Key Takeaways
- While figures suggesting 250,000 weekly rides circulate, publicly confirmed data points to a more conservative but still impressive 50,000 paid trips per week, indicating significant operational momentum.
- The path to profitability is frequently misunderstood; improving per-ride unit economics should not be conflated with overall business profitability, which remains distant given vast R&D and capital expenditures reported in Alphabet’s “Other Bets” segment.
- Scaling from four cities to a hypothetical 64 by 2030 faces immense hurdles, including fragmented regulations, complex operational environments (e.g., weather), and staggering capital requirements for fleet expansion.
- Waymo’s primary value for Alphabet investors is as a long-duration call option on the future of mobility, not as a near-term contributor to earnings. Its competitive edge lies in a cautious, technology-led approach, contrasting with rivals like Tesla and a recovering Cruise.
- The ultimate, most profitable application of Waymo’s technology may not be consumer ride-hailing but could pivot towards B2B logistics or a capital-light software licensing model for automotive partners.
Recent chatter surrounding Alphabet’s autonomous vehicle unit, Waymo, suggests a business hitting an inflection point, with some accounts pointing towards a run rate of 250,000 fully driverless trips per week. While publicly verified figures are more modest, the sheer velocity of the discussion highlights a critical question for investors: at what point does Waymo graduate from a costly science project into a meaningful contributor to Alphabet’s gargantuan enterprise? The narrative of exponential growth is compelling, yet a sober analysis reveals a far more complex picture, balancing impressive technological milestones against the immense structural challenges of scaling, competition, and the elusive path to profitability.
Sizing the Opportunity: From Four Cities to a Global Network
To ground the analysis, one must first distinguish between reported figures and confirmed data. In April 2024, Waymo confirmed it was completing over 50,000 paid trips per week across its operational areas of Phoenix, San Francisco, Los Angeles, and Austin. The more optimistic figure of 250,000 weekly trips, while unconfirmed, serves as a useful proxy for bull-case scenarios. Using these numbers, we can model the current and potential annualised revenue run rates.
| Metric | Confirmed Scenario (50,000 rides/week) | Hypothetical Scenario (250,000 rides/week) |
|---|---|---|
| Weekly Rides | 50,000 | 250,000 |
| Assumed Average Fare | £12.70 ($16) | £12.70 ($16) |
| Implied Weekly Revenue | ~£635,000 | ~£3.18 million |
| Annualised Revenue Run Rate | ~£33 million | ~£165 million |
Even at the higher end, this revenue is a rounding error for Alphabet, which generated over $307 billion in 2023. The thought experiment of expanding to 64 cities by 2030, with each city matching the hypothetical 250,000 weekly rides, would equate to an annual revenue north of £10 billion. This simple multiplication exercise, however, conveniently ignores the brutal realities of such an expansion. Each new city introduces unique challenges, from navigating local regulatory bodies and securing permits to mapping complex road networks and adapting the AI driver to different weather conditions and driving cultures. A linear scaling model is, therefore, profoundly unrealistic.
The Immense Cost of Autonomy
A frequent misconception is that rising ride volume directly translates to imminent profitability. This overlooks the colossal cost structure of an autonomous vehicle operation. Alphabet’s “Other Bets” segment, which houses Waymo, is a testament to this, consistently reporting billions in annual operating losses. These losses are driven by several factors:
- Research & Development: The core software, the “Waymo Driver,” requires constant refinement by thousands of highly paid engineers and researchers. This is not a cost that diminishes significantly with scale.
- Capital Expenditure: Each vehicle is a high-cost asset. While the exact figure is proprietary, the sensor suite alone—comprising LiDAR, cameras, and radar—along with the onboard compute power, adds tens of thousands of pounds to the base cost of a vehicle like the Jaguar I-PACE or the purpose-built Zeekr.
- Operational Overheads: Fleets require physical depots for maintenance, charging, and cleaning. Furthermore, a team of remote operators and roadside assistance technicians must be on standby, adding significant labour costs.
While Waymo may be approaching or have even achieved positive *unit economics* on a per-ride basis in dense, mature markets (where revenue per ride exceeds the marginal cost of that ride), the business as a whole remains deeply unprofitable. Achieving overall profitability would require ride volume so immense that it could amortise the fixed R&D and operational costs across the entire network, a prospect that is likely a decade or more away.
A Crowded and Cautious Field
Waymo does not operate in a vacuum. Its main competitor, General Motors’ Cruise, serves as a powerful cautionary tale. Cruise’s aggressive expansion was halted abruptly in late 2023 following a serious safety incident in San Francisco, leading to a fleet grounding and a complete overhaul of its leadership and safety procedures. This event has likely reinforced Waymo’s more methodical and arguably slower expansion strategy, prioritising safety and technological validation over rapid geographic growth.
Then there is Tesla, which represents a fundamentally different model. Instead of operating its own fleet, Tesla aims to sell its Full Self-Driving (FSD) software to its millions of vehicle owners and eventually enable a decentralised “robotaxi” network. While its vision-only approach is viewed with scepticism by many in the industry compared to Waymo’s multi-sensor fusion, Tesla’s vast data collection from its customer fleet provides a powerful and unique advantage for training its neural networks.
Investment Thesis and a Forward-Looking Hypothesis
For investors in Alphabet, Waymo should be viewed not as a contributor to the current bottom line, but as a high-risk, high-reward call option on the future of transportation and logistics. Its valuation is not based on current revenue but on the discounted value of a potential future market it might one day dominate. The progress is tangible and the technology appears robust, but the financial and logistical chasms to be crossed are equally vast.
Perhaps the most salient question is whether consumer ride-hailing is even the optimal business model. A compelling alternative hypothesis is that Waymo’s most valuable near-term application lies in B2B logistics. Autonomous long-haul trucking (via Waymo Via) or last-mile delivery offers a more constrained operational design problem—predictable routes, fewer pedestrian interactions, and business customers who prioritise reliability over user experience nuance. This could provide a more direct and capital-efficient path to profitability, allowing the consumer-facing “robotaxi” service to mature at its own, more patient, pace.
References
[1] Waymo. (2023, December 14). A year of fully autonomous driving: 2023 in review. Retrieved from https://waymo.com/blog/2023/12/a-year-in-review-2023/
[2] Kolodny, L. (2024, April 24). Waymo is now doing more than 50,000 paid robotaxi rides per week in the U.S. CNBC. Retrieved from https://www.cnbc.com/2024/04/24/waymo-reports-50000-paid-robotaxi-rides-per-week-in-us.html
[3] TIME. (2024). TIME100 Most Influential Companies 2024: Waymo. Retrieved from https://time.com/collection/time100-companies-2024/6963299/waymo/
[4] @realroseceline. (2024, November 1). [The idea is compelling. Waymo $GOOG is already doing 250,000 fully driverless rides per week across just four cities.]. Retrieved from https://x.com/realroseceline/status/1852174054207694320
[5] Visual Capitalist. (2024). Visualizing Waymo’s Rise in Ridership. Retrieved from https://www.visualcapitalist.com/visualizing-waymos-rise-in-ridership/
