Alphabet Waymo Enters Los Angeles without Its Taxi Business

Alphabet’s (GOOGL) Waymo will start testing its self-driving vehicles in Los Angeles this week. The company wants to see if Waymo’s autonomous driving technology will be a good fit for Los Angeles—the second-most populous city in the US.

Self-driving vehicles, like Waymo’s cars, have a lot of promise. The cars could make the roads safer by eliminating human driving errors that lead to deaths. Waymo wants to educate people about the benefits of self-driving technology. To learn more, read Alphabet’s Waymo Invests in Education to Expand Market. Some studies have shown that self-driving vehicles could help solve traffic congestion problems in big cities. However, there’s still a lot of debate about self-driving cars and traffic congestion.

Alphabet Waymo pursues $285 billion in ride-hailing market

Although Waymo wants to understand the traffic situation in Los Angeles, the company doesn’t have plans to introduce its self-driving taxi service in the city, according to a TechCrunch report.

Waymo’s autonomous ride-hailing service, called “Waymo One,” has only launched in parts of Phoenix, Arizona. In fact, Waymo One’s slow rollout was a major reason that a Wall Street firm cut its valuation. However, there’s huge revenue opportunity for Waymo in the ride-hailing market. Goldman Sachs (GS) predicts that the global ride-hailing market will grow to $285 billion by 2030 from $36 billion in 2017.

Waymo sets sight on $6.3 trillion freight trucking market

In addition to ride-hailing, Alphabet’s Waymo might bring its autonomous driving technology to the freight trucking market. The market has huge revenue opportunities for the company. The global freight trucking market will grow to $6.3 trillion by 2025 from $3.8 trillion in 2016.

Alphabet wants to diversify outside the advertising market

Alphabet leans on businesses like Waymo to diversify its revenue sources. Currently, Alphabet derives most of its revenues from advertising sales, which flow through its Google unit.

However, Google’s tight grip on the digital advertising market is weakening, according to eMarketer figures. We think that continued reliance on the advertising market could create problems for Alphabet in the future. As a result, Alphabet wants to diversify its business. In addition to Waymo, Alphabet’s other non-advertising businesses include Loon, Wing, and Verily. Loon provides innovative Internet access technology. Notably, the business uses special balloons to spread high-speed Internet access to remote regions. Wing provides drone delivery service, while Verily is into life sciences.