Where Waymo fits in

Waymo's decision to build its own self-driving car technology platform has its competitors watching to see whether the company can carve out a position somewhere between automaker and auto supplier.

The strategy makes Waymo, which was spun off from Google at the end of last year, different from a Tier 1 supplier, which sells parts directly to automakers, because integrating the platform into vehicles will take a lot more coordination than simply shipping a part to the manufacturer to plug into their already-designed cars. But Waymo won't go as far as to make its own cars, leaving it hovering in a gray area.

"We don't know exactly what their strategy is," said Dan Galves, vice president of communications at Mobileye. "If they're really trying to just sell their autonomous system to automakers and have automakers integrate it into their vehicles, that's direct competition to us."

At the Detroit auto show this month, Waymo CEO John Krafcik said the company has been developing a self-driving platform in-house. Waymo isn't narrowing down what kinds of vehicles the platform could be used in -- Krafcik has said the company is exploring opportunities in personal transportation, ride-hailing, trucking and logistics and licensing its platform to automakers.

But he made it clear that wherever the technology ends up, it will be made by Waymo.

"People who are really serious about software should make their own hardware," Krafcik said at the show, quoting computer scientist Alan Kay.

Waymo has said it has cut the costs of its lidar system by 90 percent, from an off-the-shelf price of around $75,000, but competitors say the company will have to lower costs even further, prove the scalability of its hardware and generate a large amount of testing data before it can be considered serious competition.

At CES this month, Delphi Automotive and Mobileye demonstrated their end-to-end self-driving platform, which the companies expect to be production-ready by 2019 and cost $5,000 per unit. Also at the show, chipmaker Nvidia said it was partnering with ZF and Bosch GmbH to develop self-driving systems. 

Given the cost estimates for self-driving technology that's on its way to the market, Praveen Chandrasekar, mobility research manager at Frost & Sullivan, said nearly $8,000 is "a huge price tag" for just the lidar.

Waymo said it expects the production cost of the sensors to decrease further as it increases its manufacturing capacity.

Galves said costs as high as Waymo's would make the company much less of a threat to Mobileye's offering. 

This month, Krafcik said Waymo was open to partnering with suppliers to manufacture the platform, potentially bringing down costs and facilitating mass production, but he wouldn't give more details. Waymo declined to comment further.

Many recently shown self-driving vehicle prototypes hide sensors into the vehicle's design, evolving from large rooftop lidar sensors that looked like rotating soup cans. Companies such as Velodyne and Quanergy have been able to reduce the size and cost of lidar, allowing for a more elegant look.

"The majority of the industry is looking for solid-state lidar that can be integrated easily in a variety of places," Chandrasekar said.

But in the Chrysler Pacifica minivans Waymo has adapted with self-driving technology, a large sensor system that resembles a futuristic ambulance siren sits on top of the vehicle. It contains a combination of lidar, radar and camera sensors that helps power the platform -- and it won't be leaving its conspicuous perch anytime soon.

"That's the best place for them," Krafcik said at the Automotive News World Congress in Detroit, two days after his address at the auto show. "It doesn't make sense to build a really safe car that has all of these driving capabilities and to not be putting them in the best place to optimize safety."

Autonomous systems need to generate a vast amount of real-world testing data before they start driving passengers. Krafcik said Waymo had completed 2.5 million miles of testing on public roads and would reach 3 million miles by May.

That number of on-the-road miles is an advantage, Chandrasekar said.

"The challenge is not just developing hardware and software, but the number of miles of road testing you have achieved with these sensors and software that allows you to continuously fine-tune it," he said.

While Waymo has amassed a significant number of miles on its own, other companies have collaborated to boost the amount of data collected and diversify the types of situations their technology encounters.

"If you could put three or four automakers together, you can multiply the number of miles driven and have a lot better data set," Galves said.

Some suppliers see potential to collaborate with Waymo. Manuela Papadopol, director of business development and communications at Elektrobit, said the company has a variety of expertise to offer, including "software maintenance, testing and updates for carmakers that license their technology."

For companies that view Waymo as a potential competitor, the newcomer's success won't block others from being successful in the market.

"It's not a zero-sum game," Galves said. "One company making an announcement doesn't mean another one is losing."