S., as well as in many other countries.
But Waymo says it's still committed to hands-free automation. The goal for the company is to pair its hardware and software with automakers' cars to eventually create a fully autonomous driving experience.
3. Don't expect big revenue just yet
I think we'll start seeing announcements from Waymo this coming year about new partnerships and collaborations. Alphabet clearly believes that its self-driving technology is ready for public services, and that means Waymo will be looking to earn some revenue soon, even if there aren't any immediate profits.
The driverless car market is estimated to be worth $77 billion by 2035, but Alphabet likely won't see any major financial benefits for some time, as the cost to develop the tech and come up with a viable commercial plan will likely exceed any revenue gains for a while.
If Bloomberg's report proves true and a ride-sharing service is already in the works, then investors can expect to see a lot more public testing of Waymo's technology on the roads to get the public ready for a late 2017 release. For all the hype around autonomous cars over the past few years, it appears Waymo might truly usher in the technology very, very soon.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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