Favorable regulations, increased investments in vehicle-to-infrastructure (V2I) and vehicle-to-vehicle (V2V) technologies, expanding operational areas, and improved scalability to boost long term growth of global robotaxi industry.
By Avishar Dutta, Senior Research Analyst – Mobility
Robotaxis are on the cusp of commercial success, thanks to technological advancements, favorable regulatory conditions, and the onset of large-scale manufacturing that promises to make them more affordable. By 2024, the global alignment of autonomous mobility standards, including the adoption of the UNECE Level 4 regulations by 42 countries, will significantly boost the industry’s growth. Such positive trends will be further supported by the consumer preference for less crowded transportation options like robotaxis.
Long-term growth will be fueled by increased investments in vehicle-to-infrastructure (V2I) and vehicle-to-vehicle (V2V) technologies, expanding operational areas for autonomous vehicles (AVs). Additionally, anticipated reduction in the cost of advanced driver assistance systems (ADAS) to below $500 by 2025 will enhance the economic feasibility of large-scale autonomous mobility deployment.
However, a significant challenge remains: the current technological limitations of robotaxis often require human intervention. In many regions, the mandatory requirement for a safety driver undermines the cost advantages of fully autonomous vehicles.
To learn more, please access: Growth Opportunities in the Global Robotaxi Industry, 2024-2035, or contact sathyanarayanak@frost.com for information on a private briefing.
Explosive Market Growth
The global robotaxi market is set to expand at an impressive compound annual growth rate (CAGR) of 75%, soaring from $84 million in 2023 to a staggering $68.75 billion by 2035. By then, it is expected that over 700,000 robotaxis will be in operation.
The growth of fare-box revenue from robotaxi operations is heavily influenced by regulatory approvals. Initially, growth will be gradual as fare collection will require case-by-case approval. However, by 2028, standardized regulations will streamline fare collection processes, eliminating the need for separate approvals. While increasing competition may suppress fare-per-ride growth, the expansion of fleet sizes will drive overall industry growth.
Global robotaxi fleets are anticipated to grow rapidly from 2025 onwards as new regulations addressing passenger safety, road design for AVs, accident liability, and pedestrian safety are implemented. Economies of scale will reduce production costs, allowing ridehailing companies to swiftly replace conventional cars with robotaxis. This fleet growth will be paralleled by the rising public acceptance of robotaxis.
Transitioning to Public Operations
Robotaxi operators are progressing from testing their technology with safety drivers to launching their fleets for public use. This beta testing phase will allow operators to refine their final product based on public feedback.
The competitive nature of the industry has established clear leaders in autonomous driving technology. Automotive manufacturers that have been observing from the sidelines are now partnering with these leaders to license their technology.
As robotaxi operators expand into new cities, enlarge their fleets, and carry more passengers, they will encounter new challenges. Regulations are being formulated and fast-tracked to address these challenges.
A Roadmap for the Future
In the near term, robotaxi services will operate within geo-fenced areas to mitigate risks. These service areas will gradually expand, supported by high-definition mapping and pilot programs.
Over the medium term, robotaxi operations will transition from free beta testing to paid rides available to the general public. Operators will consolidate their presence in existing cities, expand their service areas, and enhance their technical capabilities, including operating on expressways.
In the long run, robotaxis will replace a significant portion of traditional taxis and manually operated ridehailing services in urban areas. The goal is to expand geographically, including into smaller cities and emerging markets. New business models, inspired by the carsharing industry, will emerge as robotaxis become integral to shared mobility.
Our Perspective
Telematics and data storage companies have significant growth opportunities in assisting robotaxi operators with data management and analysis. Mobility companies specializing in city fleet management can offer valuable insights from other cities, optimizing urban mobility offerings.
By offering autonomous driving technology as a service (TaaS), developers can monetize their investments in robotaxi technology without requiring large upfront purchases from users. Ridehailing, carsharing, and mobility-as-a-service (MaaS) companies can integrate robotaxis into their services seamlessly through TaaS.
As the commercial deployment of robotaxis increases, there will be a surge in demand for planning and aftersales services. This includes over-the-air software updates, data analysis and storage, integration with other transport modes, development of ticketing and booking software, fleet management, and training. Providers offering these services can diversify and create products specifically for the robotaxi industry. For example, smart city service companies could offer smart infrastructure for robotaxi deployment, while cloud storage companies could provide data storage and analysis solutions.
With inputs from Amrita Shetty, Senior Manager, Communications & Content – Mobility
