If We End Up Sitting Around in Self-Driving Cars Watching Ads, Google Is Going to Make Billions

While producing cars and components is still expected to be a good business once cars are autonomous, providing the driving experience is seen to be the biggest and best opportunity. New research from UBS predicts that U.S. autonomous-vehicle revenue will reach $2.3 trillion by 2030—and 70% of the estimated is expected to come from selling experiences to the former drivers.

The biggest opportunity—$1.2 trillion—will be in robo-taxi services, moving people and things around in autonomous vehicles, according to UBS. Even though ride-sharing platforms like Uber and Lyft have an advantage through their large customer base, UBS sees their future as analogous to online travel agencies where the new ride agencies book trips with multiple robo-taxi services.

For the services themselves, it’s two traditional car companies—GM and Mercedes-Benz owner Daimler—and one upstart, Alphabet’s Waymo, that are seen as having the best opportunities to vertically integrate the car, driving technology, and service for the consumer.

The second-biggest opportunity, or $472 billion, will be in in-car monetization: selling ads or services against the time spent in the car not driving. Not surprisingly, UBS thinks Waymo—or more broadly, Google’s parent company Alphabet—will be the dominant player in this category, perhaps capturing 60% of the revenue. UBS thinks Waymo’s combined opportunities in services and software make Waymo worth $75 billion today, or roughly 11% of Alphabet’s current valuation.

Pretty impressive for a company that only just started taking paying customers in Arizona, is part of an industry reeling from the fallout from its first human fatality, and isn’t expected to generate any real revenue for several years.

The race to providing autonomous vehicle experiences is far from over and there is still time for new competitors. But it is interesting that UBS makes almost no mention of the other big four tech companies, Apple, Amazon, Facebook, and Microsoft, as key players in the autonomous future. For now it seems, Alphabet is in the lead on its own. Way to go, Waymo.