Waymo Charges Forward
We can debate the launch timing of $Tesla Motors(TSLA)$ Mobileye, and a dozen other autonomous companies. But $Alphabet(GOOG)$ $Alphabet(GOOGL)$ Waymo is here and expanding.
Waymo has been operational in Los Angeles for a while and is now adding freeways, initially for employees, and if history is any indication this will launch to the broader audience in a few months. Ironically, Waymo has kept to the higher-risk city centers and kept off the highway, so this will be a key expansion around the country to make longer haul trips more viable and increase the addressable market.
Waymo also announced that it will be going on a “road trip” to Las Vegas and San Diego. Oddly, the blog post in the tweet below is from 2023, so it’s not an announcement of expanded operations, yet. It seems this is a test of how quickly the system can adapt to new cities with a plan to add operations in 10+ cities in 2025.
Speaking of road trips, add Washington D.C. to the list of places Waymo is going.
Commercial rides are officially starting in Atlanta. This is the first of their exclusive partnerships with Uber where $Uber(UBER)$ will operate and maintain the fleet. Waymo hasn’t expanded this partnership recently, so it’ll be interesting to see if Uber starts playing a bigger role in operating autonomous fleets or if that’s pulled in-house for Waymo and other fleet operators.
The next phase of expansion for Waymo will require more vehicles and more focus on the business’s cost structure. We’re not going to get a lot of details until Waymo goes public because Alphabet is notoriously close to the vest, but look for Waymo to push forward with the custom Hyundai Ioniq 5 launch, getting tens of thousands of vehicles on the road in coming years.
Legacy OEM Autonomy and Mobileye’s Progress
One of my highest potential autonomy stocks is Mobileye, which is the horizontal service provider in autonomy for dozens of automakers around the world. It’s building everything from advanced driver assist systems (ADAS) that it sells for ~$50 per vehicle today to Level 4 autonomy systems that go for ~$10,000 and are already being tested as robotaxis today.
In Mobileye’s Q4 2024 earnings report, the company said it’s building on more advanced driving programs, but legacy OEMs are slow to decide what they want to do for model years 2027 and beyond.
Business development activity was substantial in 2024. We won well-above 95% of the ADAS programs awarded by our top customers. On the advanced product side, decision-making timing was slower than expected, but the number of engagements significantly expanded and we gained additional clarity on future segmentation and volume expectations of premium ADAS and AV products. We have built an unprecedented set of potential opportunities across 9 of our top 10 customers, as well as others, with RFQ-stage development programs representing 25 million future units for Surround ADAS, 8-16 million future units for SuperVision, and 1-3 million future units for Chauffeur. This represents more than 10 times our current awarded business for these solutions and offers the potential for meaningful business expansion during 2025.
Mobileye Q4 2024 Earnings Release
Winning these programs involves years of testing and customization with OEMs. This is why the business model of a horizontal service company is important. Mobileye can develop the baseline technology, but then it needs to be flexible for each vehicle’s design and how they want to incorporate third-party tech or in-house tech.
During 2024, we did a lot of buildup with the potential customers building and development vehicles with our stack, working with them on very very extensive testing. And we believe all of that will bear fruit in 2025. Exact timing in 2025, it's difficult to pinpoint. But all the indications that all what we did in 2024 are going to bear fruit, both in SuperVision and in surround ADAS. Surround ADAS is also a very interesting category that is being built right now. 2027 seems like still looks like the sweet spot in terms of introduction of these kinds of technologies. And the work of Tesla it's really creating a sense of urgency with our OEMs. So we still believe that 2027 is really the right timing for introduction of these systems.
Amnon Shashua, Mobileye CEO
This is the calm before the storm for Mobileye. I expect multiple major awards this year with production of more advanced systems that have higher sale prices late this year and into 2026. And with a business that’s already positive FCF with $1.4 billion in cash and a market cap of just $13.4 billion, this is a very asymmetric opportunity in autonomy.
Via FinChat
Tesla’s Big Promise
And then there’s Tesla.
Let’s be honest, Tesla’s earnings report was terrible. Deliveries are down. Auto sales dropped 8%. Margins are tanking. The only reason the company was profitable was Bitcoin, battery subsidies, and regulatory credits.
But that doesn’t matter because the company has moved on to being an “AI and robotics” company. $10 trillion in robot revenue is on the horizon, according to Elon Musk.
As I’ve written, I’m skeptical of a lot of these plans. But when it comes to autonomous driving we did get some more news.
In June 2025, Elon Musk said Tesla would launch a fully autonomous robotaxi in Austin, Texas. Investors and the media ran with this announcement, but put it under some scrutiny and it’s not the least bit plausible. First, Tesla isn’t testing full autonomy even with a safety driver today. Even in Texas, where rules may be more lax than California, some safety and performance data will be required before there’s approval to launch an autonomous robotaxi.
And no company has gone from the start of testing to launching commercial operations in 4 months.
If you want to stay up to date on if/when Tesla puts any sort of autonomous vehicles on the road in Austing, here’s the place to check 👇️ . Tesla is not currently a “known AV operator.”
Autonomous Vehicles | AustinTexas.gov
Automated or autonomous vehicles (AVs) are defined in the Texas Transportation Code as a motor vehicle that includes an automated driving system, which is hardware and software that, when installed on a motor vehicle and engaged, are collectively capable of performing, without any intervention or supervision by a human operator. That includes all aspects of the entire dynamic driving task for the vehicle on a sustained basis and any fallback maneuvers necessary to respond to a failure of the system.
www.austintexas.gov/page/autonomous-vehicles
Color me skeptical there will be a Telsa robotaxi service anywhere in the world in 2025.
On the topic of licensing FSD, Musk continues to talk about this potential and again the media runs with it as if it’s fact. But look at this statement and ask yourself who would partner with Tesla?
What we're seeing is at this point, significant interest from a number of major car companies about licensing Tesla full self-driving technology. What we've generally said is the best way to know what to do is take one of our cars apart. And then you can see where the placement of the cameras are, what the thermal needs are of the Tesla AI inference computer. That's better than us selling some CAD drawings. And then we're only going to entertain situations where the volume would be very high. Otherwise, it's just not worth the complexity. And we will not burden our engineering team with laborious discussions with other engineering teams until we obviously have unsupervised full self-driving working throughout the United States. I think the interest level from other manufacturers to license FSD will be extremely high once it is obvious that unless you have FSD, you're dead.
Elon Musk, Tesla CEO
I can’t believe we are taking serious the idea that an OEM would decide to buy a Tesla, take it apart to figure out where the parts are, design their car around this teardown and then hope Elon will eventually have enough time to allow them to work with Tesla’s engineers to finalize the design so they can license FSD sometime in the future…are we?
I don’t know what discussions Tesla has had, but I feel confident saying no OEM is going to license FSD anytime soon.
Contrast that to the details Mobileye goes to in showing what OEMs require of their sensors and how they’re meeting those requirements.
If there’s a company licensing autonomous technologies, I’m betting on Mobileye.
It seems like Waymo and Mobileye are advancing quickly. Telsa, I have my doubts, but by June we will find out if my skepticism is well founded or not.
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