Walt, we're back at it. Another week, another Uber announcement. I got to tell you, this printing press is running on overdrive. Perhaps it's running some Nvidia Blackwell chips. I don't know, but it keeps pumping out the news over at Uber. Waymo says, 'Bye-bye early rider. Hello everybody rider in Miami and Orlando.' And then Lyft, they pulled back the curtain in Nashville in the depot they're building specifically for autonomous vehicles. But let's start with Uber and Lucid. Another week, another deal, and for me, another press release full of questions. You want to break it down for us?
Waymo is just kind of like just chugging along, right? Every week they're just, you know, expanding in a new market. In this case, Miami and Orlando. Um, which yeah, I think you've already tested. Um, I think it's also highways, too. So, it's not like where they're going, it's very quick evolution in these markets now. And part of that is, you know, part of this I guess generalization, the speed of AI development. And I think more people are kind of catching on to this concept of like even though it took a decade or so for Waymo, that they're kind of accelerating expansion from here is there. Obviously, that's a benefit to new entrants as well, cuz they also benefit from how AI is accelerating a lot of things. Uh, I guess my question to you, Grayson, A, you know, were you... Can you remind me, were you on the highways in Miami in a Waymo already with your, you know, some of your early adopter access? And then secondly, um, Orlando, are you aware of whether, you know, these cars can actually operate, uh, you know, taking people to the Disney resorts?
Well folks, we're starting with Waymo, not Uber. I got ahead of myself there, but to Miami, no, I have not been on the highway in Miami. When I was early rider Miami, it was all surface streets, and I want to clarify for the audience. When I was early rider Miami, it was only on the mainland. It wasn't going out to the beaches. So, no, wasn't there. On Orlando, Orlando is not operating on the freeways. And Orlando is not operating at Disney World yet. Which I still call the Reedy Creek Corporation. I know Governor DeSantis renamed it. Don't remember that name, but I still call it Reedy Creek. If you look at the Waymo map, Walt, it's carved out. Now, it's not shaped like Mickey Mouse with the ears or Goofy with the big floppy ears as well. No service there. Why? There's something called Disney strategic alliances. And what does that mean? As any parent who's taken their children to Disney World, you've got to open up the bank account and spend a lot of bucks. Not Mickey bucks. Real bucks. And that partner, drum roll, please, is Chevrolet. Chevrolet's owned by GM. So, it is my assumption, my hunch, that Waymo will have to enter into a corporate strategic partnership with Disney to be able to operate there. Again, that's a hunch, just based on the way that Disney does business and the way that you have to pay out called the Mickey Mouse tax.
Well, no offense to Sterling Anderson, but, you know, if they're going to wait for GM to deliver some autonomous vehicles, you know, to get people into the parks, they may be waiting uh for a fair amount of time. Now, I get that there could be some issues between Disney and YouTube given some of the competitive issues that they have, you know, relative to their media business. Um, but this seems like a product, you know, some type of autonomy product you'd want to have in Disney. It seems consistent um with the brand and how they'd want to attract people there, especially given what you've said in the past of um, you know, even Dara, the CEO of Uber, in terms of, you know, autonomy as a tourist attraction. So, you know, notwithstanding the existing relationship with Chevrolet, you know, which means GM, um, you know, if they were to do a partnership with someone to get, you know, cars into Orlando, who would it be? And do companies that are not Tesla have an advantage because of the fun sensors that they have on the roof? It makes it seem more like something out of Tomorrowland if they have sensors as opposed to Tesla which just looks like any old Tesla.
Well, we're going to go in the wayback machine here to the early days of autonomy. This was Iger's first run before Chapek to give individuals a timeline there. It is when companies were still operating primarily with safety drivers. In the early days when Walt Disney Imagineering was exploring—I used to use the words exploring—putting autonomous vehicles at Disney World because yes, they have explored it and yes, for full disclosure I have met with Disney Waymo in the past about this. There is two interesting clauses that had to be part of that contract. This is the early days. One, and ready for this Walt? The vehicle had to fit Mickey Mouse. No joke on that one. That was a requirement. And two, they wanted to put Mickey Mouse ears where the lidar sensors were to kind of make it look like the Mickey mobile. And you might say, well why is there precedent for that? Years ago, and I don't know if they're still doing this, Lyft operated minivans as in Minnie Mouse polka dots, human driven vans around the parks. There is a great opportunity in my opinion for Disney to put Waymo there. I was talking to a parent the other day about this and they said, 'I got stuck at the Animal Kingdom for 45 minutes waiting for the bus. It was a pain in the beep beep beep beep.' Well, Waymo solves that issue. You get it out, you can go to more parks. You spend more time in the parks, you spend more money. Outside of the old requirements, we don't know what the new requirements are, it makes a lot of sense. You're keeping people in the Reedy Creek Corporation, which I know it's not anymore, and they're going to spend more money.
