Motley Fool Hidden Gems Investing - What’s a Waymo Anyway?

Episode Date: November 26, 2025

Waymo is in expansion mode as competitors fail to get fully autonomous vehicles (without a safety driver) off the ground. We discuss Waymo’s approach and whether there’s a sustainable lead in autonomy. Plus, what other stocks should you have on your radar in 2026? Travis Hoium, Rachel Warren, and Jon Quast discuss: - Waymo’s dominance- Can Waymo bring costs down?- AV stocks to watch- The future of ride-sharing Companies discussed: Uber (UBER), Lyft (LYFT), Alphabet (GOOG), WeRide (WRD), Doordash (DASH). Host: Travis HoiumGuests: Rachel Warren, Jon QuastEngineer: Bart Shannon Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. Learn more about your ad choices. Visit megaphone.fm/adchoices

What is a Waymo? Anyway, Motley Fool Money starts now. Welcome to Motley Fool Money. I'm Travis Hoyum, joined by Rachel Warren and John Quast. Guys, we have got to talk about Waymo today. We've been hearing about autonomous driving from companies like Tesla for a very long time. It's been a decade ago that Elon Musk said that the teslas were going to be able to drive themselves across the country it's a huge part of their valuation but they've been stuck in test mode in austin and slowly but surely waymo is really taking over this autonomous vehicle market with no safety driver that's a big caveat here that's what i think is really interesting and worth sort of diving into as we have this

holiday week it's a little bit of a slow news week so let's talk about something that could be really impactful to a lot of different companies waymo is completing over 250 000 rides. By the way, that stat's about eight months old at this point, so it's probably significantly more than that. Rachel, I'm going to start with you. Is Waymo already winning the autonomous vehicle market before anyone else really gets off the ground? I think for now, yes. They have a significant lead. As you noted, Waymo's offering fully driverless rides to the public. And this is in major cities like San Francisco, Los Angeles, Phoenix, and the list keeps growing. And there's been this very consistent strategy of methodical deployment.

On the other hand, Tesla's public service, even in Austin, as you noted, requires human safety drivers to be present in every vehicle. And there's some really key reasons for this. We've talked about this in the past, but it's worth mentioning. Waymo and Tesla operate on completely different systems when it comes to their autonomous vehicles or their approach to autonomy, right? So Waymo uses this comprehensive sensor suite. It includes multiple LiDAR units, radar, numerous cameras. And basically what that means in layman's terms is it allows for really effective operations in a wide range of conditions, even though it comes at a higher per vehicle cost. Now, on the flip side of that, Tesla relies on a vision only approach.

So they use just eight cameras. They use various neural networks to replicate human vision. Elon Musk has previously said that LiDAR is a crutch, that they prefer this cheaper human like approach. But so far, Waymo's approach has proven to be far more effective and allowed for much faster and broader deployment. You know, one final thing as well, Waymo meticulously maps every inch of its operational cities down to millimeter precision. And that is something that I think is allowing them to deploy at a very fast rate with minimal incident and in a way that's resonating with consumers. And I think that that so far is putting them ahead of the pack. Will that change in the next decade?

It's possible. But certainly right now, they're the leader in this space. John, are we at the point where they're building an insurmountable lead? And as they deploy more vehicles, as they reduce their costs, we'll talk about the cost side in just a second, because that is important. But is this something where somebody else can catch up or a number of other companies can catch up? Or are they that far ahead?

No, I don't believe that the lead is insurmountable, Travis. I really wanted to push back on you on the premise of the question in the first place, whether or not they had a lead. Oh, man. Right? But as I researched the show, it's pretty undeniable that Waymo does have a lead here. I think that all the stats do point to that. I think you make a really hard case that Waymo would not be in the lead.

I think it is. But I would push back on the significance of being in the lead at this stage of the game. The stats that I saw, less than 1% of the population has even taken a ride in a driverless taxi at this point in the US. So according to the law of diffusion of technology, we're still in the early adopter phase. So that means that companies such as Tesla, Uber, even Amazon with Zoox, they all still have plenty of time to catch up before we get to the early majority phase of adoption. I think that's where a lead really matters is in that stage of the game. Right now, we're still really early. There is time to catch up.

