Robotaxis’ $1 Trillion Opportunity

**Andrew Percoco** (0:00)
Welcome to Thoughts on the Market. I'm Andrew Percoco, head of North America Auto and Shared Mobility Research.

**Tim Hsiao** (0:05)
And I'm Tim Hsiao, Greater China Auto and Shared Mobility Analyst.

**Andrew Percoco** (0:10)
Today, why robotaxis may be approaching a commercial inflection point. It's Thursday, August 13th at 8 a.m. in New York.

**Tim Hsiao** (0:18)
And 8 p.m. in Hong Kong.

**Andrew Percoco** (0:21)
So Tim, for years, robotaxis were really confined to limited pilot rollouts across the globe.
You've done a lot of work over the last few weeks. We put out a big collaborative report on the robotaxi market and how it could be a $1 trillion TAM by 2040 What makes this moment different than some of the other robotaxi hype cycles that we've seen in the past?

**Tim Hsiao** (0:42)
We observed four things have been converging. Firstly, NTN AI is improving much faster.
Secondly, hardware and the training costs are falling. And thirdly, more well-capitalized players can found deployment and last but not least, regulation is becoming clearer. The leading operators are no longer just demonstrating the technology. They are running fully driverless services around the clock and generating commercial rights. So, in our view, the question has been shifting from can it work to expand operating areas, raise utilization and lower costs at a much faster pace. So, that's a very different setup. This is the 2018 and 2021 hype cycles.
Andrew, US autonomous miles could rise from 116 million in 25 to 16 billion by 2032, but still make up only about 0.5 percent of all miles driven. How can rubber taxis become a meaningful business while remaining such a small part of the market?

**Andrew Percoco** (1:52)
I would say, obviously, the US mobility and transportation market is a massive market. So even with the rapid growth that we expect in rubber taxis is going to take a long time to make a material impact in the overall market share of mobility. But if you think about the profit pools in this business, 16 billion miles at $2 a mile can pretty quickly become a very significant TAM and market opportunity. And I think fundamentally, if you think about a rubber taxi business, I would argue you're better utilizing an asset, right? If you think about the car park, the amount of vehicles that are in the fleet today or in the US today, they're sitting idle 90% of the time, right? So you're talking about taking a smaller amount of volume and driving a higher utilization on that fleet and driving much improved economics. So yes, it's going to take time to displace the hundreds of millions of cars that you have on the road in the US and displace the penetration of miles driven. But ultimately, we think that the profit pool and the opportunity in RoboTaxis are much more attractive for the entire value chain as it relates to RoboTaxis. And I say there's a few things that we're watching along the way to make sure that, to your point, this is not another hype cycle and that there's real commercial backbone to this business. I'd say the first is seeing the rollouts continue to improve and the density of the rollouts improve across the select cities that we've seen in the US right now. Robot taxis are only available in a handful of cities in the US, so we want to see that continue to expand into more cities, but also the density of the fleet increase in the cities where they're currently present. And at the same time, the safety side is still something that gets a lot of questions in making sure that it is truly safer than a human driver across technology platforms. There's various players in this market with different approaches to technology. So I think seeing that the safety curve is starting to or continues to improve is going to be very important for the viability of this market going forward. Obviously, US is very different from China. What have you seen in China? China has shown some impressive growth and utilization in some of the operators that are on the road in China. So just curious your perspective in terms of what you're seeing on the ground there.

**Tim Hsiao** (4:06)
I think China shows that there's as much in operations and skill challenges as technology challenges. The fleet in China is above 5,000 vehicles across, I think more than 7,500 square kilometers in key cities. Some operators average more than 20 orders per vehicle per day. So total cost of ownership has fallen roughly 30 to 40 percent, while remote assistance ratios are moving from one operator for 20 to 40 to even 50 to 60 vehicles. We think it will achieve one for 100