Waymo vs. Tesla: What's the Top Ridesharing Stock?

What’s the top ridesharing stock? In the segment below, 24/7 Wall St. Analyst Eric Bleeker breaks down the key differences between Alphabet‘s Waymo service and Tesla‘s new Robotaxi service that launched on June 22nd in Austin.

Why are autonomous driving services suddenly in the news and how quickly could they be headed toward a city near you in the coming years?

Watch the Segment Now 

Segment Highlights

• Waymo recently was the center of attention in news cycles when its cars were repeatedly burned during protests in LA.
• While the event led to a surge in broader interest around Waymo, the reality is the service has been growing significantly for years. 
• Waymo hit
  • 1 million rides end of 2023 
  • 5 million last year 
  • And is already over 10 million rides less than midway through this year 
  • To date, the service has only been available in a handful of  cities like San Francisco, LA, Austin, and Phoenix
  • However, it’s about to expand rapidly to cities like Washington DC, Miami, and Houston
  • It wouldn’t shock us if by the end of next year, Waymos were either in or testing across 20+ cities and targeting international

• So far, the safety results have been very positive. Waymos have logged 50 million-plus driverless miles. 
• Insurer Swiss Re reported Waymos lead to ~90% less bodily injuries and ~86% less property damage. 
• In San Francisco, Waymo cars generally cost a significant premium compared to Uber. However, people are choosing them because the experience is better.
• This is kind of ironic: People talk about their preference for Waymos over Ubers the same way they talked about Ubers over taxis in the early 2010s.
• Next up is Tesla: The company launched its Robotaxi service in a limited area in Austin, Texas, on June 22nd.
• The key battle line between the companies is safety and cost.
• Tesla is rolling out at a much cheaper cost using a more limited set of cameras as their primary input.
• Waymos use a much broader suite of cameras and other sensors – we’ve heard their cost is about $180,000 per car, which is significantly higher than Tesla’s, which is targeting a $30,000 price point for future driverless car releases.
• There are no shortage of conflicting reports of safety, but our opinion is that for now, Waymo is much safer. Tesla’s own calculations on their Full Self Driving page put the technology at 54% safer. Meanwhile, Swiss Re data has pegged Waymo cars at rates closer to 10X less bodily injuries.

How we’re investing: 

• Tesla’s current share price has a lot of success in emerging opportunities like robotics and self-driving cars being large contributors. 
• In the case of Alphabet, Waymo is adding very little value to the overall business currently. The share price of Google will continue to be shaped by areas like concerns about share declining against competitors like OpenAI, and the growth trajectory of its cloud unit. 
• Another option in the space is the component plays. We haven’t personally been impressed with most options, and if Tesla’s approach wins out, component plays in areas like LIDAR would almost certainly not be successful investments.
• The big picture: this is one of the clearest stories of a mind-blowing AI application hitting the mainstream. After years of promises never fulfilled in this market, it appears self-driving is finally making a push across America and beyond.

Get all the Top AI News

If you’re looking for the top investments in the artificial intelligence space, make sure to check out the ‘AI Investor Podcast’ from 24/7 Wall St. The segment above is from the show, and 24/7 Wall St. Analyst Eric Bleeker invests $500,000 of his own money across his favorite AI stock ideas. You can listen to the latest episode below on popular podcast players.

Transcript:

[00:00:05] Austin Smith: You know, one of the companies that you and I talk a lot about privately and is really interesting right now is Waymo, this sort of potential sleeping giant in Google, which is also, of course, an AI company and an AI play. how big do you think Waymo could get in 2026?

[00:00:19] Austin Smith: I mean, some of the. The ride share figures that we’re seeing are crazy. You know, expansion into cities like Austin. I think a rumored expansion into MI, or not a rumored and announced expansion into Miami and some of the velocity of ride sharing that we’re seeing out of Waymo in cities like San Francisco is just stunning.

[00:00:34] Austin Smith: I think I saw they’re larger than Lyft now, is that correct?

[00:00:37] Eric Bleeker: Yes. Yes. They are larger than the ride sharing companies and kind of the markets they’ve had the longest history in.

[00:00:44] Austin Smith: And one of the things that’s really interesting here, this also ties in with something we had talked about in our last episode, which is the, the potential application of AI to robotics.

[00:00:53] Austin Smith: I mean, in many ways Waymo is just a, a large mobile robot, right? And we’re, this might be one of the first real valid use cases where people can really internalize how AI could be impacting their physical lives.

[00:01:05] Eric Bleeker: Yeah, a hundred percent. So I think there’s. A few interesting things here. You hit the nail on the head when you said this is gonna be one of the first use cases where this impacts people’s lives.

[00:01:14] Eric Bleeker: Second, we have this pretty, uh, what you wanna call an interesting story of LA where you know, you get to these edge cases. If you called an Uber (NYSE: UBER) into the areas where protests are happening, the driver would just turn around and say, Nope. A self-driving car doesn’t have that decision making. Mm-hmm. So, uh, the protesters start calling a series of Waymo’s into the protest area and burning them.

[00:01:38] Eric Bleeker: Um, you know, it’s interesting ass, I believe you said it, there’s an old saying that, um, all PR is good pr and if you look at search trends, well, Waymo is doing this, you know, world changing technology. It really took an event like this to kind of get it. Into kind of the broader space where so many more people even know it exists because it’s been limited to a small number of markets.

