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Is Google Indeed Falling Behind in the Self-Driving Car Race?

Zacks Equity Research

Self-driving cars have gained a lot of prominence in the last few years. It was in 2009 that Alphabet’s GOOGL Google revealed its autonomous car project. Since then both technology and automobile makers are striving to get a lead in the race for dominance in the self-driving car space.

In the past few years, Google has made decent progress in the space. The company has already completed over 1.8 million miles of autonomous driving testing on community roads. Being the first one to get a permit for on road testing and its various collaborations over the past few years have apparently made Google’s technology relatively advanced by now.

But all said and done, it appears that Google is lagging in the market, which is now evolving at a rapid pace.

What’s Putting the Brakes on the Project?

A Bloomberg report yesterday stated that “Google has lost its first-mover advantage to other companies pursuing more practical, less-ambitious self-driving car services.”

It appears that the company’s commitment to roll out the cars only after they are fully automated (that is completely driverless) is creating a lot of restlessness both within and outside Google.

After all, it’s the results that matter in the end. Other players, who entered the market after Google, have already started rolling out partially automated cars.  Earlier this year, a startup initiated a autonomous taxi service in Singapore. Reports indicate that even bigger players like Uber Technologies are set to get autonomous vehicle technology on road very soon.

Google, on the other hand, is still in the heavy testing phase in order to tune its software to respond to all eventualities. 

Therefore, despite the edge in terms of technology, Google doesn’t have a clear commercialization plan in place, which is raising serious concerns. The company still has to form strategic collaborations or chalk a line of action regarding the mass manufacture of these vehicles. Though it has started a pilot carpooling service recently, it’s still far behind in collecting sufficient data to get its software right.

For the driverless robot cars that Google is dreaming of, apart from perfecting the technology, it will have to overcome other challenges like getting regulatory approvals, which are not easy to come by given the obvious risks and security issues.

And most importantly, competition seems to be intensifying in the space with both tech players like Uber, Lyft, Didi Chuxing, Baidu, Intel, Apple AAPL and automakers like Ford, Tesla, Volkswagen, General Motors GM, Volvo, Fiat Chrysler FCAU going full throttle to get the biggest share of the pie as soon as possible. (Read: Who Will Win the Robot Car Showdown, Automakers or Techies?)

Loss of Veterans Making Things Difficult

As we said before, the slow pace of things at the Google car division is already causing some restlessness internally.

In the last few months, the project has lost a number of veterans and leaders. Last month, Chris Urmson stepped down from the role of chief technical officer. This came as a blow as media reports suggested that it was because of a tiff between Urmson and John Krafcik, who had taken the helm as the CEO of the project a few months ago.

Apart from Urmson, other notable departures were of Sebastian Thrun, Jiajun Zhu and Dave Ferguson. Both Zhu and Ferguson are now working on their own artificial intelligence and robotics initiative per the Bloomberg report while Thrun is setting up his own startup in the education space. Some other ex-senior executives like Anthony Levandowski are even working on their own self-driving technology project named Otto.

These departures have made investors jittery as the car is still far from making it to the markets.

Wrapping Up

It appears that Google now has to form a concrete plan to stay in the race. Meanwhile, it faces stiff competition, uncertainty and regulatory hurdles that come in the way of its lofty ambitions.

Zacks Rank

Currently, Alphabet has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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