Waymo's Recent Recall is a Tiny Blip in the $2 Trillion Autonomous Revolution

Alphabet's (NASDAQ: GOOGL) (NASDAQ: GOOG) Waymo recently issued a voluntary recall of its autonomous vehicles (AVs) -- about 3,800 in all -- which got a lot of attention. Apparently, when a self-driving car drives itself into a flooded road (thankfully, with no one inside) and gets swept away into a creek, people understandably freak out a little.

But the mishap, along with additional reports of some Waymo vehicles struggling to navigate heavy rain and flooded roads, is likely a temporary issue for the company rather than an ongoing problem.

And it's unlikely to negatively impact the company's long-term potential to tap into the nearly $2 trillion global AV market taking shape between now and 2035.

Image source: Waymo.

How deep do you think that water is?

After a handful of Waymos made very public driving mistakes in bad weather, the NHTSA began an initial probe in April. That led to Waymo issuing a voluntary recall, meaning the company proactively took its AV fleet off the streets in the 11 cities where it operates to address the issues.

That's important to highlight because Waymo has, from the beginning of its formerly named Google self-driving car project, been very focused on safety. It may seem to some riders that Waymo cars are just popping up overnight in new cities, but the company has tested its AV software for more than a decade, with millions of real-world miles driven and billions of digital miles logged.

Like any software (or human), Waymo's AVs can make mistakes. And it's not the first time Waymo AVs have. The vehicles were reported to have passed stopped school buses in error earlier this year. Waymo has issued software updates to fix the issues.

Still, I think one of the major lessons from this mishap is that Waymo can make big changes to its entire fleet of vehicles by issuing a software update. We're all used to software updates on our devices, so it's easy to think that's not a big deal.

But I actually think this move shows just how advanced Waymo's vehicles are. A large problem can be fixed with a small software update that makes the vehicles far more capable and safer. Human drivers can't download an update and instantly know how to navigate poor weather conditions -- but software-enabled vehicles can.

Waymo's vehicles can make big leaps forward with simple updates. And that's still a safety advantage over humans behind the wheel.

Waymo is still miles ahead of the competition

While the recall is a setback for Waymo, Alphabet investors should know that the company is far ahead of its competitors in the self-driving space. For one, Waymo has more than 200 million miles of real-world driving experience and operates in nearly a dozen cities.

At least 20 more cities will soon be added to the list of services, including two internationally, which is leaps and bounds ahead of competitors like Tesla's Robotaxi and Amazon-owned Zoox.

And while most autonomous vehicle companies are still testing out commercial viability, Waymo boasts 500,000 paid rides weekly -- double what it was less than a year ago.

Waymo also received $16 billion in funding back in February, giving the company a lot of cash to expand its services and giving Waymo a valuation of $126 billion.

"Our focus is now on [a] global scale, bringing the safety and magic of the Waymo Driver to even more cities this year across the United States and internationally," Waymo's leadership said in a press release earlier this year.

Last year, a Wells Fargo analyst estimated that Waymo would expand from 18 million rides in 2025 to 465 million by 2030. The opportunity, as mentioned, is huge. The global AV market -- including hardware, software, and services -- will be worth an estimated $2 trillion by 2035. About $415 billion of that will come from robotaxis specifically.

All of this means that even with the recent setback, Alphabet investors shouldn't worry too much. Waymo is still far ahead of its competitors, has a very safe self-driving platform, and is on track to continue dominating the robotaxi market as this emerging technology takes shape.

Wells Fargo is an advertising partner of Motley Fool Money. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Tesla. The Motley Fool has a disclosure policy.