Google Might Be Sitting on a $70 Billion Rival to Uber and Tesla

Google’s self-driving car unit could be far more valuable than General Motors and Ford, Morgan Stanley analysts said Tuesday.

Waymo, the self-driving unit of Google’s parent company Alphabet could be worth $ 70 billion, Morgan Stanley analysts led by Brian Nowak wrote in the note to clients. That valuation comes a week after Waymo struck a partnership with the second biggest U.S. ride service by volume, Lyft, to launch a pilot program for self-driving cars. Morgan Stanley took the partnership as an encouraging sign that Waymo could put more cars on the road and “drive the autonomous transition.”

While autonomous vehicles seem fated to eclipse driver-operated ones, it’s still stark to see exactly how much the autonomous vehicle industry is expected to grow. At an expected so-called “enterprise value” of $ 70 billion, Waymo would be worth more than GM (now $ 44 billion), Ford ($ 35 billion), and Tesla ($ 51 billion), based on data from Bloomberg. That’s assuming Waymo establishes a fleet of about three million self-driving cars driving about 65,000 miles a year each by 2030. Enterprise value is a measurement — using market capitalization, debt and cash — of how much it would theoretically cost to buy a company’s business.

If fact, the Morgan Stanley analysts said that if Waymo manages to play its cards right, it could even reach an enterprise value of $ 140 billion — exceeding the current combined value of GM, Tesla, and Ford. That makes Alphabet’s budding self-driving unit not only a threat to Uber — but also to electric car maker Tesla Motors.

“Our Internet team argues Waymo is a potential spin-out candidate that could be worth $ 70 billion, competing for talent and capital vs. Tesla,” Morgan Stanley analyst Adam Jonas wrote in another note Tuesday.

Morgan Stanley gave Alphabet a target price of about $ 1,050, a 9% upside from its Monday closing price.