Tesla Inc (ticker: TSLA) is the presumptive leader in driverless automobile technology. However, a new deal between Alphabet Inc (GOOG) (GOOGL) and ride-hailing startup company Lyft could be a sign that competition is heating up in the non-traditional auto industry.
Waymo, Google’s driverless car unit, and Lyft confirmed their partnership deal earlier this week.
“Lyft’s vision and commitment to improving the way cities move will help Waymo’s self-driving technology reach more people in more places,” a Waymo spokesperson said.
The Waymo-Lyft partnership is a compelling union for Google as it tries to keep up with Tesla. Morgan Stanley analyst Adam Jonas says the combination of Google’s technology and Lyft’s miles could help Google bridge the gap with Tesla when it comes to data collection, testing and commercialization. Morgan Stanley estimates that while Waymo’s vehicle fleet is logging several thousand miles of data per day, Lyft’s fleet could be accumulating millions of miles on a daily basis.
Google’s powerful combination of technology, data and resources could be a troubling sign for the much smaller Tesla. Jonas recently downgraded Tesla stock from “overweight” to “equal-weight,” citing fears over competition as the primary justification. But competition from established automakers Ford Motor Co. (F) and General Motors Co. (GM) may not be the primary concern for Tesla.
Instead, Jonas says huge tech companies with massive, loyal user bases and nearly unlimited resources, such as Apple (AAPL) and Google, could be Tesla’s main competition.
“One of the biggest concerns we have about the ‘end-state’ of shared mobility from a Tesla perspective is the risk that other firms could enter the market as a competitor, offering the mobility service from, say, New York to Boston or from Santa Monica to LAX at a loss … just to get access to your time and data …the chance to monetize your journey for paid search or to sell you content,” Jonas says.
At a recent Ted Talk presentation, Tesla CEO Elon Musk said the company expects to have a fully driverless car on the market within two years. ARK Investment Management estimates Google’s driverless car technology will be ready for launch by 2019 as well.
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