Waymo, owned by Google's parent company Alphabet (GOOGL  ), has risen to the top of the autonomous vehicle arena. According to UBS analyst Eric Sheridan, after conducting interviews with 22 industry expert and evaluating landscape forecasts, he concluded that Waymo is "the early leader (by a solid margin) in the emerging field of autonomous driving." Estimates show that the vehicle subsidiary could be worth between $25 billion to $135 billion. With a base case valuation of approximately $75 billion, that places Waymo at 11% of Alphabet's overall enterprise value. This represents a considerable chunk! Alphabet's valuation has risen in the past year as a result to 25x P/E and 20x EV/EBIT.

So how did Waymo become such a success, beating Tesla and Uber who specialize in vehicle autonomy?

Data from the California DMV showed that Waymo has the lowest rate of human intervention among all of the firms testing in the state in the past year. More importantly, Waymo has not experienced any major crashes or accidents, unlike their rival Uber. One of Uber's self-driving vehicles struck and killed a crossing pedestrian in Arizona this past March. As a result, Uber temporarily terminated its self-driving cars and has been banned from testing on any Arizona roads. In addition to this, Waymo revealed that its self-driving cars have reached 8 million miles on public roads and 5 billion miles in simulated miles. The vehicle technology is able to run through various scenarios that that the cars might encounter in real life and practice how to respond to them in the best way possible. The company has said that the simulated 5.0 billion miles is equivalent to 25,000 self-driving cars operating each day.

Waymo recently announced a partnership with Jaguar Land Rover to provide 20,000 electric, self-driving SUVs. Waymo has also ordered more than 80,000 vehicles, specifically Chrysler Pacificas (FCAU  ) and Jaguar I-Paces, to deploy in various cities across the U.S. and eventually in Europe as well. However Uber and Tesla (TSLA  ) are not the only competitors. Others include General Motors (GM  ), which released a self-driving Chevrolet Bolt EV this past January. The vehicle is truly autonomous as it lacks a steering wheel and pedals. Ford (F  ) has been using Fusion sedans equipped with self-driving technology to deliver pizzas across Miami, while Nissan (TYO: 7201) has developed a few "ferry" cars that drive between the company's headquarters in Tokyo and a nearby shopping center.

There are really three main criteria that a driverless service such as Waymo must meet in order to launch successfully: have an operating system, customer relationship system that connects available cars to passengers, and speed to build cars quickly and efficiently. With all of the success that Waymo has been boasting recently, they are well on their way.