In San Francisco, Waymo robotaxis, with their distinctive spinning LiDAR units mounted on their roofs, have become ubiquitous, with a fleet of roughly 1,000 vehicles roaming the tech hub. And Waymo also has sizable deployments in Los Angeles (700 vehicles) and Phoenix (500 vehicles).
In Austin, Texas, meanwhile, Tesla just started offering robotaxi rides without a safety monitor in the car, as touted by CEO Elon Musk on X, with plans to gradually increase the ratio of unsupervised to supervised rides as it expands the size of its overall fleet there. On its most recent earnings conference call, the company said it plans to have coverage in seven additional US markets in the first half of this year: Dallas, Houston, Phoenix, Miami, Orlando, Tampa and Las Vegas.
And Amazon-backed Zoox, with its unique-looking toaster-like vehicles with neither steering wheel nor pedals, recently began offering free robotaxi services in Las Vegas and San Francisco. A host of other tech companies are launching their own robotaxi initiatives.
Billions and Trillions
All of these players are vying for a major share of a ridehailing market estimated at $43 billion in the US and $150 billion worldwide, with the potential for billions and even trillions of dollars in growth as the lower costs and improved safety of autonomous vehicles dramatically expands the demand for ridehailing.
Who's leading the race depends heavily on the market, and all are grappling with technology that's still being refined as well as regulations that haven't caught up with the market and are subject to change, whether that change comes in incremental developments or lands with existential impact.
Right now, Waymo is significantly ahead of its rivals in the US. The Google-backed firm currently has about 2,500 autonomous vehicles on the road, offering paid rides in San Francisco, Los Angeles, Phoenix, Austin and Atlanta, with plans to expand to 20 more cities this year, including Dallas, Washington, Miami and London. Significantly, the more cities it rolls out in, the more data and experience Waymo gathers for its launch in the next one, and Waymo's current shift to using more affordable electric vehicles produced by Hyundai and Chinese automaker Zeekr, as opposed to the current Jaguars, will allow the company to expand even more rapidly.
Still, Tesla is finally starting to make some headway with its robotaxi efforts, after years of falling short of Musk's bold projections and promises. The electric carmaker now has about 72 vehicles deployed in Austin and 168 in San Francisco, according to Robotaxi Tracker, although the majority of those vehicles still require a safety monitor in the car and so are not considered fully autonomous vehicles (AVs).
Crucially, Tesla and Waymo are taking fundamentally different approaches to solving the problem of operating AVs. Waymo is prioritizing safety and relying on more data via expensive LiDAR and radar equipment, in addition to cameras, positioned on each car and supplementing that data with mapping of each city in which it has deployed in order to operate fully driverless cars.
Tesla, meanwhile, is leaning on cheaper camera-only technology, which explains why it's only now starting to remove human safety monitors as it accumulates more data and experience. The automaker said in late January that it has begun "tooling" in advance of producing its Cybercab, a two-seat, "purpose-built" driverless car that will not include a steering wheel or pedals.
Robotaxi Edgelords
Eventually, the company hopes to leverage the data from the millions of cars it has on the road to continually improve its self-driving technology. Tesla's approach will take much more testing to learn how to handle the myriad edge cases encountered by a typical driver in a given city, but should be easier to scale once all that testing is done. Optimism about this strategy has been one of the things fueling Tesla's stock surge in recent months.
"The market's very enthusiastic that Tesla will be able to successfully enter the robotaxi business and scale very quickly into multiple cities once the software is good enough," notes Seth Goldstein, a senior equity analyst at Morningstar who covers autonomous and electric vehicles. But Goldstein thinks it will be at least a year or two before Tesla catches up to Waymo's deployment of fully autonomous cars.
Along the way, there will inevitably be bumps on the road, some more significant than others, as unforeseen circumstances arise. In late December, for example, many of the Waymo cars deployed in San Francisco stalled at intersections during a citywide power outage. The company later explained that when its vehicles encounter non-working traffic lights, they often check in to confirm what the safest choice is, and the sheer number of such requests during the blackout overwhelmed the system, causing the cars to freeze. So one of the main changes in response will be to integrate more information about outages so that cars can make more decisions on their own.
Whose model will win in the end? It's hard to say, given the different approaches the two companies are taking. Goldstein thinks Waymo and Tesla will likely dominate the US robotaxi market together, jointly capturing half of the overall ride-hailing market in North America by 2035. So far, Waymo has chosen to both operate its own fleet and partner with other ride-hailing operators to see what makes the most sense, while Tesla is opting to go it alone.
One wild card is regulation and whether we'll see the adoption of federal safety standards in the US around AVs, versus the current time-consuming and costly-to-navigate patchwork of AV regulations at the state and local levels. So far the Trump administration has been generally supportive of the AV industry, but whether that will continue or what might happen under a different administration is unclear.
The picture overseas is another matter, however.
The Middle (Kingdom) Road
The main global challengers to Waymo's robotaxi dominance are well-funded Chinese companies such as Nasdaq-listed Baidu's Apollo Go, Pony.ai and WeRide, the latter two of which are based in Guangzhou and are also listed in the US. The AV efforts of Chinese tech giants also benefit from significant state support, both financial and regulatory.
Apollo Go is already operating in several major Chinese cities, including Wuhan and the suburbs of Beijing, and is also seeking to expand in the Middle East and Switzerland. Meanwhile, Pony.ai launched operations in Beijing, Guangzhou and Shenzhen in 2025, while WeRide operates robotaxi services in Beijing, Guangzhou and in Abu Dhabi, the last of which is being offered via a partnership with Uber.
Tesla, in particular, is unlikely to gain much traction in China because of data export restrictions that prohibit the company from transferring data from its cars in China back to its centers in the US, meaning they would likely have to partner with a Chinese company to develop full self-driving software there, according to Goldstein.
For these reasons, Chinese companies are expected to dominate the Chinese market and possibly the Middle East as well.
In Europe, the other key region, AV development has been hampered by a much stricter regulatory environment and less capital to invest in the huge, long-term plays that building an AV operation entails, notes Jody Kelman, the former head of Lyft's AV program. On the regulatory side, Tesla is not even allowed to offer its supervised Full Self Driving (FSD) system to its car owners in Europe today, let alone more advanced fully autonomous technology, although the company is hopeful that situation will change this year.
"I think what will end up happening is you'll see Waymo going to Europe as a second-order market after it sort of nails the major US markets, just because Europe is a more expensive, harder market to enter," says Kelman.
In the end, what we're likely to see is a tripartite market in which Waymo and Tesla dominate the US market, Chinese companies rule the Chinese and potentially Middle East markets, and all of them duke it out in Europe to see whose technology and business model works best.
"We're in the early innings, though, so I would not expect a straight-line growth by any means," says Goldstein.
Written by Nelson Wang
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