Waymo Adds $750 Million to War Chest as Driverless Cars Prove Tough to Deploy

By Tim Higgins 

In the world of driverless cars, the big keep getting bigger.

Waymo LLC has raised a further $750 million, pushing the total outside investment the company has announced in the past two months to $3 billion and bolstering its financial war chest at a time when the coronavirus pandemic has created new uncertainty in the race to develop self-driving vehicles.

The announcement on Tuesday by the unit of Google-parent Alphabet Inc. is part of a broader trend in the autonomous vehicle industry where eye-popping investments are going to big companies rather than unproven startups as the artificial intelligence technology has proven harder to deploy than expected five years earlier.

Waymo on March 2 said it had raised $2.25 billion through its first external fundraising effort to help deploy the company's fifth-generation sensor system as well as ramp up a goods-delivery service. Waymo suggested then it would be adding to the total raised.

Chief Executive John Krafcik said about the latest fundraising that the extra money wasn't spurred by pandemic concerns.

Rival General Motors Co.'s Cruise self-driving unit has raised more than $7 billion, including from Honda Motor Co., while Ford Motor Co.'s bet on driverless startup Argo AI attracted a new investor last summer, Volkswagen AG, with a commitment to invest about $2.6 billion.

To be sure, some startups have been able to attract sizable investments, but they often have high-profile founders who left big projects, such as Google's self-driving car project that has evolved into Waymo.

Some self-driving car efforts have faltered, though. On March 19, Stefan Seltz-Axmacher, co-founder of an autonomous trucking startup called Starsky Robotics, which had received a lot of attention, described in a Medium post the challenges he faced and why his company folded.

"The space was too overwhelmed with the unmet promise of AI to focus on a practical solution," he wrote. "As those breakthroughs failed to appear, the downpour of investor interest became a drizzle."

Waymo's Mr. Krafcik said the increase in investor dollars to larger players like his company demonstrated how hard the technology is to realize. "There used to be an expression...you could get a group of grad students together, a couple of six-packs of beer and put together a [driverless car] demonstration that might be worthy enough to attract money from investors. It's a very different world right now," he said, saying each milestone of development since the team began work in 2009 has only proven more complex.

"It takes more and more resources, more and more cash, more and more software resource and more and more hardware expertise," he said.

Still, some major investors see potential in the technology. Waymo said it raised the additional money from investors including Perry Creek Capital and units of T. Rowe Price Group Inc. and Fidelity Investments.

As auto and tech companies around the world try to work through the ramifications of the coronavirus, it isn't clear how driverless car programs might be affected. Last month, Ford said it was postponing its driverless vehicle service to 2022 from 2021 and rethinking its strategy.

Ride-hailing companies Uber Technologies Inc. and Lyft Inc. this month both reaffirmed their interest in autonomous driving technology, even after announcing big job and cost cuts to deal with the financial repercussions of lower ridership during the pandemic.

Write to Tim Higgins at [e-mail]

(END) Dow Jones Newswires

May 12, 2020 12:14 ET (16:14 GMT)

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