How Will Google Make Money from Autonomous Vehicles?

Today’s biggest businesses have got a taste for technological endeavour. Amazon is pioneering checkout-free, line-free grocery stores with Amazon Go. Virgin plans to take “space tourists” for a spin about the stars with Virgin Galactic. And, closer to the ground, Google is one of a handful of big hitters that are building AI-powered driverless cars – also known as autonomous vehicles (AVs).

The automotive industry in particular is rife with innovation. Fleet management systems now combine GPS with sophisticated software, helping fleet businesses to cut costs and boost efficiency. Quietly elegant electric vehicles and hybrids are, one-by-one, replacing our gas guzzlers with cleaner, leaner tech. But fully driverless vehicles? Well, they’re what we’ve all really been waiting for.

Why? Well, for one thing, Waymo – the AV venture run by Google and its parent company, Alphabet – expects that replacing flawed, confusable human brains with cool, calm, and collected AI (artificial intelligence) will prevent road accidents, 94% of which are currently said to be caused by human error. Plus, driverless cars promise to provide a convenient, safe transport option to those with visual impairment or mobility issues. AVs have got the cool-factor, yes. But they’re also very likely to be of real benefit to mankind.

It’s an exciting time to be alive, for sure. But it would be naive of us to think that Google and Alphabet are pursuing this invention straight out of the pages of sci-fi just because they’re feeling adventurous or charitable. No – just as fish have got to swim, tech behemoths have got to make money.

So, what’s Google doing to monetize this groundbreaking venture? Will it start selling driverless cars to the public? Unlikely, at least at the moment. Will it license its self-driving tech out to other AV developers? Also unlikely – we know that tech companies don’t like having to rely on Google’s ingenuity instead of their own.

So, what else? Will Google start a driverless ride-hailing service? Well, actually, yes! Enter, Waymo One.

Having completed its first journey in 2018, Waymo One can be distilled down into three words: Uber without drivers. (But don’t worry, chatterboxes – backup human drivers are currently stationed in each Waymo vehicle. You know, just in case.)

At the moment, Waymo One isn’t widely available – it’s currently being tested in several cities in the Metro Phoenix area of Arizona, and Waymo remains tight-lipped about the cities, states, and countries it hopes to expand into in future. Only a select number of local citizens can use the service right now, but you can still download the app (it’s now available for iOS and Android), join the waitlist, and cross your fingers.

Of course, no matter how innovative the proposition, venturing into the ride hailing industry is still something of a risk. At the moment, the market is dominated by Uber. Knocking Uber – and its cheap rides and one-tap hailing – off its pedestal is going to be a tough one, especially now this king among cabs is also experimenting with AVs.

Plus, there’s the fact that Uber isn’t actually profitable. In 2019, it made an eye-watering loss of $8.5 billion, and had to lay off 1,000 workers. However you spin it, right now, the long-term business viability of ride-hailing apps in general is in question.

Of course, Google is a different kind of business; one that can mine gold from a different source: user data. As more and more passengers sign up to and start using Waymo One, Google will gain more personal data from these consumers, and thus, more fresh, juicy marketing opportunities with all kinds of money-making potential.

There’s also the small fact that Waymo One will free up hours for people who’d usually have to spend a lot of time driving. When the car does the driving for you, you’ve got time to sit back, whip out your phone, and use Google’s other services: browse Google, check Gmail, explore Google Maps… in other words, you’ve got time to generate even more revenue for the company, alongside paying for your trips with Waymo One.

This all looks pretty promising for the internet giant. But, even so, driverless rides aren’t the only method by which Google can make money through its autonomous vehicle technology. As Waymo One enters the B2C market, Google’s AV tech can also be found catering to the world of B2B – with Waymo selling its lidar technology to other companies.

For a bit of context, lidar is what most driverless vehicles use to, well, get around. To pack a complex idea into a few simple words: lidar image sensors pulse out laser light that bounces back off surrounding objects, effectively telling the vehicle what the world around it looks like.

After finding that the ‘store-bought’ variety wasn't cutting it any more, Waymo started to develop its own 3D lidar sensors in 2011. Now, central to Waymo’s storefront of technological wonders is Laser Bear Honeycomb. Before you ask, it isn’t a crossover event between Marvel and Winnie the Pooh – it’s the name of the lidar device that Waymo has been selling to select partners since March 2019.

Of course, it only supplies the devices to companies that have zilch to do with driverless vehicles – its partners are primarily in the robotics, security, and agricultural sectors. After all, why give a leg up to the competition?

For Waymo (read: Google) and those partners, this arrangement is very much a win-win. As Simon Verghese, head of Waymo’s lidar team, wrote in an official blog post : “Offering this lidar to partners helps spur the growth of applications outside of self-driving cars and also propels our business forward. We can scale our autonomous technology faster, making each sensor more affordable through economies of scale.”

So, there we have it – a couple of ways by which Google is making money through its autonomous vehicles and the tech that powers them. Of course, with Waymo’s figures hidden away in the shadowy ‘Other Bets’ section of Google’s financial records, it’ll be difficult for us to tell just how financially successful these ventures are. No matter what happens, though, autonomous vehicles are poised to change the world. And Google, hand-in-hand with Waymo, is without doubt in the best position to lead the revolution