Waymo is patronized by Alphabet for as long as it needs to be. This has been good, as it takes off a lot of pressure to virtue signal fake progress to impatient investors; a fate many of Waymo's potential competitors haven fallen victim to.
When Uber and Tesla were acting like cowboys and creating plenty of drama for the media Waymo (under the sensible and boring leadership of non-techy car industry vet John Krafcik) was quietly structuring itself to be in the game for the long haul, following the whole "Fuck You Money" episode that saw most of the Google Self Driving Car Project's original talent leave for easy Venture Capital elsewhere.
Waymo is very tight lipped about their operational costs, I would really love to know how close they are to being revenue positive. Recent moves by Waymo suggest they believe they are getting close.
They're doing 100k paid trips/wk now, per the CEO in a recent LinkedIn post. If average trip value is (very generously) $20, that's still only $100MM in annual revenue. I would bet that doesn't even pay for the direct physical + digital costs of operating the cars, let alone salaries, office leases, etc.
Waymo has started onto a very good trendline now, for sure, and a path to revenue-positive is becoming clearer. But they have a loooooooong way to go before they are offsetting even their operating costs, let alone beginning to pay down their (absolutely massive) fixed costs.
I think the bear case is actually pretty tough for Waymo. Their scaling is not cheap.
- The cars are, by all account, expensive as hell; I've seen $200k+
- The cars require ongoing cleaning, maintenance, mechanical work
- There's a massive customer support operation; not just people to call for support when your car gets stuck, but people who can step in and remote-instruct the vehicle.
- Expanding to a new city requires a massive data-gathering operation before any paid trips can begin.
None of this is taking into account the massive fixed costs that come with being a tech company - hundreds of $400k+TC employees, server bills in the tens of millions, thousands of top-of-the-line GPUs for training clusters.
Given how fast Waymo is scaling, we should look at forward revenue projections, if available. Also, when it comes to TAM, Uber is a good standard to compare against. In Q2 2024[1], Uber had
- 10.7B revenue (42.8B ARR), out of which 6.134B (24.5B ARR) was from "mobility" and others from delivery/freight.
- Real fun part: Gross booking revenue for mobility was 20.554B, but revenue for Uber itself was 6.134B, or 30% of gross revenue. If 70% is going to drivers, that is Waymo's opportunity. It can price at 40% discount to Uber's prices while still reaping twice the revenue per ride. Start with the most lucrative markets where Uber is already profitable and expand from there.
Waymo has to recoup their research costs which are far from trivial, so I doubt prices will drop. Futhermore, there's an agreement for Uber to run the Waymo's in their app, futher complicating the calculus
Consumer cars really aren't meant to last over 100k miles. I know a lot of uber drivers will put 30k miles or more on per year. Also if a car becomes a standard widget made to be easily repairable with parts that are standard widgets, repairs and maintenance would be cheaper.
E.g. If you needed to clean the carpet in a vehicle, make the carpet easily removable and washable in an industrial washing machine.
> Consumer cars really aren't meant to last over 100k miles
What on earth are you talking about? A Honda Civic or Toyota Corolla will easily last 200k miles. In places with salt and rust, the body will probably fall apart before the engine and transmission give out.
"Many non-commercial vehicles (both auto and truck) have exceeded 1,000,000 miles (1,600,000 km). For instance, in 2013, East Patchogue, New York resident Irv Gordon (1940-2018) had accumulated 3,000,000 miles (4,800,000 km) in his 1966 Volvo P1800. The car had amassed 3,200,000 miles (5,100,000 km) by Gordon's death on 15 November 2018."
https://en.wikipedia.org/wiki/Car_longevityhttps://autos.yahoo.com/news/the-first-car-to-3-million-mile...
Honestly, I'd not use the word many, perhaps a significant number....
It’s not the hard. Put your stupid quote away and use your brain.
Warrantees are designed to instill confidence. It’s a product differentiation add on.
Our cars are so good we will guarantee it with fixing anything that breaks within a specific amount of time.
When a customer looks at two options a longer warrantee could be the deciding factor.
