U.S. and Chinese Robotaxi Companies Intensify Global Competition

BEIJING — Chinese robotaxi companies are accelerating their global expansion efforts, outpacing U.S. counterparts like Waymo and Tesla, as industry leaders collectively believe autonomous driving is nearing a crucial inflection point.

“I think robotaxi has reached a tipping point, both here in China and in the U.S.,” Baidu CEO Robin Li stated on Tuesday’s earnings call, according to a FactSet transcript.

Li elaborated, “There are enough people who have experienced driverless rides, and the positive word of mouth is translating into favorable social media sentiment,” suggesting that increased public exposure could expedite regulatory approvals.

This optimism echoes similar sentiments expressed in recent weeks by Nvidia CEO Jensen Huang and Xpeng Co-President Brian Gu. Notably, Gu reversed his previously cautious outlook, citing faster-than-anticipated technological advancements. Xpeng is slated to launch its own robotaxi service in Guangzhou next year.

Goldman Sachs estimates suggest the global market holds substantial growth potential, projecting a value exceeding $25 billion by 2030. The race is on, but challenges remain in scaling deployments and demonstrating robust safety records.

To capitalize on this burgeoning opportunity, Chinese companies are aggressively pursuing overseas expansion plans, driven by a belief that they are on the cusp of establishing robotaxis as a viable business model, rather than simply burning capital to gain market share.

Over the past 18 months, Baidu, Pony.ai, and WeRide have strategically partnered with Uber, integrating their robotaxi services into the ride-hailing platform in select locations, starting in the Middle East.

Counterpoint Senior Analyst Murtuza Ali emphasizes that such strategic alliances “will be critical to success” by enabling robotaxi companies to enhance operational efficiency and achieve profitability more rapidly.

According to Baidu, its Apollo Go robotaxi unit has achieved per-vehicle profitability in Wuhan since late last year. This achievement is based on deploying over 1,000 vehicles. This profitability is attributed to ridership levels that can offset taxi fares that are 30% cheaper than in Beijing or Shanghai, and significantly lower than prices in the U.S. or Europe. In addition to developing autonomous driving systems, Baidu has also designed and produced its dedicated electric robotaxi vehicles, resulting in a 50% cost reduction compared to relying on third-party manufacturers. This vertically integrated approach may offer Baidu a significant competitive edge.

“Once we can generate profit for every single car in a second-tier city [like Wuhan] in mainland China, we can generate profits in lots of cities across the world,” Halton Niu, general manager for Apollo Go’s overseas business, told CNBC.

“Scale matters,” he said. “If you only deploy, for example, 100 to 200 cars in a single city, if you only cover a small area of the city, you can never become profitable.”

In the U.S., Alphabet-owned Waymo operates over 2,500 vehicles and is rapidly expanding from major cities in California to Texas and Florida. The company also plans to enter London next year after entering Tokyo. As of now, Waymo has the largest fleet and geographic reach, giving them a potential advantage in data collection for AI training and refinement.

Tesla sells its electric cars in China and recently showcased its Cybercab in Shanghai. However, robotaxi testing began in Texas only in June, and the company recently obtained a permit to operate in Arizona. While Tesla possesses a vast fleet of consumer vehicles that could potentially be retrofitted for robotaxi use, their comparatively late entry into dedicated robotaxi testing could impact their market penetration in the short term.

Amazon’s Zoox is also expanding within the U.S., but hasn’t announced overseas plans.

Currently, none of the three companies have released the exact details on their robotaxi profitability.

Baidu’s Niu did not explicitly rule out expanding in the U.S. Currently, the company plans to enter Europe through trials in regions of Switzerland, after growing in market share in the Middle East.

Last week, Abu Dhabi granted Apollo Go permission to charge the public for fully autonomous robotaxi rides operating locally under AutoGo, which was eight months after local trials started.

WeRide also announced that it obtained a similar permit to charge rates for its robotaxi services in Abu Dhabi. WeRide claims that removing people from the cars would allow them to profit for each vehicle.

This implies that Pony.ai is furthest from being profitable out of the three other robotaxi companies. CFO, Leo Haojun Wang, stated that the company aimed to make a profit on each car by the end of this year or the start of next year.

Pony.ai plans to launch a commercial robotaxi business in Dubai by 2026 after a testing permit in late September. The company intends to expand to Europe and Singapore.

WeRide and Pony.ai are prepared to release earnings reports later this week.

“Currently, companies like Waymo, Baidu, Pony.ai and WeRide are leading in terms of fleet size, which positions them advantageously in the race for profitability,” said Yuqian Ding, head of China Autos Research at HSBC.

Fleet size has become a distinguishing factor in the industry landscape. Pony.ai plans to release 1,000 taxis in the Middle East by 2028, while WeRide seeks to manage taxis in the region by the end of next year.

Halton Niu stated that Apollo Go manages around 100 taxis in Abu Dhabi and Dubai and plans to double the fleet in the coming months.

“Apollo Go has had a head start with significantly more test rides than the other two,” said Kai Wang, Asia equity market strategist at Morningstar. “The more testing and data you can collect from trips taken, the more likely the AI sensors are able to recognize the objects on the road, which means better safety as well.”

He also mentioned that the robotaxi is still uncertain since “no one has truly had mass adoption for their vehicles.”

Despite the progress, coverage restrictions remain a challenge. Even in China, robotaxis are limited to certain zones, even though Pony.ai earned approval to operate its vehicles throughout Shenzhen, China’s Silicon Valley. Pony.ai’s recent all-Shenzhen approval could serve as a template for nationwide expansion, contingent on maintaining impeccable safety records and demonstrating operational stability. In Beijing, self-driving taxis are restricted mostly to Yizhuang.

CNBC tests conclude that Pony.ai offered a smoother ride than Apollo Go, which had harsh braking.

Safety is a crucial component for regulatory approval. Currently, none of the six robotaxi programs has reported fatalities caused by autonomous vehicles. In efforts to improve trust, Apollo Go and Waymo have started to communicate low airbag deploy rates.

Even if approval is not worldwide, Beijing will ramp up support at home.

HSBC’s Ding predicts that the number of vehicles is expected to jump from a few thousand to tens of thousands by 2026, which would provide operators more proof that their model works.