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Google Inc (GOOGL) Has a Car Company, Limited Risk, Unlimited Reward

Google self-driving car

Google Inc   has made serious inroads into the auto industry as its work on self-driving cars continues to progress. The firm started the auto race with an existing fleet of self-driving Lexus RX450h SUVs. The Lexus SUVs are regular cars modified to have self-driving abilities. The firm reported that its Lexus SUVS logged 1 million miles last year, which is equal to 75 years of an average American adult driving mileage.

Google self-driving car

Google took its self-driving car project a notch higher with news that it was building a new fleet of self-driving vehicles from the ground up. Those cute cars have become a common sight in it’s Mountain View campus. In June, Google reported that its cute cars would be hitting public roads in California as it attempts to be the king of the road.

Google Auto is Different From Google Inc.

The Guardian reports that Google has set up a separate LLC for its self-driving car project as far back as late 2011. The Google unit named, Google Auto LLC has Chris Urmson as project lead for Google’s self-driving cars. Google Auto is listed as maker of passenger vehicles. The firm is listed as the maker of 23 auto-drive Lexus cars as well as the new cute self-driving cars that are logging miles in Mountain View.

Google  loves to keep all its assets in house and it doesn’t always form LLCs for its hardware projects. However, the scale, scope, and prospects of robocars might be the reason the firm is selling up an LLC for its robocar project.

Smart Thinking to Protect Stock and Assets

Anita Krug, associate professor of law at the University of Washington in Seattle has provided a great reason behind Google’s move to set up an LLC for its robocars. She says, “When you have a separate entity, you generally have separate liability protection… The idea is that if the subsidiary has financial difficulties, creditors should not be able to go after the parent company’s assets.”

Cyberspace was filled with news when those self-driving cars were involved in some accidents. The Verge reported that Google’s self-driving cars have been involved in 11 accidents in total. All the accidents were minor; seven had the Google car rear-ended. Two were sideswipes and one accident had another car running a red light.

It was revealed that Google Cars did not cause the accidents. It seems that human drivers are more prone to driving errors that robocars. However, Google might have had serious headwinds facing it stock if its cars had caused those accidents and if lawsuits were filed against the firm.

Accidents are inevitable when building a car up from the scratch; Tesla’s cars were involved in a number of fire accidents, that rocked the stock early into sales of the Model S.

Google shows smart foresight in setting up an LLC separate from the parent company. For one, the firm’s asset will be protected in the event of lawsuits or a financial mess in the robocar space. Secondly, it’s stock will not be subject to volatility when the media starts blowing news about robocars out of proportion.

 

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.

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