[00:02:02] Eric Bleeker: So let’s, let’s break down. You had talked about the numbers. Mm-hmm. So, Waymo, they had 1 million rides completed at the end of 2023, 5 million by last year. And they’re already over 10 million rides at this point in the year. So, you know, you are seeing that upwards trajectory where I think the story is going to become.

[00:02:22] Eric Bleeker: A lot more front of mind for people. So far. Lyft’s had, or sorry, Waymo, I should say, has had more limited markets. You know, San Francisco, LA, Austin, Phoenix. It’s about to rapidly expand. I live in Washington, dc It’s coming here. It’s coming to Miami, Houston. It wouldn’t shock me if by the end of 2026 we had Waymo targeting something in the neighborhood.

[00:02:47] Eric Bleeker: Of 20 cities. So if you live across the US there’s a good chance there’s going to be Waymo deployed in active use pretty close to where you live in the next, you know, one to two years. Now what’s, what’s really interesting about Waymo itself, well, there are over 50 million driverless market, uh, 50 million driverless miles, I should say, and Swiss Re, which is a major reinsurer.

[00:03:13] Eric Bleeker: By their estimates, Waymo’s caused 90% less bodily injuries and 86% less property damage. And again, with technology like self-driving cars, it’s as bad as it’s ever going to be. I. It’s only going to get better now. Austin. I know when we had first started working together, I believe when Uber was relatively a new app coming out and what you saw from people was, you know, a big reason for the uptake.

[00:03:42] Eric Bleeker: And Ubers themselves was that it was just a better experience than cabs. It wasn’t just ordering it on the app itself. It was the trust. It was how much you knew you were going to pay, even if Uber was priced at a premium, which initially was people just wanted to use it over taxis because it was a genuinely better product.

[00:04:03] Eric Bleeker: When I talk with people who have been using Waymo’s, when I look at Chatter online. I see a one-to-one relationship in the way that Uber disrupted taxis with Waymo’s disrupting Uber. In fact, in a lot of areas like San Francisco, Waymo’s generally cost two to three times the cost. Yet there’s a massive backlog for them because people just prefer using them.

[00:04:27] Eric Bleeker: And you can imagine many of the reasons why. It’s just a lot more comfortable to be in a car where you’re by yourself. Now the next battle line is Tesla launching their own self-driving network. That’s supposed to happen June 22nd. They just changed that date. We’re filming on Thursday, June 12th. Mm-hmm.

[00:04:46] Eric Bleeker: Uh, Tesla just pushed it back yesterday, but the main battle line here is mostly around safety. Um, by Tesla’s own kind of calculations, they see their full self-driving as 54% safer. Waymo, we shared the figures from Swiss Re that were closer to 10, 10 times safer, and that comes at a cost, a very real cost.

[00:05:11] Eric Bleeker: I’ve heard the average Waymo cost about $180,000, where Tesla is aiming for a much cheaper solution, relying just on a limited number of cameras. So, you know, Austin, I think for now I, I just wanted to talk about this story we had in the news because of what’s going on in Los Angeles, but also frame up just.

[00:05:30] Eric Bleeker: What we are seeing because as you note at the start, this is one of the clear stories of a mind blowing AI application, hang the mainstream. And if someone says, I’ve just seen way more on the news, we’re about to see an acceleration point where it goes from being something you read about to something functioning in your own city.

[00:05:48] Eric Bleeker: So I don’t think at this moment we are looking for any investments. ’cause Waymo is such a small piece of. Uh, Google and Alphabet itself. Tesla’s got a lot more going on to its story. You’re kind of left with a lot of the component plays.

[00:06:03] Austin Smith: Mm-hmm.

[00:06:04] Eric Bleeker: I’m not in love with a lot of the options you have and things like uh, lidar.

[00:06:08] Eric Bleeker: But we did wanna talk about this because it is going to be something capturing the imagination and the rate at which it’s taking off will surprise people. And as you note at the start, might be kind of a preview for fields like. Robotics itself.

[00:06:22] Austin Smith: Mm-hmm. And I would just add, uh, two things there. You know, this is a, a sector to watch.

[00:06:27] Austin Smith: We’re not yet doing component plays here. And part of the reasons we might be in very much like a, a beta, you know, a Blu-ray versus HD technology battle here where, where it’s lidar versus camera based. You talked about Tesla is the biggest competitor to Waymo. Waymo, notably has cameras, lidar, and they’re much more expensive and complicated, but arguably that, you know, the, the case that they would make is that makes their vehicles safer.

[00:06:49] Austin Smith: Mm-hmm. Tesla has the advantage on the manufacturing side, price based, but far fewer, uh, sensors and they’re, they are camera based, they’re vision based plays, so it’s hard to know which component play makes sense until we know which technology is really the one that is gonna win and proliferate and end up, uh, being the real winner for this form factor.

[00:07:06] Austin Smith: One other thing I just wanted to note is for people who are looking at the potential of a company like Waymo and drawing the analogy to a Uber, I think that that’s the wrong analogy to draw because Uber famously works best in high density urban areas where you have the supply demand balance where the the service makes sense.

[00:07:24] Austin Smith: There are enough cars on the road, enough drivers on the road. Waymo won’t suffer for that. Waymo. If this proves out in dense urban areas should be able to proliferate to suburban and, and in rural areas eventually with much better economics than a company like Uber, which has to worry about both driver and passenger, uh, balance economics.

[00:07:43] Austin Smith: So this is, this is a technology actually could proliferate much broader culturally than Uber. But let’s keep going here. There’s a lot of other news to talk about. I don’t wanna get hung up on self-driving cars.​