I don't think this is all that surprising to be honest. Google is (by and large) a software development and services company, not a car manufacturer. If they make their own autonomous vehicles, that means they then have to handle everything from safety testing to customer support and sales in addition to the self driving car technology itself. By working with existing car manufacturers, they can focus on their part o…
Google is first and foremost an Internet Search Advertising company, so far it has been the thing keeping the lights on. I expect that if it had felt it could make the transition into self driving car company it would have. But it helps to remember a little bit of history here.
Google was, for the most part, the very first company of significant size to invest in self driving cars. They did that at the behest of Sebastian Thrun who was working there. It made some big headlines and it certainly added to Google's "glow" as a place where the future was happening. And then it ran into the sludge that is Google's inability to actually make "products" that aren't a web page. And as it did people started slipping away, first Sebastian, then Chris, then a big exit to what was Otto, Etc.
While Google was sitting in that quagmire of their inability to execute on a product vision, Tesla came in, announced auto pilot, deployed autopilot, updated it to do many of the things Google could actually do, announced self drive, deployed the hardware for self drive. Basically all executing on a product strategy while Google argued internally about whether or not their "car" should have a steering wheel or not.
What I've read in the news so far it sounds like Google is spinning off what is left of that group as Waymo (that seems like it is a sort of PIP for groups at Google) and trying to sell it off to someone.
I left in 2010 and the self driving car group was about a year old (and I tried to join it but they turned me down :-() Here it is 2016 so 7 years of development. A number of actual vehicles were produced, a number of cars were modified, I'm guessing there were about 150 people in the group at its peak. Just doing back of the envelope conversations for that group I'm guessing Google invested at least $300M in the effort. And now its scrap.
I appreciate that it is a really hard problem, and I appreciate that it was pretty far off Google's expertise spectrum. I also appreciate that they take "big bets" even when they fail. But given where Tesla is, and where they are, I worry that even if one of their big bets is a "winner", Google won't be able to execute on it. Just like Xerox couldn't execute on the personal computer and GM on electric cars. Once you get to be too big to win, what do you do?