Waymo’s Billion-Dollar Play for Autonomous Dominance
Recently, Waymo, Alphabet’s self-driving car subsidiary, raised $5.6 billion in Series C funding. This round included investors like Andreessen Horowitz, Fidelity, Perry Creek, Silver Lake, Tiger Global, and T. Rowe Price. With its autonomous vehicles operating in cities like San Francisco, Los Angeles, and Phoenix — and providing over 100,000 paid rides weekly in these markets — Waymo is seen as a leader in autonomous driving technology. It even offers airport trips in Phoenix, expanding its practical use cases.
But here’s the kicker: Alphabet, Waymo’s parent company, holds over $100 billion in cash reserves. So why would Alphabet invite external investors into a subsidiary with a proven, working product? After all, keeping the entire “pie” to themselves could mean bigger profits in the long run. The answer lies in strategic foresight and leveraging external resources for maximum growth. Here are the key reasons:
I assume that bringing in external funding helps Waymo with:
- External investment validates Waymo’s technology, showcasing market trust and confidence in its growth potential.
- Investors bring industry expertise, networks, and partnerships, accelerating Waymo’s expansion and market penetration.
- Diversifies financial risk, reducing Alphabet’s exposure in the capital-intensive autonomous vehicle market.
- Frees Alphabet’s cash reserves for other high-priority innovation projects like AI and cloud computing.
- Strengthens Waymo’s credibility and positions it for long-term dominance in the competitive autonomous vehicle space.
What’s next?
Waymo can be achieve annual revenues exceeding $1 billion, with potential net profits over $500 million due to high-profit margins in autonomous operations in next 3 years. However, as they reinvest these profits into further expansion, their revenue is likely to continue growing significantly over time and we won’t see significant profits.
Currently, Waymo has 700 cars on road and let’s say doing 120,000 rides per week that means per car 170 trips/car that’s 24 trips per car per week that would be around 1 trip per car per week on average.
Funding and Growth Milestones
Series A: $2.25 Billion
The initial funding was allocated towards autonomous research, building a robust team, and launching a fleet of 250 vehicles.
Series B: $2.5 Billion
With this round, Waymo expanded its operational areas, scaled hiring, and nearly tripled its fleet to 770 cars. They demonstrated 2x efficiency in deploying funds, adding more than 500 vehicles.
Series C (Latest): $5.6 Billion
This latest funding round has enabled Waymo to scale its fleet by 4x, increasing from 770 vehicles to approximately 3,080 vehicles. With this significant expansion, Waymo is well-positioned to become a self-sustaining business while expanding operations in key markets.
Revenue Projections for the Next Two Years
• Projected Fleet: 3,080 vehicles
• Trips per hour per car: 2.5 trips per hour
• Total Weekly Trips: ~1.29 million (2.5 trips * 24 hours * 7 days * 3,080 cars)
• Average Revenue Per Ride: $15
• Total Weekly Revenue: ~$19.3 million
• Annual Revenue: ~$1.01 billion
Assuming a 50% margin (enabled by the absence of human driver costs), Waymo could achieve approximately $503 million in annual net revenue, crossing the half-billion mark in profits. This projection underscores the potential of autonomous technology to drive substantial business growth and profitability
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