Waymo is Becoming a Business and Scaling in California

This Week in The Autonomy Economy

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The Road to Autonomy
August 04, 2024

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This Week in The Autonomy Economy is presented by Koop Insurance, a specialist insurance provider focused on robotics and autonomous vehicles.

This Week in The Autonomy Economy, The Road to Autonomy Index declined 5.59% amidst the backdrop of a broad market sell-off. As the market sold off, investors’ appetite for autonomy did not diminish as Aurora successfully raised $483 million in a primary offering led by Morgan Stanley.

The offering was upsized ~20% (from $350MM at initial launch) due to investor demand. As we have been writing about for weeks, the interest from investors in autonomy is growing. As the interest grows, Waymo is growing up and becoming a revenue generating business.

In May, Waymo successfully completed 143,600 paid rides in San Francisco and Los Angeles. If the average fare was $15 per ride, Waymo generated $1.9 million in revenue from two cities. Add-in the Phoenix Metro Region and we estimate Waymo generated just south of $3 million in May.

With Waymo on the verge of opening Los Angeles to all riders, Waymo is on the cusp of generating $4 to $5 million a month in revenue. While these numbers are light and will have no meaningful impact on Alphabet’s earnings, they are a clear indication that Waymo is entering the next phase of it’s life — a growth business.

How big Waymo can ultimately grow will be up to Alphabet and their long-term plans for the company. If Waymo continues to expand at their current pace, the company should surpass $100 million in yearly revenue next year.

Waymo parent Alphabet is a The Road to Autonomy Index component company

WHAT’S MOVING THE MARKETS | AUTONOMOUS VEHICLES

Becoming a Business and Scaling in California

Waymo Autonomous Vehicle

Waymo Autonomous Vehicle | Source: Waymo

Waymo is in the midst of a massive expansion in California, as they gradually open the service to everyone.

In May, Waymo successfully completed 133,000 paid rides in San Francisco — roughly 4,300 rides per day using 300 vehicles. We believe that these numbers have only grown since Waymo opened the service to everyone on June 25th in San Francisco.

Paid Waymo Trips in California

Paid Waymo Trips in California | Source: The San Francisco Chronicle

If the average fare for a Waymo ride in May in San Francisco was $15 per ride, Waymo generated $1.9 million in revenue — $66,500 a day. Factor in the 10,600 paid rides in Los Angeles and Waymo generated $2.059 million in revenue.

During the month of May 204,400 individuals rode in a Waymo (paid ride), up from 119,100 in April.

Waymo Paid Ride Passengers

Waymo Paid Ride Passengers | Source: The San Francisco Chronicle

Individuals are using the service and making it part of their daily routine as Waymo is racking up miles. In May, Waymo drove 903,500 miles during paid operations, up from 573,200 miles in April.

Waymo Vehicle Miles Traveled in Service | Source: The San Francisco Chronicle

As Waymo racks up the miles, special interests and elected officials are paying attention and asking for a handout. This time it’s to fund San Francisco’s declining public transportation system that has a $130 million budget deficit for its 2025 fiscal year and that is projected to swell to $214 million in 2026.

In November California voters will vote whether or not to implement the Community Transit Act that will tax Uber, Lyft and Waymo’s revenue. This new proposed tax would be on top of 2019’s Proposition D, which placed a 1.5% to 3.25% tax on all ride-hailing fares in San Francisco.

Being San Francisco they had to make the tax progressive. As the company’s revenue increases, the tax they pay will increase from 1% to 4.5%. If they didn’t make the tax progressive, perhaps it would fail?

We all know, the tax is going to be passed onto the consumer if it is enacted. Instead of taxing to fix financial mismanagement, why not incentivize Waymo to continue to invest in the city, create jobs and provide, safe reliable transportation?

We have always said and we will continue to say that data-sharing with cities and transit authorities is a one-way street. As we are seeing in San Francisco, the data is being weaponized. As Waymo scales in the city, the data will only continue to be used against them.

While the City of San Francisco does their best to live up to the California standard of being hostile to business, Waymo is in the process of becoming a business.

A business that Alphabet incubated in Other Bets before it graduated on December 13, 2016 to become a new Alphabet business. Wolfe Research estimates that Alphabet has spent $30 billion on Waymo (including the new financing round).

That investment is now beginning to pay-off as Waymo scales their revenue generating operations in two states, soon to be three.

Our take: The future is bright for Waymo with a potential IPO on the horizon.

Waymo is currently ranked #1 with a bullish outlook on AUTONOMY LEADERBOARD in the autonomous vehicle category.

Uber and Waymo parent Alphabet are The Road to Autonomy Index component companies

WHAT’S MOVING THE MARKETS | AUTONOMOUS VEHICLES

Uber and BYD to Collaborate on Autonomous Vehicles

BYD & Uber

BYD & Uber | Source: Uber

On July 31st, Uber and BYD announced that the companies are going to collaborate on future BYD autonomous-capable vehicles to be deployed in the Uber platform.

Despite what is said by talking heads and so-called “experts” on financial news shows, Uber is going to play a significant role in the future of autonomy. Selling Uber ATG to Aurora and Uber Elevate to Joby Aviation were the correct decisions. Those decisions are now paying dividends as Uber went back to their roots of being a platform.

Uber is going to enable autonomy to scale. Without a platform, autonomous vehicles will not scale. Uber is the platform that enables autonomy to scale.

Our take: Dara Khosrowshahi is one of the most important executives in autonomy, yet he is not given the credit he deserves for making the right decisions that are enabling Uber to scale autonomy.

