Car companies. Google certainly wasn't the first to be working on self-driving cars, they just got a lot of time in the tech press for it. The big car companies have been working on it for years. I can't find any details but I remember hearing about some companies working on it about 8-10 years ago. More recently BMW have been working on it: http://www.motorauthority.com/news/1072117_on-the-road-with-...
There is a difference in complexity though. Most systems developed by the Automotive companies are just a step above highway lane keeping, and adaptive cruse control. Google's system handles city roads with pedestrians and more complex traffic patterns.
There is a cost to that of course, Google's system uses $100k of sensors, and isn't well integrated into the body of a car. This means it's father off from being seen a in a production car. I could see it being sold as an aftermarket add on to specific cars, maybe even only to business customers, who then want to sell the service and automated car can provide.
You're right there is a difference. Google has better software. The car companies have better cars. If Google does continue to push the technology I hope they license it. I dread to think what an actual Google car would be like. It's an interesting market that's been progressing for years. It seems now that we are very close to seeing it in production models.
