Waymo Met With More Than 12 Carmakers in 2016 on Driverless Tech

(Bloomberg) -- Waymo met with more than 12 carmakers including Volvo in 2016 as the Alphabet Inc. unit sought manufacturing partners for its autonomous vehicle technology, according to an internal document unsealed in court this week.

The memo, marked "highly confidential," was written on Aug. 18, 2016, the day Bloomberg reported that Uber Technologies Inc. was partnering with Volvo and had acquired driverless car startup Otto, a deal that triggered a bitter legal battle between Waymo and the ride-sharing giant.

Waymo tried to reassure staff in the document after the news. Otto was co-founded by a former Google executive Anthony Levandowski, and Volvo was a potential partner that could manufacture cars -- something Waymo didn’t want to do.

"Did we try to talk to Volvo? Yes. We have met with over a dozen OEMs this year, including Volvo," Waymo said. "We were surprised they wanted to partner with Uber given the importance they place on safety, and developing this technology safely. However, the deal with Uber is non-exclusive for both parties." OEM is industry lingo for a carmaker.

The comments are a rare, unfiltered glimpse at Waymo’s pursuit of auto manufacturing partners before it spun out of Google as a standalone unit in December 2016. So far, Waymo has announced deals with Fiat Chrysler Automobiles NV, Jaguar Land Rover Automotive Plc and Honda Motor Co. Volvo reiterated in an email on Tuesday that its deal with Uber wasn’t exclusive. Waymo didn’t respond to a request for comment.

Uber and Volvo, part of China’s Zhejiang Geely Holding Group Co., agreed to invest $300 million into their self-driving car effort. Waymo disparaged Uber’s strategy and Otto’s technical strengths, while noting that Uber was still interested in working with Waymo.

"Uber called us after today’s announcement and they reiterated their desire to partner with us (which is perhaps a sign of the lack of confidence in their progress)," the memo said.

Here are other tidbits from the unsealed documents this week:

• Waymo weighed a "mixed fleet": One question the document addresses is whether Waymo would consider Uber’s approach of coupling autonomous test cars with regular human drivers. Waymo warned against that in the memo. "Introducing a mixed fleet can be a distraction to our business, and also training wheels that become harder to take off from a public and regulatory perspective (for example, regulators may force us to keep test drivers in vehicles indefinitely until we’ve driven x billions of miles)," it wrote.
• Waymo’s lidar costs: The Waymo-Uber lawsuit revolved around lidar, a sensor technology that helps cars detect their surroundings. In a related filing, lawyers for Waymo wrote that the materials for its GBr3 lidar cost "just over $5,000" -- a fraction of the $70,000 cost of the industry standard then, from Velodyne.
• The Alphabet term sheet: The memo was written months before Waymo because a unit of Alphabet. Getting there required the car project to jump through many of the hoops that independent startups face when raising money from outside investors. There was a term sheet with 25 categories and members of the corporate-development were waiting to hear from Alphabet executives. By August, they had only agreed on 14 of the categories.
• Levandowski defended Google’s founders: The Waymo document reassures staff that Alphabet’s bosses, Larry Page and Sergey Brin ("L&S" in the document) are "really supportive" of Waymo’s strategy. But other emails disclosed in the Uber legal case show that Page was upset about Levandowski’s departure for fear that he would start a rival. (A Google HR manager called the episode a "soap opera.") Even after Levandowski co-founded Otto, the Google founders stayed in touch. In text messages disclosed on Monday, Levandowski wrote that Brin had requested a meeting on Feb. 6, 2016, five days after Otto was started. "Sergey and Larry are actually really good people," he wrote later to one Otto co-founder. Then he wrote: "About to erase the messages."

--With assistance from Joel Rosenblatt.

To contact the reporter on this story: Mark Bergen in San Francisco at mbergen10@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Alistair Barr, Molly Schuetz

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