I think I have a better idea for Disney than Waymo. Because if you're Disney, you want to keep people on your properties or at least affiliated properties. And obviously Waymo's can take you to any old hotel and so have someone else benefit from your dollars. And you obviously want to take those people to whatever that place is where everyone goes to, you know, to restaurants. I always forget the name of it, but um, you have Glydewways. Glydewways is what I think—I didn't see it in our show notes, but I think raised some additional capital this week. And you know, I always remember my, you know, when I was a kid going to Disney and you had that monorail system and how cool that was at the time cuz you would, you know, get off the elevator at your hotel. I think it was the Cosmopolitan and it would take you right into the parks. Glydewways can give you that Tomorrowland-like experience. And because Disney effectively controls all of that real estate there and the way Florida is in general, where you don't need to like basically do eminent domain and right of ways, like you could put these dedicated paths for a Glydewways-type vehicle. And I think those Glydewways vehicles would fit Mickey Mouse. Um, so it would check the box for Mickey Mouse and whatever other characters you'd want to stuff in there. And uh, you would also be able to limit it to the locations that are basically Disney property. So it'd handle the scale of people cuz Glydewways is a great example of like why this California train should not exist. You can handle scale of people with individual rides and not have wasted multi-million dollar assets of empty seats. So I think, you know, my suggestion on the autonomy front would be maybe Disney should cut a deal with Glydewways and that would be economically beneficial, fish beneficial for them.
That's an interesting point. I would still vote for Waymo, but your point is in today, you can go to SeaWorld and you can go to Universal Studios. And we know a lot of families based on tourism data that go to both parks. So you're right, you keep it in that controlled environment. Very good case there, but if you look at the way that Reedy Creek Disney World is laid out, Waymo makes more sense because the monorail is—using the monorail's example—it's limited to where it can go. Just that's based on cost, by the way. But I believe in my humble opinion that the Waymo gives more flexibility.
Well, we can agree to disagree on that one, but either way, we would guess that Disney's going to want to do something in this space. It seems on brand for them to do that. Who knows with the new CEO and, you know, where that company is going next. Moving along, uh, you know, Waymo is not just doing stuff in the US. This is an international company, right? In London, um, apparently, I don't know what exactly is new. Maybe you can explain this to me, Grayson, cuz as our listeners know, when I was back in London, I don't know, it was weeks, months ago, Mel, I spotted a Waymo on the street. So, what exactly did they announce this week in London?
They announced the next step. As you and I demonstrated the six steps in an earlier podcast, when you were in London, hopefully you said hi to His Majesty King Charles. When you were there, they were manually driving. They had two hands on the wheels. Now, Waymo is driving hands-off. So, they're safety drivers and they're in the autonomous testing phase. The next phase of that will be removing the driver. So, they officially entered the next phase, getting closer to driver-out testing and then eventually when the regulations allow, going to full-blown commercial operations with no safety driver.
Well, that seems like a good segue into Wave, who's based out of the UK and I think is in London, who just raised 60 million from a couple of chip guys as a follow-on investment from the earlier billion-two investment that they had. Um, you know, so here's Waymo making progress in the whole market of a company that is, I think, allegedly trying to compete with them, but maybe they're not. Like, what is, you know, what's the latest on Wave and what was your read on this incremental investment from Qualcomm and others?
With this investment of 60 million from Qualcomm, AMD, and ARM, it signals to me, based on the architecture of the chips, ADAS, is that Wave seems to be leaning into a level two system. When he said a level two plus system, any way to describe it, they seem to be leaning in towards an ADAS system. Because right now, I mean Qualcomm is developing some technology for L4, I haven't seen it commercialized or haven't been in a vehicle operating it yet. That for the computer in the vehicle to or in order to achieve L4 outside of Tesla, it's mostly Nvidia at this point. So to me, this investment signals a growing interest in the ADAS market.
