Autonomous World is here—at least for some of us. Level 4 autonomous vehicles have made their way to the commercial passenger transport sector, and if you’re lucky enough to live in certain cities (for now), you can now book a driverless cab to take you places. The commercial use of robotaxis, once considered a fantasy by many, not only amazes me but also prompts me to reflect on the significant progress we’ve made since inventing the modern passenger vehicle barely a century ago. Where are we headed next? Are pilotless planes or personal driverless air taxis the future of transportation? I certainly wouldn’t count it out if I were you. However, autonomous taxis are here.
For over a decade, the ambitious vision of robotaxis hovered between possibility and doubt, punctuated by the notable market exits of Uber and GM. However, today, this transformative technology is beginning to take shape, with operational robotaxi services available in nearly 25 cities worldwide. Although still far from being mainstream—only San Francisco and Phoenix in the US, and Wuhan in China, can boast of established commercial operations—other countries and players are not far behind. In fact, robotaxi services in Beijing, Singapore, and Dubai are poised to launch by the end of this year, while Tokyo, Switzerland, and Turkey are actively engaged in testing phases and plan to launch services soon after. Bolstered by market enthusiasm and expansion strategies, MarketsandMarkets experts project that robotaxis will span over 100 cities globally by 2035, signaling a new era in urban mobility.
SAN FRANCISCO, CALIFORNIA – APRIL 11: A Waymo autonomous vehicle drives along Masonic Avenue on April 11, 2022 in San Francisco, California. San Francisco is serving as testing grounds for autonomous vehicles with Waymo, a Google subsidiary and Cruise, a subsidiary of General Motors, logging millions of test miles throughout San Francisco in 2021. (Photo by Justin Sullivan/Getty Images)
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My mobility team at MarketsandMarkets predicts the global robotaxi fleet to exceed 900,000 vehicles by 2035, reaching a market value of around USD 100 billion. In the US alone, robotaxis are expected to grow from over 2,200 vehicles today to more than 250,000 by 2035, driven by increased investments from industry leaders like Waymo, Tesla, and Zoox. Furthermore, China’s autonomous vehicle sector is also poised for significant growth, with its robotaxi fleet projected to increase by a hundredfold—from approximately 4,500 vehicles to nearly 550,000 during the same period.
One could argue these forecasts are conservative as I did with my team. With over 30mn ride hailing taxis today and 2bn cars on the road by 2030, a fleet size of just around a million does seem conservative. However, it shows once regulations are in place and the technology is tested and tried, the growth could be a hockey stick.
Global Robotaxi Market : City Mapping
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Of course, today’s landscape is very different—just a few select industry pioneers dominate, but this is expected to change significantly over the next decade. Waymo has already become synonymous with robotaxis, thanks to its extensive operational scale—at last count, it was overseeing over 250,000 rides per week! They’ve earned widespread regulatory and public trust, as demonstrated by their recent approval for airport shuttle services at San Jose International Airport in addition to the services they already offer at the Phoenix Sky Harbor International Airport. Across the world, the situation is the same—a few leaders in the space have begun operations, with others not far off. On the Chinese front, established players include WeRide, Baidu Apollo Go, and Pony.ai, while emerging players include Didi, Momenta, Xpeng, and Lotus. These companies are utilizing innovative go-to-market strategies, competitive pricing, and cost efficiencies to expand their presence rapidly. In addition to these, newcomers like Zoox are introducing new and exciting designs—their specially designed, rectangular robotaxis eliminate traditional steering wheels and pedals, offering a fresh, albeit somewhat unsettling, perspective on urban mobility. Tesla is looking to join this trend with its upcoming Cyberhub robotaxi and push the boundaries even further. It’s safe to say that the robotaxi space is heating up, and in the near future, many more providers—such as May Mobility, Mobileye, Wayve, and Nuro—will be knocking on the proverbial door, underscoring a dynamic and fiercely competitive environment that will reshape the future of urban mobility.
From Niche to Nationwide: Where Are Robotaxis Headed Next?
A few years ago, robotaxis were only talked about in certain parts of the US or China. Today, robotaxis have become a buzzword in the mobility sectors of the Middle East, Japan, and South Korea—a true testament to their success and commercial viability. All three major Chinese operators—WeRide, Apollo Baidu Go, and Pony.ai—are trying to establish their presence in Middle Eastern and European markets (including in Germany, the UK, and Luxembourg) through strategic partnerships, despite regulatory hurdles inhibiting growth in the European markets. WeRide is also aiming to establish a presence in the lucrative Southeast Asian taxi market.
Leaders in the robotaxi market are not only expanding across Tier 1 hubs but are also extending into Tier 2 cities, indicating a clear shift from pilot tests to large-scale commercialization. Waymo, Zoox, and Tesla are expanding their presence in the US to Miami, Seattle, Nevada, and Arlington, while Chinese companies are also aggressively scaling up across both Tier 1 and Tier 2 Chinese cities, including Suzhou, Hangzhou, and Guangzhou, among others.
The first wave of commercialization is expected to see North America and Asia drive nearly 90% of revenues, with China having the highest share of robotaxis at ~60%. However, North America will lead the market in terms of total addressable market/market revenue—an anomaly that could be attributed to lower average fares of taxis/robotaxis in China.