Naturally. Cars do break. And thus there is a curve to how long of warrantee a car manufacturer can be before it cost them more to offer it. As such they are currently just long enough that they take max profit. The length is directly tied to how well the car is made and market conditions.
A car company whose cars start to fall apart at 20k miles can’t offer a warrantee for 30k miles without going out of business. But they may offer one for 5k, safely within range their cars exhibit no issues.
So. If I was a car manufacturer and my cars lasted 200k miles on average. I would be inclined to provide a warrantee for 100k, even more so if my competitors could only offer 30k.
You can see this in action with certified pre owned cars. And in some cases where EV batteries were under warranties for 100k miles.
Cars on average don’t last 300 and 400k. Even if some people have had some do so. In such these companies don’t offer long warrantee periods.
So yes. Your car starts to fall apart sometime after the warranty. Bringing out outliners adds no value to this conversation.
There is absolutely no way they are remotely close to being revenue positive (unless you're asking strictly if they are charging more than the gas they're burning without counting anything else). They have like 700 very expensive taxis and a burn rate measured in billions of dollars per year.
> (unless you're asking strictly if they are charging more than the gas they're burning without counting anything else).
Yes, I assume they're asking about the operating margin. That's the number everybody cares about. If it's positive, then Waymo can theoretically become revenue positive by adding more cars and regions to their fleet.
That number needs to include car depreciation + any remote 'safety drivers' + the maintenance depot overhead + fuel and insurance + any other costs that scale with the number of cars then.
Exactly. They have revenue in the low 6 figures per vehicle annually, so they probably need to get the number of operational employees per vehicle down to around 1/10. Seems feasible, but they're probably not anywhere close to that yet.
On the other hand, HN has consistently underestimated them for the last two years or so as they've begun to commercialize. Their trajectory has been 10x growth in rides served per year for a while now. At the current scale it's hard to imagine they could grow another 10x in the next year without being close to break even on operating cost.
10x growth would be ~$1B revenue, 7000 cars. Let's assume it requires doubling head count from 2500 to 5000. That's $130K/car, $250K/employee. sounds break-even-ish.
Yep, I look forward to reading good books about it in a decade or so. I think there are lots of lessons to be learned here for how to do a certain kind of difficult new thing.
I'd like to read that book too... but "how to do a certain kind of difficult new thing" in their case involved more than solid execution. It also needed an owner/investor with extremely deep pockets and technical capabilities that vastly accelerated their work, who was willing to throw huge amounts of money at the problem for years, along with favorable economic conditions (zero-percent interest rates) for long periods of time, at the right period of time. I give Waymo tons of credit for their work here, but the conditions that enabled it aren't easily repeatable IMO.
The reason it's interesting (IMO) is that other companies that also had owner/investors with extremely deep pockets and technical capabilities have been throwing huge amounts of money at it in the same favorable interest rate environment, but with seemingly a lot less success.
I think their (apparent) success probably does have a lot to do with some combination of having the deepest pockets and (I think?) being a few years earlier to get started than everyone else, but still, it also looks like they had a better strategy, and I'm pretty curious how that worked.
It is fascinating how Google simultaneously provides a great lesson in how to leverage their primary competency of AI, as well as how not to (losing to OpenAI in LLMs).
> Waymo is very tight lipped about their operational costs, I would really love to know how close they are to being revenue positive. Recent moves by Waymo suggest they believe they are getting close.
What specific "moves" by them indicate they are close to being profitable? All the industry research I get indicates they are still negative to the tune of $1B+ a year.
Scaling out now helps along their regulatory moat, being the first trusted operator in a given market means they get a seat at the table for setting the rules
Considering just how many of their cars I see driving around Atlanta covered in sensor arrays every day, I would certainly hope they’re making real progress.
When Uber and Tesla were acting like cowboys and creating plenty of drama for the media Waymo (under the sensible and boring leadership of non-techy car industry vet John Krafcik) was quietly structuring itself to be in the game for the long haul, following the whole "Fuck You Money" episode that saw most of the Google Self Driving Car Project's original talent leave for easy Venture Capital elsewhere.
Waymo is very tight lipped about their operational costs, I would really love to know how close they are to being revenue positive. Recent moves by Waymo suggest they believe they are getting close.