According to Astro Teller, the Google self-driving car is "close to graduating from X." Parsing out the meaning of that string of words is a little complicated, but basically it means that Alphabet isn't thinking of self-driving cars so much as a crazy "moonshot," but as a thing that's just about ready to be a standalone business that could actually generate revenue.

If you're not a close follower of Google, though, more explanation might still be in order. It's coming, in the form of a segment on tonight's NBC Nightly News with Lester Holt. They'll be airing an inside look at X division inside Alphabet. That's the group you know as Google X, but after last year's corporate reorg, we're all still getting used to the new naming conventions.

Failure is still a feature at X

Holt interviewed Astro Teller and Obi Felten, who have the cheeky titles "Chief of Moonshots" and "Director of X Foundry," respectively. It'll likely be an overview of the projects that X is currently running — including self-driving cars, Project Loon, Project Wing, and Makani. Teller will also be candid about X's failures. Failure being a favorite topic of his, actually — Holt tells us that inside X, "if you have an idea that crashes and burns, they give you a sticker."

So when Teller says that self-driving cars are about ready to "graduate," what he means is that they're one idea that has gone from crazy dream to concrete reality — real enough that it's ready to stand alone as its own business inside Alphabet (or perhaps inside Google! Again, what goes where and whom reports to whom can still be a little fuzzy). As its own business, the self-driving car project would likely have to start making money.

Speaking of making money, Teller's comments follow a December report in Bloomberg that suggested Google could spin off the project and initially focus on deploying cars for a ride-hailing service in contained areas like college campuses. By limiting where the cars can travel, Google could get around the push to fully legalize and regulate such vehicles on public roads and highways nationwide — a process that will likely take years, even in the most optimistic scenario.

Google could starting with ride-hailing services on college campuses

Teller also told NBC that Google is engaged with traffic regulators now, which has been a trend for the company in recent months: Chris Urmson, the longtime director of the self-driving car project, appeared before Congress in March to discuss policy issues. Urmson's boss, John Krafcik, stood beside US Secretary of Transportation Anthony Foxx in January at a press conference to promote the speedy deployment of a regulatory framework for autonomous cars.

Given how quickly everybody is moving on self-driving cars, it makes perfect sense that Alphabet would get serious about making the division more official and more independent. X's job is to prove out that technology is both viable and profitable and even though we don't yet see self-driving cars on the roads in any real way, it's obvious that the case has been made, both by Google and virtually every company in the auto industry.

Cars aren't the first division to graduate out of X. Google Brain, for example, is now at the center of Google's deep learning efforts. And it seems likely that there will be other high-profile successes — and of course low-profile failures. But for Teller and Fenton, that's part of the plan.

NBC Nightly News with Lester Holt airs at 6:30PM ET.

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