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Handout photo courtesy of the Nevada Department of Motor Vehicles shows a Google self-driven car in Las Vegas, Nevada, May 1, 2012. (Handout / Reuters/Reuters)
Handout photo courtesy of the Nevada Department of Motor Vehicles shows a Google self-driven car in Las Vegas, Nevada, May 1, 2012. (Handout / Reuters/Reuters)

Trans-Canada Highway

Toyota, Mazda... Google? How a search engine could become a car company Add to ...

Google created plenty of buzz with its self-driving prototype last week, a two seater that puts the search engine company on the road to using software and sensors to replace a steering wheel, accelerator pedal and brake pedal in your car.

This is not a silly pastime for Google. The company has been testing self-driving cars since 2009. Chris Urmson, Google’s head of the self-driving car project, said in an online post, "We're going to learn a lot from this experience, and if the technology develops as we hope, we'll work with partners to bring this technology into the world safely."

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One natural fit for Google is Tesla, the electric car company and Silicone Valley neighbour of Google. The Googleplex is in Mountain View, Calif, while Tesla HQ is a 14-minute drive away in Palo Alto.

Now imagine that Google and Tesla join forces to create some of the most advanced cars in the world – battery car meets self-driving machine. Would they go it alone, build up their own global sales and distribution network, along with a comprehensive service support structure? Or would Google, or Google and Tesla combined, buy an established global auto company to quicken their plans for world domination?

Money isn’t a problem. Google’s market capitalization today is north of $370-billion, while Tesla’s is more than $25-billion (all figures in U.S. dollars). Toyota is worth less than half of Google, with a market cap of about $180-billion.

Google isn’t going to buy Toyota, but why not some other, smaller car company with a global footprint. That move would both legitimize and turbocharge a Google or a Google/Tesla move to reinvent the world’s auto industry. Mazda, for instance, is worth slightly more than $13-billion, while Fuji Heavy Industries, the maker of Subarus, has a market cap of about $21-billion. Google or Google/Tesla could swallow either whole and instantly become real car companies with a global footprint.

As Urmson said, Google will work with partners if its self-driving technology works. Why wouldn’t an acquired car company be one of those partners? That’s a thought sure to keep many car company executives up at night.

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