Google Inc (NASDAQ:GOOG) has been working on self-driving cars for quite some time, and well-known Piper Jaffray analyst Gene Munster sees a financial opportunity worth at least $200 billion to the company.

Google Driverless car

Google’s Opportunity In Self-Driving Cars

In a report issued to investors, Munster said they still see Google as “the best positioned Internet company over the next 10 years.” He also believes the search giant could begin seeing revenue from its self-driving cars by the end of the current decade.

It’s undeniable Google Inc (NASDAQ:GOOG)’s self-driving cars will add a lot to the automotive industry. Munster believes “the combination of higher safety levels and elimination of idle time are [sic] a powerful motivator in introducing a self-driving car solution. He points to data from the National Highway Traffic Safety Administration (NHTSA) which indicates that about 32,000 people died because of car accidents in 2011. It’s expected that the elimination of human error could greatly reduce this number.

He also points to statistics from the Texas A&M Transportation Institute, which indicates that Americans wasted about 5.5 billion hours sitting in traffic in 2011. The same study estimates a price tag of $121 billion on those wasted hours, counting both the loss of productivity during those hours and also the increased fuel costs associated with idling cars.

Clearing The Legal Path For Google’s Driverless Cars

Munster said there is one area that still needs some work in order for Google Inc (NASDAQ:GOOG) to be able to take full advantage of the technology it’s working on. Self-driving cars are only legal in three states in the U.S.: California, Nevada and Florida. He believes Google is testing a “fleet” of between 20 and 100 cars in those states. Michigan could be a future test area for the company as it has a bill allowing driverless cars that’s pending right now.

He said the NHTSA has already studied self-driving cars and set forth five different levels of automation from zero to full automation. According to Munster, Google Inc (NASDAQ:GOOG)’s vehicles fall into the third level of the NHTSA’s system because the vehicles have limits. Drivers are expected to control the vehicle for some of the time.

The Future Of Self-Driving Cars

Munster predicts that by 2020, level three vehicles like those made by Google Inc (NASDAQ:GOOG) will “become common,” while level four vehicles which do not require human driver interaction, “will be more common in the middle of [sic] next decade.” He also notes that the company does have some small (as yet) competition in the space, especially as more and more companies become interested in the concept.