The Growth Formula: What’s Driving the Robotaxi Market
Advancements in L4 technology for automated driving systems, the declining cost of LiDAR, radar, and cameras, easing regulatory mandates, and the emergence of viable business models are among the key factors driving the commercial robotaxi market.
Robotaxis demonstrate a clear cost advantage over traditional taxis, mainly by eliminating human drivers and reducing per-mile expenses. In fact, in Chinese cities like Wuhan, robotaxi operators are undercutting traditional taxi fares by almost 30–60% per km! The basis for this is simple—the inflection point for robotaxis will only occur when robotaxi fares are lower than those of traditional taxis. For now, robotaxis are still more expensive than an average Uber trip in the US—about USD 20 for a typical 6 km trip compared to about USD 15 for Uber—with the inflection point expected around 2030. However, other enablers, such as industry-defining alliances with ride-hailing operators and advances in 5G/V2X, are creating the blueprint for large-scale, economically viable robotaxi deployments.
Race to Dominance: Chinese Operators Lead the Way
Unsurprisingly, Chinese robotaxi operators are outpacing their US counterparts, mainly by aggressive fare strategies, strategic city expansion plans, low hardware costs, and partnership-led scalability to accelerate rollout beyond China. The growth is also partly driven by government initiatives such as trade-in subsidies, fast-track permits, and special testing zones, which offer Chinese operators a significant advantage over operators in other regions. Consequently, Baidu Apollo Go, WeRide, and Pony.ai are outpacing US firms in adaptability and market reach by leveraging the first-mover advantage—a development that could also impact robotaxi fares and profitability margins across markets.
The Commercialization Code Unlocked by Ride-Hailing Service Providers
Interest in partnerships between robotaxi operators and leading mobility/ride-hailing service providers has recently surged, with almost every operator attempting to partner with Uber, Lyft, and Grab to gain access to a ready customer base and ensure broad customer outreach. Uber recently invested over USD 300 million in the Lucid Motors and Nuro partnership, while Grab invested an undisclosed amount in WeRide to drive its robotaxi operations and autonomous shuttles in Southeast Asia. Such strategic partnerships will prove to be vital for scaling up market reach and driving adoption with a short turnaround time. These collaborations will also enable operators to expand quickly, optimize fleet utilization, and reduce customer acquisition costs, cementing aggregator services as the centerpiece of the next phase of global robotaxi growth.
Robotaxi Industry Eco System
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Will Favorable Regulations Enable Mass Commercialization?
The regulatory landscape for robotaxis is highly fragmented—countries such as China, Germany, and Japan exhibit strong policy clarity and nationwide frameworks, whereas regions like the US and UK face challenges due to a state-led approach. Certification, incentives, and regulations also differ widely: while China leads with dedicated AV approval processes and strict localization rules, Germany and France rely on established testing and data privacy programs. On the other hand, the US operates under a patchwork of state-level policies and lacks unified insurance and permit frameworks. Uncertainty around global regulations makes international standardization a top priority for industry leaders looking to expand globally and ensure compliance.
More Than Just Fares: Unlocking Hidden Revenue Streams
Robotaxi business models are evolving faster than anticipated, diversifying quickly and creating new opportunities for ownership, revenue growth, and scalability. Ride-hailing companies like Waymo and Pony.ai already provide autonomous mobility-as-a-service through their existing platforms, while Tesla is pioneering a peer-to-peer robotaxi network, similar to its established carsharing model, enabling private owners to turn idle vehicles into revenue-generating assets. Other revenue models include Baidu’s plans to introduce robotaxi rentals via its CAR vehicle rental app in Beijing, and Waymo and Wayve’s sales of their autonomous vehicle technology to OEMs such as Toyota and Nissan for use in personally owned autonomous vehicles. These innovative business models ensure revenue diversification, setting the stage for robust growth and competitive differentiation in the autonomous mobility landscape.
Will the Financials Drive Themselves: Are Robotaxis Financially Sustainable?
The future looks bright for robotaxis, thanks to falling costs and rapidly advancing technology. Analysts at MarketsandMarkets expect the direct cost per km to decrease from USD 2.31 today to just USD 0.43 in the US by 2035, and from USD 0.67 per km to an exceptionally low USD 0.25 per km in China, driven by local manufacturing, cheaper hardware, and innovative fleet architectures. With leaders such as Waymo reducing sensor complexity, Zoox entering the mass production stage, and Baidu scaling production through in-house innovation, the robotaxi market is moving toward highly scalable processes.
A financial analysis of the robotaxi market by analysts at MarketsandMarkets revealed that US operators would break even after approximately 160,000 km or around the third year of operation, with profitability increasing significantly after 2030 as safety driver costs are phased out and utilization improves. China’s robotaxi market is expected to reach break-even before the US market—at about 110,000 km or roughly 3.5 years of operation—due to lower vehicle and operating costs. The break-even point is higher in the US due to higher cost outlays compared to China. China’s break-even could happen much sooner if average fares were higher. However, since the traditional taxi market already has low fares, reducing robotaxi fares further could hinder customer adoption and overall market profitability.
Conclusion
Robotaxis have successfully transitioned from the experimental phase to practical deployment and are fast losing their futuristic allure. The day is not far when robotaxis become an everyday transportation option for millions of users. And with cheaper fares, the promise of fewer accidents, and increased accessibility for passengers who have long been underserved by traditional transportation, we can only hope that becomes a reality soon.