Robotaxi market forecast to grow, ARK estimates $0.25 per mile cost

Investing.com -- ARK’s Big Ideas report 2025 projects that Robotaxis will continue to gain market share from internal combustion engine vehicles. The report highlights that while many automakers planned to launch an autonomous vehicle by 2020, only Waymo has delivered, launching its first commercial autonomous rides in 2018. Tesla (NASDAQ:TSLA), on the other hand, aims to launch in 2025. The progress made by Waymo and Tesla’s internal testing of robotaxis indicates that 2025 could be a pivotal year for autonomous transportation.

The cost of owning and operating a personal car, when adjusted for inflation, hasn’t changed since the first Model T was manufactured over a century ago. ARK estimates that at scale, autonomous taxis could cost consumers as little as $0.25 per mile, which could lead to widespread adoption.

The report also reveals that the US and China are leading the Robotaxi revolution, followed by the Middle East and Europe. It is expected that price competition in China could lead local players to form profitable partnerships abroad.

According to the report, Robotaxis have already reached 12 million rides at an annual rate. Waymo and Baidu (NASDAQ:BIDU) are the main contributors to autonomous rides in the US and China, respectively. Tesla, with its large data lake, could have a competitive edge if it launches ride-hail operations as planned in 2025.

ARK’s research suggests that by 2030, the number of robotaxis could increase to approximately 50 million globally, with Tesla potentially holding around 50% of the market share. The report also indicates that competitors could face barriers to scale due to intense price competition in China and misalignment between technology providers and traditional automakers.

The report also suggests that a $15,000 Robotaxi is feasible, according to Wright’s Law. Tesla’s Cybercab, with an efficiency of 5.5 miles/kWh and an anticipated battery cost decline, could potentially cost as little as $2,300. The drivetrain of a vehicle typically makes up around 20% of the total vehicle cost, which suggests a Cybercab could be profitable at a price of $15,000 or below.

Tesla is also confident in its autonomous software outperforming human drivers in terms of safety. The automaker expects more than 10,000 miles between critical interventions, equivalent to a year’s worth of human driving before the average person would need to touch the wheel in Full Self-Driving (FSD) mode. By late 2025, Tesla plans to surpass the national accident rate, which could open discussions with regulators.

Waymo’s commercial robotaxi service has already exceeded 400,000 miles between police-reported collisions, showcasing impressive performance for a fleet of its size.

The report concludes that Robotaxis could generate approximately $34 trillion in enterprise value by 2030.

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