Uber is currently ranked #1 with a bullish outlook on AUTONOMY LEADERBOARD in the software platforms category.

BYD investor Berkshire Hathaway and Uber are The Road to Autonomy Index component companies

WHAT’S MOVING THE MARKETS | INSURANCE

Insuring Personally Owned Autonomous Vehicles

The market for personally owned autonomous vehicles is beginning to emerge as GM touts their ambitions and Tesla continues to advance FSD (Full Self-Driving). Looking at the market for personally owned autonomous vehicles today, we see GM and Tesla as the two biggest benefactors of this emerging trend.

As the trend continues to emerge, these vehicles will need to be insured. Prior to personally owned autonomous vehicles being introduced to the market, insurance companies will need to transition from evaluating human risks to assessing software risks.

Traditional insurance companies may struggle to adapt quickly enough to the risk thus opening the door for OEMs such as GM and Tesla to offer their own insurance as part of the lease/sale of the vehicle. Currently, Tesla has the ability to sell insurance in 12 States. We imagine their goal is to be able to sell insurance in all 50 States.

In the future, OEMS will be increasingly important players in the insurance space. They’ll transition from simply building cars to providing software, experiences and services — including insurance.

Our take: Sergey Litvinenko, Co-Founder & CEO of Koop Insurance joined us on The Road to Autonomy Insights to discuss the future of insurance for personally owned autonomous vehicles. Figuring out the model of how to insure personally owned autonomous vehicles is absolutely vital for the technology and services built around it to scale.

Tesla is currently ranked #1 with a bullish outlook on AUTONOMY LEADERBOARD in the personally owned autonomous vehicle category.

GM and Tesla are The Road to Autonomy Index component companies

Koop is the Premier Sponsor for This Week in The Autonomy Economy

WHAT’S MOVING THE MARKETS | AUTONOMOUS VEHICLES

China Bets on Robotaxis

In Wuhan, China, Baidu is currently operating a fleet of more than 500 robotaxis. The market for investing in autonomous vehicles in China is stable as Xi Jinping has signaled his desire for China to invest in “high-value add technology”.

The signaling from the Chinese Government is unleashing a race to deploy autonomous vehicles in the country. At some point, Chinese autonomous vehicles will be exported to the world. First it was electric vehicles, next it will be autonomous vehicles.

Our take: With China clearly signaling their desire to win in autonomy, it is vitally important that the United States works towards a bipartisan national autonomous vehicle framework. The future of the U.S. economy depends on it.

PIQUING OUR INTEREST

Aurora Raises $483 Million Aurora ($AUR) successfully raised $483 million in a primary offering led by Morgan Stanley. Due to strong investor demand the base offer was upsized ~20% (from $350MM at initial launch). Aurora now has $1.5 billion in cash, giving the company runway into 2026.

Focusing on China Ola Kaellenius CEO of Mercedes-Benz ($MBG) announced in an August 2nd LinkedIn post that Mercedes has become the first international car maker to obtain an SAE Level 4 Automated Driving Testing License in Beijing.

NVIDIA In Bubble Land? That is what Elliott Management is telling investors. What is going to cause the bubble to pop — a poor earnings report. We will find out what happens when NVIDIA ($NVDA) reports earnings on August 28th.

Saying Goodbye to Apple Berkshire Hathaway ($BRK.B) reported a record quarterly operating profit for Q2 2024, sold 50% of its massive stake in Apple and the company’s cash pile grew to $276.94 billion.

Q2 Earnings Have Been Mixed Of the 75% of S&P 500 companies that have reported for Q2, 78% have beaten consensus EPS expectations, level with the 78% one-year average and a bit higher than the five-year average of 77%. However, only 59% have surpassed consensus sales expectations, below the 63% one-year average and the five-year average of 69% according to Bank of America.

SOCIAL BUZZ | AUTONOMOUS VEHICLES

Nuro Expands to Highways

Nuro has expanded testing to highways. The company appears to be making big progress and we are looking forward to seeing that progress in person when we visit them this fall.

Our take: Something is cooking at Nuro. Could the company be accelerating the development of their autonomous driving stack with a plan to license it?

SOCIAL BUZZ | OFF-ROAD AUTONOMY

Anthony Levandowski Pivots Back To Off-Road Autonomy

Anthony Levandowski is back at it again. This time with Pronto and a customer — Heidelberg Materials North America. Pronto’s autonomous haulage system is being integrated into Komatsu haulage trucks and deployed at the Bridgeport Quarry in Texas.

Our take: The off-road autonomy market is booming. The boom is partly being driven by a growing labor shortage. More deals, partnerships and investments in the off-road autonomy sector will begin to emerge in the coming quarters.

THE ROAD TO AUTONOMY INDEX WEEKLY PERFORMANCE

The Road to Autonomy Index® is a high-definition lens into the emerging world of autonomous vehicles and trucks. It is the world’s first and only pure-play index designed to measure the performance of the autonomous vehicle/truck market.

For the week of July 29th, The Road to Autonomy Index declined 5.59%, the S&P 500 declined 2.06% and the NASDAQ 100 declined 3.06%. The Road to Autonomy Index underperformed the S&P 500 by 3.53% and underperformed the NASDAQ 100 by 2.06%.

The Road to Autonomy Index Performance – Week of July 29, 2024

The Road to Autonomy Index Performance – Week of July 29, 2024

Year to Date (YTD), The Road to Autonomy Index has returned 6.30%

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