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How big can Waymo’s business get in 2025?

Investing.com — Waymo, Alphabet’s (NASDAQ:GOOGL) autonomous driving unit, has seen increased adoption in recent years. As per analysts at Morgan Stanley, by 2025, Waymo could make up a low to mid single digit percentage share of the rideshare markets in key cities like Phoenix and San Francisco.

Waymo’s business has seen growth, reporting about a 10x increase in weekly trips compared to May of the previous year. 

By August 2024, Waymo was conducting 100,000 trips per week, a significant jump from the 10,000 trips in May 2023. 

This rapid scaling is further supported by its expansion into new geographies, including neighborhoods in Los Angeles, airport services in Phoenix, and the San Francisco Peninsula.

The number of miles driven by Waymo also rose exponentially, with its most mature market, Phoenix, witnessing about a 350% year-over-year increase in the first half of 2021. 

By 2025, the company is expected to continue on this trajectory, driven by technological advancements and growing geographic reach.

The base case suggests that Waymo will achieve a 4% market share in Phoenix and 3% in San Francisco. This corresponds to a projected revenue of $76 million in Phoenix and $64 million in San Francisco in 2025​.

Additionally, Waymo’s partnership with Uber (NYSE:UBER) is critical to achieving these numbers, as some trips in Phoenix will be conducted through the Uber platform. This partnership is expected to contribute to Waymo’s ability to secure a portion of Uber’s gross bookings in these regions​.

Waymo is currently operational in four cities, namely Phoenix, San Francisco, Los Angeles, and Austin. However, the company has mapped over 25 cities and continues to expand. 

San Francisco, Los Angeles, and Austin are scaling at 2x the rate of Phoenix, with each new city launch reaching key milestones faster than its predecessor. 

Morgan Stanley highlights that the pace of city launches will be a crucial factor in determining the size of Waymo’s business by 2025. 

“With a presence in only 3 of the top 20 metro areas in the US (Austin is not a top 20 metro), Waymo still only covers a fraction of the overall US population,” the analysts said. 

Morgan Stanley forecasts strong revenue growth across Waymo’s markets. Waymo’s revenue is expected to grow 109% year-over-year in 2025, with the overall revenue across all markets (Phoenix, San Francisco, Los Angeles, and Austin) reaching $180.9 million​. 

These projections do not include the potential revenue from new city launches, which could further accelerate growth.

While Waymo’s growth is promising, challenges remain. Technological hurdles, safety concerns, regulatory requirements, and investment needs make full autonomy a multi-year challenge. 

Morgan Stanley analysts caution that while Waymo’s business can grow significantly by 2025, broad adoption of autonomous vehicles across all cities may still be a distant goal​.

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