Robotaxi expansion accelerates; Tesla emerges as key driver in US

Tesla is currently testing its Robotaxis in Texas and is planning to extend services to the San Francisco Bay Area, drawing significant industry attention. TrendForce reports the U.S. Robotaxi market will be dominated by Tesla and Waymo, with the market size expected to reach US$36.5 billion by 2035. Meanwhile, China’s Robotaxi sector is also booming, with a well-established supply chain driving a rapid decline in hardware costs.

Elon Musk, Tesla CEO, stated last week that the company is awaiting regulatory approval from California, and could launch Robotaxi services in the Bay Area within one to two months. TrendForce notes that California’s autonomous vehicle permits fall into three categories: testing with a driver, driverless testing, and deployment. Currently, only three companies, including Waymo, hold deployment permits, allowing them to offer commercial services to the public in designated areas.

TrendForce notes that Tesla’s Robotaxi rollout hinges on two key factors. The first is how quickly it can obtain a deployment permit, which requires meeting a number of stringent regulatory conditions. The second is whether Tesla can begin mass production of the purpose-built Cybercab by 2026. This milestone will directly impact Tesla’s ability to scale its autonomous driving services and achieve cost efficiency.

TrendForce forecasts that the U.S. Robotaxi market will grow at a CAGR of 61% between 2025 and 2035. In this fast-growing market, Tesla holds a competitive edge with its vertically integrated manufacturing and vision-based autonomous driving solution, resulting in relatively lower hardware costs.

Although Waymo benefits from its first-mover advantage, it risks losing market leadership if it fails to scale quickly and reduce costs effectively.

As for China—the other major Robotaxi market—TrendForce estimates that its market size will reach US$44.5 billion by 2035, with a CAGR of 96% from 2025 to 2035. Leading Chinese players include Baidu, Pony.ai, and WeRide, all of which are aggressively expanding.

Backed by rapid fleet growth and strong support from domestic EV markets and supply chains, the hardware cost of Robotaxi vehicles and autonomous driving systems in China is expected to drop significantly. Meanwhile, user adoption is likely to increase as per-kilometer ride costs decline.

Robotaxi development faces several major challenges despite the market’s potential: Regulatory discrepancies across countries and regions may restrict the speed of fleet expansion, the complexity of autonomous driving technology and its dependence on extensive R&D make market entry difficult for newcomers, and long investment cycles, and uncertain timelines for profitability further complicate business viability.

Finally, social concerns—such as potential job displacement, operational safety, and data privacy—also pose obstacles to mainstream adoption and long-term growth.

Source: TrendForce, Taiwan.