Tesla Overvalued as Waymo's Quiet Ride Gains Momentum in Autonomous Race

Even if Tesla becomes the first to achieve L5 fully autonomous driving technology, the rapid advancement of AI capabilities may allow competitors to swiftly catch up, making it difficult for Tesla to secure excess profits. On the contrary, the value of Alphabet's Waymo may be significantly underestimated, with its weekly 100,000 rides potentially generating over $100 million in annual revenue, a figure that is rapidly growing.

On October 21, Bernstein analysts, led by Nikhil Devnani, released a report indicating that Tesla's Robotaxi offerings are overvalued, while Waymo's potential is underappreciated. They express skepticism about Tesla's ability to dominate the self-driving sector, noting that Tesla lags behind in regulatory collaborations compared to peers, even if they achieve L5 autonomy first. The accelerated advancements in AI may democratize this technology, limiting Tesla's ability to extract significant financial premiums.

Conversely, Bernstein suggests that Waymo's assets are undervalued due to a lack of transparency, primarily because Alphabet bundles Waymo with other diversified projects. With their fleet achieving 100,000 weekly paid trips in the U.S., Waymo's yearly revenue prospects are promising.

According to Bernstein, Tesla's current market perception is too optimistic, while Waymo, despite leading in autonomous vehicle market presence, flies under the radar. Waymo employs cutting-edge hardware and sophisticated algorithms, including multiple cameras and radars, ensuring robust safety and reliability in complex urban settings. Conversely, Tesla's vision-reliant strategy is seen as riskier but potentially cost-effective.

This competition highlights a broader dynamic in the autonomous driving race, where investors might need to reassess where real growth potential lies, considering both proven technologies and regulatory readiness.