I think I deserve a clappy hat for this one cuz I think I kind of alluded to this in terms of Wave and, you know, what they're showing versus not showing and, um, you know, whatever. I mean, this is ADAS. By the way, ADAS level two plus plus, I think can be a huge market. I think Tesla, you know, we'll get to this later, but getting approval, you know, in one European market that can lead to others can open up I think what is going to be an important market. But obviously there's critics there that say level two, you know, doesn't get to level four. I would guess that those criticisms apply no matter who it is. Like that structurally—I've heard you've heard this, I've heard this argument. I'm not saying I agree with it or disagree that it's structurally a different type of approach. So it would be great to know more about, you know, kind of the Wave, what the timeline is, what the roadmap looks like in terms of the products. But like Alex Kendall, the CEO, when this announcement happened, he's like boasting on Twitter why automotive chip suppliers are rushing to invest in this self-driving startup. Basically they're saying like, hey, you know, this is great. These chip suppliers are rushing to invest. I mean, I'd rather see like Tiger Global or others in there. Chip suppliers invest because they get revenue, right? They want to have a place at the table to get revenue. Your point is that maybe some of these chips—AMD, ARM, Qualcomm, at least this version of Qualcomm—we know that Qualcomm's obviously doing level four and wants to get into that market. You know, our just one business and so I was a little snarky there and I said like investment out, you know, revenue in, you know, in terms of that investment. But I guess the real question is like, you know, when do they get to level four? Uber is, I don't think, in this for level two and, you know, this is one of many companies that Uber's invested in, having put in just in February $300 into this company as part of the initial part of that billion-two.
Well, clappy hat for you for starters. Here's the clap because you uncovered the signals from the ADAS market. Really, what I'm watching for is how does Waymo's relationship evolve with Nvidia? Is it primarily focused on an L2 plus system? And then I did an interview with a media outlet today. When Waymo begins operating driver-out in London and potentially the fact that Waymo is not operating driver-out with Uber, does that raise a question for Uber in their strategy, which brings us to the next topic? It seems to me based on Uber keeping the press release machine hot, perhaps it's powered by the Nvidia press machine. Lucid, they seem to be, I'll just say it, doubling down on Lucid. What do you make of this continued investment that Uber is making into Lucid?
Yes, they are in fact doubling down. This is another $200 investment on top of I think what was 300 initially back in July of 25. You know, if you factor in, you know, what the vehicle cost is going to be because the original commitment was 20,000. I think now this is an incremental 25,000. So we're talking 45,000 cars. Now granted, Uber wants to, you know, offload this and hopefully someone else will come to finance these cars, but just if they had to purchase these cars, which they probably will for a lot of their earlier partners, that's like another $4 billion on top of the 500 equity investment, on top of the 400 million ballpark I think that they put into Nuro. So, all told when you think about the Nuro and the Luminar investments, and if they have to buy these cars, you're talking like 5 billion, right? And you know, the FT obviously highlighted this past week talking about the 10 billion. Do you know there's another, you know, potential 4 billion they could put into Rivian if they had to purchase all those cars plus the billion investments. Like this all adds up and you're like north of 10 billion, probably closer to 13 billion relative to a free cash flow number last year that was around 10. So, to me this is like, you know, you have these companies that are investing in AI and are using all their free cash flow to invest in AI. Uber has tried to position themselves as a free cash flow, hey, we're buying, you know, stock back company, but under the surface, you know, they're making a lot of financial commitments as they should do. And you know, we've talked about this on the last podcast. They absolutely should. They should not shy away from it. They shouldn't be upset that the FT highlights this. This is what you I think need to do to invest for, you know, the next wave of growth. And to be fair, of that 13 billion, there's only about 3 billion of that which is equity investments. The rest is just, you know, vehicle financing. That's going to be an important part of it. That's what makes it a capital intensive business that I don't think they're going to escape from. Like I do not believe that they're going to be able to offload those. This is just the initial cars, right? We're talking about only 140,000 cars, you know, at probably a ticket price of 10 billion dollars in terms of the cost of the vehicles. I'm not sure they're going to get this thing going while Waymo and Tesla potentially are cranking things out. But these are I think going to be dollars well spent for Uber to be the primary participant in this autonomous future.
