Alphabet-owned autonomous vehicle company Waymo has announced that it has raised $2.5 billion in its first new funding round in a year after a string of defections of executives rekindled concerns about the technology struggling to scale up.
The announcement came a day after General Motors’ majority-owned Cruise self-driving car subsidiary said that it would gain access to a $5 billion credit line.
The fundraising, headed by Alphabet, which owns Google, and other existing shareholders is the second outside funding for Waymo, which last year raised $3.25 billion in its first external investment round since its inception in 2009.
Waymo has long been viewed as the leader in the self-driving race, but attaining the holy grail of full and safe automation remains challenging as it faces growing competition from rivals backed by legacy automakers.
Waymo Co-chief Executives Mr. Dmitri Dolgov and Ms. Tekedra Mawakana said in a statement that “there’s no greater challenge in artificial intelligence than building and deploying fully autonomous technology at scale.”
Waymo, which offers driverless ride-hailing in limited regions of the US, has applied for a commercial deployment permit in San Francisco this year. It has also expanded into the trucking industry, testing goods transport services using autonomous trucks.
Mr. Sam Abuelsamid Principal Research analyst at Guidehouse Insights remarked that “self-driving start-ups are unlikely to be anywhere near profitable for many years to come. They need to raise the capital, to fund that expansion into the operational side.”
Investors in self-driving start-ups will be able to recoup their losses through initial public offerings (IPOs), he added.
Waymo said that the funds will be used to advance its Driver, the company’s autonomous driving technology, as well as to grow Waymo’s team.
According to the investor website PitchBook, Waymo, is valued at slightly more than $30 billion. Alphabet did not immediately comment on the unit’s most recent valuation.
US-based AutoNation, Magna International, Canada Pension Plan Investment Board, Fidelity Management and Research Company, and new investor Tiger Global are among the investors in this round.
Mr. Grayson Brulte, President at Consultancy Brulte and Co pointed out that “the latest Waymo funding round demonstrates that there is a healthy investor appetite for self-driving technologies.”