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Waymo Valuation Slashed on Autonomous Vehicle Tech Delays

Gerrit De Vynck

(Bloomberg) -- Morgan Stanley slashed its estimate of how much Alphabet Inc.’s Waymo driverless car business is worth, saying the technology is taking longer to develop than previously expected.

Waymo is worth about $105 billion, Morgan Stanley analyst Brian Nowak said in a note to clients. That’s down from the $175 billion valuation he pegged the unit at just a year ago.

“There have been a series of hurdles relating to the commercialization and advancement of autonomous driving technology,” Nowak wrote in the note on Friday. “Most notably, we underestimated how long safety drivers are likely to be present within cars and the timing of the rollout of autonomous ridesharing services.”

The hype around self-driving cars has subsided as investors and analysts realize broad adoption won’t happen as soon as many thought. Waymo, Uber Technologies Inc., General Motors Co., Tesla Inc. and others keep making advancements and running tests, but the dream that human drivers could be eliminated in the next few years has largely been abandoned.

In 2018, a self-driving test car from Uber hit and killed a pedestrian, prompting investigations by regulators and a backlash from some consumer-safety advocates. The tragedy had a chilling effect on the fledgling industry.

Waymo, a pioneer in the field, has an autonomous ride service with at least 1,000 users, but it’s still confined to suburban Phoenix. The vehicles often have human safety drivers behind the wheel. A spokeswoman for Waymo did not immediately respond to a request for comment on Friday.

Morgan Stanley said its lower Waymo valuation was partly spurred by lower ridesharing profitability as the Alphabet unit uses more safety drivers and loses money for longer. The slower development of autonomous logistics services was also a factor in the valuation reduction, the bank’s analysts said.

Still, Nowak said he remains bullish on the long-term potential of the technology -- and profits for whoever can dominate the new industry.

To contact the reporter on this story: Gerrit De Vynck in New York at gdevynck@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Alistair Barr, Andrew Pollack

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