But here's the question. Let's just call a spade a spade. Not all of these investments are going to work in these partners and at some point you are going to have consolidation. Then what happens?
Yeah, I mean, look, some of this stuff's going to go to zero, right? Obviously, like we want everyone to succeed, right? We're going to continue to monitor all this, but the reality is not everyone is going to succeed. So, when follow-on investments happen, then Uber's not going to be there. In some of these cases, if they see the technology not proceeding, if that driver is not coming out of the car, you know, Rivian's not going to get the money. You know, if Wabi doesn't deliver, you know, on whatever they're promising from a technology, they're not going to spend a couple of billion dollars on Wabi cars. So, you know, these things are like stuff that could happen if everything's successful. The reality is that field will shrink over time, you know, and we'll be here to try and figure out which ones are kind of in the lead and which ones are maybe falling back. But then, what is the real end game? Like, if Waymo remains separate, if Tesla, you know, delivers on the technology, right? Who is the partner and does it make sense then for Uber to effectively just own whoever that winning partner or two is? You know, others would say, 'No, keep them separate, you know, just be the platform.' Maybe, but like if you're really competing for the market share of this growth market, maybe it makes more sense to own that. And, you know, right now they've got decent-sized, you know, investments in a bunch of these.
It makes sense to own the way things that are shaping up. It seems that there's a very clear path potentially for Uber owning a Nuro Lucid combination and rebranding it as ATG. And if you look at that partnership, this is the only documented one that I'm aware of where Uber is controlling the in-vehicle experience. And when we were at CES and you sit in the back of the Gravity, that whole digital experience is very—they make it very clear that it's powered by Uber. The other ones, we haven't seen that. That's an interesting sign there.
Look, at the end of the day, like, you're going to worry about turning from this asset light company. There's some trucking, you know, versions of this like Plus, right? They're trying to position themselves as asset light. That's fine. That is the ideal that maybe you want to work for. But sometimes life doesn't work out exactly the way you want it and then you end up having to, you know, own the assets and there's, you know, potentially a good return on that. I would say that there's, you know, a third or maybe let's call it the fourth leg on the stool, which is the service component as well. Also, in a way, capital intensive, you know, has maybe low margins, but again, so does ride share have low margins relative to booking revenue. Um, but maybe it becomes an essential part of a business that can be very large from a revenue standpoint that there might be some capital. It's not like always a sin to, you know, deploy capital in order to get growth and get good returns on that investment. And then again, I agree with Dara, over time, you will have financial partners coming in, you know, and you can offload whether there's the cars or the service stations or whatever, but there's going to be capital, I think, that's needed to get to that point. And you know, to Uber's benefit, they've—Dara's gotten the company to a good free cash flow generation position that they can afford, you know, to do that.
Well, they can afford to do it. If you look at—let's go back 6 years, 7 years. I mean, the TCI Fund Management letter to Sundar telling him to sell off Waymo to do share buybacks. Uber's doing share buybacks and investing at the same point. When do we get a clear strategy on that because Sundar's like, 'Yeah, nope, sorry. I'm continuing to invest in Waymo.' And Waymo became that. When does Uber signal to the market that this is what they're going to continue to do cuz it seems that Uber's trying to appease both sides of the equation here?
I agree with you from a messaging standpoint, but the reality is they are investing the dollars. And that's really what matters the most. It's less of what you say and more of what you do. And you know, when investors tell you to buy stock back, I mean as a management team you just have to have a spine. Like if you have opportunities to invest in things that that investor doesn't have on their own, then you should do that. You should invest in growth. When companies are doing share repurchase or mergers or thing, it's cuz they've run out of growth. They've run out of opportunities where they can get a return on the capital that's better than the individual investor or institutional investor can get separately from them. And then it is their duty then to return the capital. But if Uber's in a position to get a return on its capital because of its dominant position, you know, as the platform, 100% you know, they should be doing that. Obviously judiciously and at the right valuations, but like, you know, that should be the mandate of the company and to a certain extent—I won't use the F word cuz my mom gave me very negative feedback after listening to the last podcast. Um, but they should go tell investors to fly a kite when there's an opportunity to invest for a time. And again, I say this with extreme bias. And what is my bias? That I believe autonomy is the future. It is inevitable. It's happening very fast. And they need to do whatever they can and anyone in the space to position themselves the best they can. They don't have multiple decades to get there.
