The first external investment of $2.25 billion by Alphabet subsidiary Waymo has given rise to speculation about the reasons, the state of the art and the future intentions. And we don’t wanna be left out here contributing to speculations.

Thanks to a cash reserve of more than $100 billion, Alphabet is guaranteed not to need to bring in outside investors. Especially not when you know what a headache they can cause if things don’t go as planned. The investors mentioned were:

An illustrious group. Silver Lake manages about 43 billion US dollars, the Canada Pension Plan investment Board 313 billion US dollars, and the Mubala Investment Company from Abu Dhabi manages about 100 billion US dollars in capital and assets.

Magna, A16Z and AutoNation represent another story. Magna builds the iPace on behalf of Jaguar, which Waymo uses as its 5th vehicle platform and of which there are options on 20,000 units. With Magna, which was founded by Austro-Canadian Frank Stronach, Waymo has brought on board an experienced manufacturing partner and Tier 1 supplier from the automotive industry and is looking forward to even closer cooperation in the future. AutoNation scores particularly well with its management and maintenance of large fleets and a US-wide infrastructure of repair shops. It is also expected that AutoNation will assist with knowledge and energetic approach to the launch of the individual Waymo One robotaxi fleets in the respective US regions.

Andreessen Horowitz, founded by two founding giants in Silicon Valley, already has mobility companies in its portfolio. For example, A16Z holds shares in the ridesharing company Lyft, the developer of autonomous driving technology CYNGN, simulation software producer for autonomous cars, Applied Intuition, Deepmap, which produces high-resolution navigation maps for autonomous cars, Smartcar, which offers open programming interfaces for mobility applications, and the micromobility company Lime. The portfolio also includes instacart, which supplies online supermarket purchases. As you can see, there are some overlaps and, above all, additions to this portfolio.

Alphabet has therefore brought in a number of strategic partners for Waymo to accelerate the market launch of the technology. The government partner from Abu Dhabi alone could perhaps indicate that the capital of the United Arab Emirates will become the first area for the commercial operation of Waymo One.

Bewertung

How many shares has Alphabet given out with the $2.25 billion? In other words, how much is Waymo worth?

UBS and Morgan Stanley had been anticipating a possible market valuation of Waymo of up to $250 billion some time ago, although they have since lowered the valuation again to around $170 billion. Remarkable in any case, if one takes into account the revenues to date, which are probably in the lower single-digit millions, if at all. If you compare this with probably a total investment by Google/Alphabet of around $10 billion since 2009, the start of the development, the valuation is definitely “interesting”. By comparison, the most valuable car company today is Toyota with a valuation of around 200 billion dollars, followed by Tesla, which is worth about three quarters of Toyota’s evaluation.

However, UBS also estimated that by 2030 Waymo alone will dominate 60 percent of the global market for autonomous cars. With a global transportation and mobility market estimated at $7 trillion today, the potential for revenue is clear. Some estimate that this market will even double in the next 10 to 20 years.

If one also takes into account that Google/Alphabet has so far financed all expenses for the development of Waymo’s self-drive technology, and that the Waymo Driver technology is already very advanced and probably not that far from market maturity, the shares awarded to these external investors cannot reach the usual dimensions for a first external investment. There will not have been five to ten, or even more percent of shares that were given to the external investors. At 5%, this would mean a valuation of 45 billion and at 10% 22.5 billion. That seems far too low.

Given the UBS and Morgan Stanley valuation attempts, the 2.25 billion could actually be 1 percent shares, which would put the valuation at 225 billion dollars. Two percent shares would then be 112.5 billion dollars. But perhaps it’s quite simple and would be 2.25 percent, at a valuation of 100 billion dollars.

What do you think?

UPDATE: Both the Financial Times and The Information report that the valuation is 30 billion dollars. Waymo CEO John Krafcik had imagined more, but it was not offered.

This article was also published in German.