Google’s side business is beating Tesla at its main business

Google-parent-owned Waymo is now doing more than a quarter of a million paid passenger trips in its driverless vehicles each week, the company said in its earnings report yesterday. That’s a 5x increase from a year ago and 50,000 more per week than it was doing just two months ago.

Meanwhile, Tesla CEO Elon Musk, when asked about how his robotaxi effort compares with Waymo during the company’s earnings call this week, said Tesla would leave Waymo in the dust.

“I don’t see anyone being able to compete with Tesla at present,” Musk said. “At least as far as I’m aware, Tesla will have, I don’t know, 99% market share or something ridiculous.”

Musk’s rationale is that while Waymo has an obvious head start, its vehicles, which are much more expensive and produced in lower volume than Tesla’s, won’t be able to scale as quickly as Tesla’s yet to be launched service. Tesla expects to kick off its driverless ride-share program in Austin with 10 to 20 vehicles but will “scale it up rapidly after that.”

Waymo vehicles, which have been estimated to cost up to $200,000 (though the company’s latest models are supposed to be cheaper), employ more sensors than Tesla’s, including lidar to help the vehicle detect objects in inclement weather or darkness.

Meanwhile Tesla’s Model Ys, which will be used in its robotaxi program supposedly launching in Austin this summer, start at about $50,000 after paying for a Full Self-Driving (Supervised) package and including tax credits. Naturally, consumer prices may not translate to what the company spends on the cars.

As Musk put it, “The issue with Waymo’s cars is it costs way-mo money.”

Tesla, of course, would be scaling its paid autonomous ride-sharing service from zero, while Waymo clocks about 36,000 rides per day.

Just this week, Tesla announced that the company would be testing its robotaxis in the wild, but the announcement came with huge asterisks. Only employees in Austin or the Bay Area could try it out — and the car still has a person sitting in the driver’s seat. Waymo has been offering driverless rides in Austin, where it’s partnered with Uber, since March, after expanding from Phoenix and the Bay Area.

Despite getting the vast majority of its revenue from cars that people drive, Tesla considers itself to be much more than a car company, with autonomous driving making up a core pillar of its value proposition.

“The future of the company is fundamentally based on large-scale autonomous cars and large scale and large volume, vast numbers of autonomous humanoid robots,” Musk said on the most recent earnings call.

Google, of course, is an internet technology company that makes the vast majority of its money from online advertising. Waymo, a subsidiary of Google parent Alphabet, is basically a side project, whose relatively tiny revenue is housed in the earnings report under “other bets,” which is “a combination of multiple operating segments that are not individually material.”

To put a finer point on it, despite what Musk has said about future market share, as it stands, Google’s side business is beating Tesla at its main business.