Let's get to that. I think what you're alluding to with Tesla in particularly is the cost side things and then scale. They could potentially flip a switch, essentially update their vehicles and be fully autonomous for hundreds of thousands of vehicles in the US. And the pushback on Waymo has always been that their vehicles are too expensive. The estimates, at least a couple of years ago, was they were $250,000. That's probably lower now. I've seen more recent estimates that it's more like 150, maybe even 100,000 after they built out this facility. I think it's in Arizona. They also are now testing Zeker vehicles. That's a Chinese manufacturer making a custom made vehicle for Waymo that has been now seen on the roads in San

Diego. But Tesla answered the cost question first, but has not answered the tech question. Are they going to be safe enough to actually pull that safety driver and not have accidents? Waymo took the opposite approach, answering the tech question, the safety question, and then the cost question will come later. So John, is that going to ultimately be the right answer or is that just too much that's to be determined from a cost side? I mean, what do I know, Travis? There are some really smart people on both sides of this argument. I think you can make a good case for either approach. What I will say is this, I do think that fast scaling solutions will matter in this space because no matter who you are,

I think that we have agreement that this market, that the autonomous taxi space will scale incredibly fast. It will be adopted really fast once it starts gaining some momentum. Just one statistic, according to Fortune Business Insights, the U.S. market for this is supposed to go from $1 billion in 2022 to over $100 billion in 2031. Will that be exactly correct? Probably not. But will it be directionally correct? Most likely. And so, a fast-scaling solution will matter. It does seem like this could favor Tesla, but I wouldn't count out Waymo's ability to drive down cost either. Rachel, what do you think? Would you rather answer the safety question first and then say, you know what, we'll figure out costs later? You mentioned all these sensors that

they have. We could potentially get to the point where you just take a bunch of those out. This is kind of the way I have an engineering background. If you're building a plane, right, you want to have zero failures in your plane and say, I'll take some cost out later rather than saying, we got a really cheap plane, but it crashes every once in a while. But hey, it didn't cost us too much, right? Yeah, I think you made the point perfectly, Travis, because that's the approach Waymo has taken. And I think it has been incredibly effective. You know, they have really prioritized developing the most advanced and safest technology first, aiming for level four and five autonomy. And that really means you're focusing on robust systems that are designed for

commercial ride hailing service or safety is paramount. And then costs can be amortized over a fleet rather than individual buyers, at least initially. And the bet there is that once the technology is proven, mass production will naturally bring costs down. If you reverse the strategy there, you can very much end up in a situation where there are key safety concerns, which inflate your costs over time anyway. And I think that's been one of the problems we've seen with Tesla's approach. I'm not saying that they can't, you know, win in the game eventually. And it's worth noting Waymo does have an advantage for a few reasons. It originated, right, from Google's self-driving project almost two decades ago. There's that advantage of being

a part of the Alphabet family. But I think a lot of it goes back to their approach. And even though Tesla has really said, look, we want to prioritize getting the technology into consumers' hands at a lower price point using that cost-first tech incremental strategy, so far that approach isn't really bearing out. I mean, we've been hearing the promises of what Tesla's technology is going to be where it pertains to autonomous vehicles for over a decade. And so far, it's been a very slow journey. Can they catch up? Absolutely. But I think there's a lot still to be proven out which approach is most successful. But right now, Waymo seems to be the winner here. John, I want to know if you think this is a turning point. And what really brought on this

discussion for me, I live in the Minneapolis area, but these are the announcements that they made for where they're at least starting to do their safety tests. They're starting to do their mapping. Kind of the progression here is that they'll go into a city, do a bunch of mapping, kind of confirm that all their systems work. And then a number of months later, you actually launch a commercial operation. That time has started to compress from when they first go to city to what they call a road trip to when they actually bring commercial vehicles to market. But these are their announcements of where they're going just in the month of November, Detroit, San Diego, Las Vegas, Tampa, New Orleans, and Minneapolis.

Seattle's another one of the cities they have on the list. They're now moving north into areas where, look, it snowed this morning in Minneapolis. There are Waymos on the road in downtown Minneapolis right now, as we're recording. That seems like they're scaling into areas where a lot of these other companies aren't even thinking about playing yet. Well, again, Travis, I think it speaks to what we were just saying. Directionally, this is heading in a direction where there will be more autonomous driving taxis out on the road, and there will be more people using them and the technology is getting better. And so we talk about this scaling to a $100 billion industry in the US in coming years. I mean, yeah, it looks like we are heading towards that

destination. Again, though, I'll reiterate, I think that underscores once again, that this costs do need to come down for both of these companies, whether it's Tesla or whether it's Waymo, they both do need a cost-effective solution because as you ramp it up and you're still not cost-effective, I mean, yeah, it's going to be an issue. What is the point of being first in an industry that has bad economics? I can think about airlines for a good example here. So many airlines have bad economics. It doesn't mean that there's all bad airline stocks, right? You can have a good investment in the airline industry, but by and large, the industry is plagued by very tough economics. I think that we're still there for autonomous taxis. And so one of these

