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Illustration: Rebecca Zisser/Axios

There's a growing realization on Wall Street that self-driving cars are still many years away. That pessimism is weighing far more heavily on traditional automakers than technology companies.

The big picture: Investors are betting the real value of AV companies will come from the estimated 4 terabytes of data each car will generate per day. And based on the way they’re valuing the major AV players, Wall Street seems to think tech companies have a better shot than Detroit at capitalizing on that data.

The bet on data helps to explain why analysts at Morgan Stanley have very different views on the two leading AV companies.

  • Auto analyst Adam Jonas recently reduced the value of GM's self-driving car unit, Cruise Automation, to $9 billion, from $11.5 billion, citing delayed expectations for fully self-driving cars.
  • Meanwhile, tech analyst Brian Nowak figures Alphabet's self-driving car unit, Waymo, is worth $37 billion, and perhaps as much as $175 billion, citing future opportunities from robotaxis, logistics and licensing revenues.
  • Those same opportunities are available to Cruise, too, but for the moment, GM investors are focused more on the roadblocks ahead.
  • Jonas says the massive gap between Cruise and Waymo is realistic because of the advantage Waymo has from Google's superior data analytics capability.

What's happening: The mood has changed about automated vehicles. Bold predictions by Tesla and others that cars would be able to drive themselves by now have evaporated in the face of technology challenges and market realities.

The business model for AVs assumes that by removing the driver, the cost per mile falls dramatically, from today's $2.50 or $3 per mile, to less than $1, unlocking a much larger market opportunity.

  • "If you are going to be more pessimistic on the timing, then it means not removing the safety driver and that means the economics of the whole thing don’t work," Jonas says.
  • "Instead of a $30,000 car with no human, you've got a $300,000 car with one or two humans."

That math looks even more difficult when you factor in the pressures facing GM's legacy automotive business under CEO Mary Barra, who is trying to lead a rapid transformation. It's a race, says Jonas, between management's execution and a cyclical downturn ahead.

The bottom line: "The value is in the data and what you can do with it," says Jonas.

Go deeper

Trump threatens to veto Defense spending bill over social media shield

Photo: Erin Schaff - Pool/Getty Images

President Trump tweeted Tuesday a threat to veto a must-pass end-of-year $740 billion bill defense-spending authorization bill unless Congress repeals a federal law that protects social media sites from legal liability.

Why it matters: Trump's attempt to get Congress to end the tech industry protections under Section 230 of the Communications Decency Act is the latest escalation in his war on tech giants over what he and some other Republicans perceive as bias against conservatives.

The walls close in on Trump

Photo: Tasos Katopodis/Getty Images

With Bill Barr's "Et tu, Brute!" interview with AP, President Trump is watching the walls close in on his claims of fraud, hoaxes and conspiracies.

Why it matters: Trump and his legal team continue to claim election fraud. But the Republican governors of Arizona and Georgia have certified their elections, a loyalist like Barr has weighed in, and lower-ranking officials have taken potshots.

Congress plots COVID pandemic-era office upgrades

oving crates outside Rep. Elise Stefanik's old office Tuesday. Photo: Bill Clark/CQ-Roll Call, Inc via Getty Images

The House plans to renovate members' suites even though staff are worried about an influx of contractors and D.C. is tightening restrictions on large gatherings, some staffers told Axios.

Why it matters: The Capitol has been closed to public tours since March. Work over the holiday season comes as U.S. coronavirus cases spike, Americans beg for more pandemic assistance and food lines grow.

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