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Alphabet's Waymo Trims Price of LiDAR, Cost Down by 90%
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Alphabet Inc. (GOOGL - Free Report) has been making some serious moves to drum up business in the self-driving space. It is banking on price reduction and technological improvement, a blend of software and hardware to fend off competition.
For the last one year, the stock has outperformed the Zacks Internet-Services industry. It has returned 12.57% compared with the industry’s return of 11.46%.
Waymo – the search giant’s self-driving car subsidiary – has reduced the cost of Light Detection and Ranging (LIDAR) sensors by 90%. We see this move as the company’s gambit to have a price advantage at a time when it faces intense competition.
A 90% slash means that cost of top-of-the-range LiDAR, which used to be about $75,000, has now come down to just $7,500.
Technological Advancements
LIDAR is the most important and expensive component of an autonomous vehicle that detects objects in a car’s proximity using lasers.
Waymo CEO Krafcik stated that the company has been making some remarkable technological improvements. It has developed short- and long-range LIDAR sensors, which can detect smaller objects and their movements, both near and far away from a car.
Upon making considerable progress with software, Alphabet has started experimenting with hardware, in search of an excellent technology that will help it leapfrog competitors in the self-driving car race.
Waymo has started building hardware in-house, in a bid to improve its scalability and reliability. At the North American International Auto Show in Detroit, Krafcik noted that Waymo’s latest combination of software and hardware has resulted in improved vision systems, which are all developed in-house.
The new move seems to be in line with Waymo’s recently announced plan to produce self-driving technology for established automakers rather than manufacturing its own self-driving car. It will also help the company bring down the cost of its self-driving cars.
The move makes sense for Alphabet as rolling out a fully driverless car is taking longer than expected under the current regulatory hurdles. We believe that Alphabet is just starting to scratch the surface of what it could do with Waymo.
Banking on Partnerships
Alphabet has long been trying to bring its fully robotic car control mechanism to the market by forming alliances with car manufacturers. However, its attempts to collaborate with General Motors (GM) and Ford Motor (F - Free Report) did not work out. The search for partners has resulted in a single alliance with Fiat Chrysler . It is also in talks with Honda Motors (HMC - Free Report) .
The company already has 100 Chrysler Pacifica minivans in its test fleet and will reportedly add 100 more. As part of the initial plan with Honda Motors, Waymo’s self-driving technology-integrated Honda vehicles will join this fleet.
The ride hailing effort in partnership with Fiat Chrysler is expected to be launched by the end of 2017. It will be entering a crowded and highly competitive market, marked by the presence of Uber, Lyft and several automakers.
To Conclude
Alphabet has reportedly made the greatest progress in developing self-driving technology (the unit has been in incubation for eight years, with the technology powering 2 million self-driving miles). However, this will be a market where regulatory control will be significant, competition will be stiff and there will be a war over who controls the data generated. It's unlikely to have a single clear winner.
Currently, Alphabet is a Zacks Rank #3 (Hold) stock.
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Alphabet's Waymo Trims Price of LiDAR, Cost Down by 90%
Alphabet Inc. (GOOGL - Free Report) has been making some serious moves to drum up business in the self-driving space. It is banking on price reduction and technological improvement, a blend of software and hardware to fend off competition.
For the last one year, the stock has outperformed the Zacks Internet-Services industry. It has returned 12.57% compared with the industry’s return of 11.46%.
Waymo – the search giant’s self-driving car subsidiary – has reduced the cost of Light Detection and Ranging (LIDAR) sensors by 90%. We see this move as the company’s gambit to have a price advantage at a time when it faces intense competition.
A 90% slash means that cost of top-of-the-range LiDAR, which used to be about $75,000, has now come down to just $7,500.
Technological Advancements
LIDAR is the most important and expensive component of an autonomous vehicle that detects objects in a car’s proximity using lasers.
Waymo CEO Krafcik stated that the company has been making some remarkable technological improvements. It has developed short- and long-range LIDAR sensors, which can detect smaller objects and their movements, both near and far away from a car.
Alphabet Inc. Net Income (TTM)
Alphabet Inc. Net Income (TTM) | Alphabet Inc. Quote
Emphasis on Hardware
Upon making considerable progress with software, Alphabet has started experimenting with hardware, in search of an excellent technology that will help it leapfrog competitors in the self-driving car race.
Waymo has started building hardware in-house, in a bid to improve its scalability and reliability. At the North American International Auto Show in Detroit, Krafcik noted that Waymo’s latest combination of software and hardware has resulted in improved vision systems, which are all developed in-house.
The new move seems to be in line with Waymo’s recently announced plan to produce self-driving technology for established automakers rather than manufacturing its own self-driving car. It will also help the company bring down the cost of its self-driving cars.
The move makes sense for Alphabet as rolling out a fully driverless car is taking longer than expected under the current regulatory hurdles. We believe that Alphabet is just starting to scratch the surface of what it could do with Waymo.
Banking on Partnerships
Alphabet has long been trying to bring its fully robotic car control mechanism to the market by forming alliances with car manufacturers. However, its attempts to collaborate with General Motors (GM) and Ford Motor (F - Free Report) did not work out. The search for partners has resulted in a single alliance with Fiat Chrysler . It is also in talks with Honda Motors (HMC - Free Report) .
The company already has 100 Chrysler Pacifica minivans in its test fleet and will reportedly add 100 more. As part of the initial plan with Honda Motors, Waymo’s self-driving technology-integrated Honda vehicles will join this fleet.
The ride hailing effort in partnership with Fiat Chrysler is expected to be launched by the end of 2017. It will be entering a crowded and highly competitive market, marked by the presence of Uber, Lyft and several automakers.
To Conclude
Alphabet has reportedly made the greatest progress in developing self-driving technology (the unit has been in incubation for eight years, with the technology powering 2 million self-driving miles). However, this will be a market where regulatory control will be significant, competition will be stiff and there will be a war over who controls the data generated. It's unlikely to have a single clear winner.
Currently, Alphabet is a Zacks Rank #3 (Hold) stock.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>