does need to improve for it to be a good investment for people out there. Yeah. The price that we pay is going to be really important for a lot of these companies. One of the things I like to say is don't pay for upside that doesn't exist. And then sometimes in business, the upside that you think is coming isn't there. Maybe that will be the case for some companies in autonomy. We've focused on Waymo here so far, but there are other players in this market. We're going to get to them in just a second. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. There are other companies in autonomous driving technology today. Rachel, can you just give us an idea who are the companies that we should be watching? Because it seems like the list is really long. You start looking at it and everybody has some sort of strategy in this space. Yeah, you know, there's so many ways to play the space. I mean, we've talked a lot, of course, about Waymo and what their business model could be and looks like. But there are a lot of companies that take a much more niche or modular approach to this industry. You know, Aurora Innovation is one example. So they focused on developing a universal self-driving system, which they call the Aurora Driver. And that's primarily for long haul trucking vehicles.

You've got companies like Mobileye. They're a leading provider of advanced driver assistance systems technology. Of course, that's a key foundation for higher levels of autonomous driving a lot of these companies are working towards. But you can play the space as well by investing in a company like NVIDIA, the high-end chipmaker that's providing all the essential high-performance processing power and AI platforms that a lot of these AV developers are using. There's a company called Pony AI. They're an autonomous driving tech company. They're developing robo-taxi and robotic trucking services. I think it's really important as well to look outside the U.S. So you've got Baidu, the Chinese tech giant. They're a leader in the robo-taxi race in China with their Apollo Go service. They're expanding into commercial AVs.

China is a market where adoption of AVs is much, much higher than we are seeing in the U.S. So that's something that's, I think, really critical. It's a default in a lot of their vehicles, too. It is. And again, they have this very rapidly developing domestic AV market. There's broad government support. So you've got a lot of regulatory guardrails in place. We're also seeing a broader establishment of legal and regulatory frameworks for AVs

in Europe, too. So that's something that's important to watch. So there's a million different ways to play this, right? You've got the legacy, you know, companies like Mercedes-Benz Group. They've got their drive pilot. That was the first level three system that was certified for use on approved roads in certain states in Germany. By the way, I want to hold on that.

I think this shocks people. They were actually the first. Level three goes to the point where the automaker, the vehicle itself, is liable if there's a crash. They did that before Tesla, before any of these other companies that are talking about autonomy. It was Mercedes-Benz. That just always kind of blows my mind because you don't think of them as even a player in this space, but they were at at least level three first. Absolutely. And I think very few people are talking about that or might even be aware of that. And of course, you've got Amazon, They've got their Zoox Robotaxi service. That's been a very, very limited deployment at this point. But I think the bottom line here is there are so many different opportunities in this space that are just emerging, looking in different markets outside the U.S. where there's a much more developed regulatory framework like in China and what we are starting to see in Europe, I think provides something of a guide for the market in the U.S. and what that could look like in the coming decade and beyond. The other company I want to bring into this, John, is WeRide. They actually announced this morning that they're pulling the safety driver in Abu Dhabi that is in a partnership with Uber. We'll get to the ride sharing companies in just a second. But where are you fishing when you're looking for opportunities in this space? Because some of the companies that Rachel mentioned, really interesting technology. But if we have four or five, six tech companies that are providing this technology that win, do any of them make money? But who has the right connections, the right business model for this moment?

One of the companies I really find interesting in this space is Mobileye, ticker symbol M-B-L-Y. The reason I think it's so interesting is because it has all this add-on hardware and software when it comes to mapping, and it's collecting just so much data. When it comes to what we're talking about here, rapidly scaling, I think data is important. I think it's valuable. And so this isn't the most headline-grabbing company out there. It's not a no-brainer. I'm not saying it's a no-brainer, but I find Mobileye very interesting for a variety of possible futures here.

They are also the company that was kind of the default for what you would call level one autonomy. So smart following, lane assist, things like that. And they're sort of trying to move up that stack. Well, that's what I'm interested in as well. I'm a shareholder of Mobileye. So we will see how that plays out with them. When we come back, we are going to talk about how ride sharing could potentially change

with autonomy in the future. You're listening to Motley Fool Money. Don't you wish you could just hit skip on the worst parts of your life? You know, the same way you can skip an ad? I get it. I'm Siaya and I live in Ice Cove. I've made some questionable decisions that didn't end up the way I planned. And today I'm still figuring it out.

Somehow things usually get worse before they get better. Apparently, that's how I roll. So bundle up and come along for the bumpy ride. Stream a new episode of North of North Tuesdays on CBC Gem. Welcome back to Motley Fool Money. One of the business models that I think is in question right now is the ride-sharing business model. So we're thinking about Uber and Lyft.

