Self-driving Cars: Building The World’s Most Experienced Driver

We believe Google is on the right track as stated in Waymo’s vision above. Google separated its self-driving car program into a new company called Waymo in 2016, and in 2017, shifted its strategy from building everything in house to focusing on what they are great at, the self-driving technologies. To do that, Google should and has been cooperating with big automakers including Nissan and Renault.

Our first recommendation to Google is to use an aggressive strategy and continue to invest in Waymo. Both the potential market growth and Google’s strengths allow an aggressive strategy, and BCG (Boston Consulting Group) growth-share matrix suggests Waymo is a “star” and should be invested more. Though it still takes time for Waymo to start generating profit because of both technology and legal environment for self-driving cars, but it will be.

Our second recommendation is to cover the market through strategic cooperation. Besides Waymo one and Waymo via, a driverless ride-sharing service now available in the East Valley of Phoenix Arizona introduced in 2017 and a driverless trucking service just launched early 2020, we recommend the next step to work with routine service providers who rely heavily on vehicles such as trash service providers and mailing and shipping service providers. We also suggest focusing on building high-end luxury fully autonomous cars initially because of high manufacturing cost (estimated $250,000 more than a traditional car) and low market acceptance.

Why self-driving cars? The current market is about $54.23 billion in 2019, about one fourth of the global commercial vehicle market size in 2017, and it is expected to increase nearly

10X to $556.67 billion by 2026. Almost every big automakers and technology companies see the potential and compete on rolling out the first driverless commercial car. Google did it in 2015! Its success is directly linked to its ability to wield its strengths: talent employee, patented proprietary products, strong brand image, innovative technology especially on AI areas and 3D mapping, and expertise in storing and processing big data from massive user base. With that, Google will continue to take the lead in self-driving car industry.

However, Google needs to work more closely with Government in order to gain the trust and pave way for Waymo’s vehicles. As per ncsl.org, since 2017, 37 states have enacted 91 legislation related to self-driving car onwards on different topics like definition, testing, privacy, and inspection needs. Putting more Waymo’s vehicles on the road is critical for Waymo start making money.

Competitors like Ford and Volkswagen, BMW and Daimler expand their alliance in developing self-driving cars, as self-driving car business is extremely expensive. Tesla prefers to work alone and has a different approach to autonomous cars. It has already put over 300,000 semi-autonomous cars on the road and has been collecting real-world driving data. While Waymo is all about fully autonomous cars and relies heavily on simulation. Waymo should continue to form alliance with other players such as what it has been doing with Jaguar Land Rover GM to get more cars on road soon.

As of now, people might be more familiar with what is already in the market, Telsa semi-autonomous cars. However, Google is solid on its self-driving software and hardware technologies, R&D resource, reputation. By cooperating with big automakers, Google is in great shape. The biggest challenge for Google right now perhaps is not competition nor technology but how people and authorities see fully self-driving cars.