You can go to DoorDash for things like food delivery. But John, are these the kind of companies that are going to be winners in autonomy? Does this help improve their supply, potentially lower their costs, something that we've talked about? Uber has talked about getting to $1 a mile, which would be a 50% to 70% improvement from where we are today. is that going to be a tailwind for these companies or a headwind over the next decade?

I think the third-party aggregators are here to stay. So your Ubers, your DoorDashes, your Instacarts, I think they're here to stay. There is a possible future in which the new technology comes online and disrupts them. I concede that point, but I do believe that they're here to stay. I'll use Airbnb as an example here. If you own a short-term vacation rental, you can go direct to the consumer. You can have your own website. You can have your own mailing list. You can do all of this. And many of your vacation property owners do have systems in place to collect this consumer data and to bypass Airbnb so that they can make more money and not give Airbnb its take rate. However, by and large, these properties remain on Airbnb because that is

where the consumer is. That is where the traveler is. And as much as you try to get away from it, you can't avoid it, even if you're a really good property. And so I really see that being kind of your trajectory of where the space is going. Yeah, I think that everyone's going to want to try to move away from the third-party aggregators, but getting away from it in practical terms, I don't think they're going to be able to. And just to point out how these companies, the Ubers and the Lyfts in particular, are at least saying they're thinking about this is they think that the market is not going to be individuals owning vehicles and then just letting your tesla go out and drive around for a few hours to make a few bucks there's going to be fleet

operators so this is the way that they're actually operating their fleets uber and lyft both are kind of doing some similar things for waymo in some cases in the cities where they're partnering where there's going to be an owner of 10 20 100 vehicles then there's going to be infrastructure in place to charge them to clean them out do all that kind of stuff but it's not necessarily going be individuals, it's going to be kind of businesses behind the scenes. Rachel, does that make sense to you that we're going to move from, they're going to be still the aggregators, the Lyfts, the DoorDashers, the Ubers of the world, but then the suppliers is going to go from individuals to maybe small businesses, maybe, you know, maybe bigger business, maybe that'll be a public option

to invest in these suppliers to ride sharing. But how are you thinking about that potential change? I think to a certain extent, and I do think over the next decade and past that, we do start to see new business models emerge like you've outlined. And I do think a company like Waymo clearly has a disruptive element to its business, but I don't think we suddenly see it replace the use cases that we know companies like Uber and Lyft for. I don't think we're going to suddenly have a situation where people are only going to be going in the back of a driverless vehicle rather than ordering an Uber or Lyft or deciding that that's how they want all their food or their groceries or whatever they use those platforms for. Well, the question would be, are you going

to download another app. Well, there's that too. I think there's still a lot of questions about what is kind of the driver of adoption here. And I think that's what these companies like Waymo are still trying to figure out. And what's also interesting is they're specifically testing very different operational models in different markets, right? So Waymo directly competes with Uber and Lyft in some cities where they're operating their own ride hailing service through the proprietary Waymo One app. Now we've seen in San Francisco, for example, they're rapidly gaining market share. They've even surpassed Lyft in their challenging Uber's dominance in their operating zone. Obviously, that's a small sample size. But then you go to cities like Austin

and Atlanta, and Waymo's robo-taxis are actually just exclusively available for booking via the Uber app. So that actually expands Uber's service offerings. That's a tailwind for Uber. So I don't think we're going to see a winner-takes-all situation. I don't think there's just one way for these businesses to play that. And I think they're trying to see what business models stick. It's really, really early days still. And I think that's one of the most exciting things

about this space. Yeah, that's right. That's one of the reasons I think we should talk about Waymo more is they are throwing things at the wall and seeing what sticks. They've, seems like they've figured out the safety thing. Now, can you scale the business?

Can you move into more cities? Can you lower your costs? That's something they're going to have to answer. Other companies have different answers to that. And then you have the ride sharing piece. What are they going to do? And what is everybody else going to do? because they are using some of these demand aggregators

to help scale their business, but not in every case. So they could definitely go their own way if they build a big enough brand. So a lot of opportunities, potential risks here for investors, but definitely something we should be keeping our eye on over the next 10 years. As always, people on the program

may have interest in the stocks they talk about. The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows The Motley Fool's editorial standards and is not approved by advertisers. Advertisements are sponsored content

and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Rachel Warren, John Quast, Bart Shannon, Behind the Glass, and the entire Motley Fool team, I'm Travis Hoyum. No show for us tomorrow as we do have the Thanksgiving Day holiday,

but we'll be back on Friday. Thanks for listening to Motley Fool Money.