The large-scale advent of fully autonomous digital drivers is upon us, and we think the development roadmaps of electric vehicles (EV) and AI will converge as of 2025.
This is very exciting amidst all the current debate around the lack of “perceived” ROI on current AI compute datacenter investments, as autonomous self-driving vehicles (AI drivers) represent the first mega use case for Physical AI with a potential TAM of up to $ 1 trillion (in revenues) over the next decade.
The first commercial fully autonomous robotaxis service is Google’s Waymo digital chauffer (on V5 now), which is already on a monthly run-rate of 100k customer trips and 1.0 million miles driven as of October 2024. We think Waymo generates revenues of $ 15 per trip, which is at par with Uber’s pricing of $ 1 – 2 per mile. While Waymo is only active in 4 cities (San Francisco, LA, Austin, Phoenix) with 1,000 total vehicles, we hear it will launch a commercial service in Miami in 2025 with the goal to increase the number of its vehicles to 5,000 per active city. The company also has a private testing in Tokyo. Waymo has disclosed that, in their first 25 million miles driven, it has had 81% fewer airbag deployment crashes and 72% fewer injury-causing crashes when compared to human drivers.
There were 3.22 trillion total vehicle-miles driven on all roads in the US in 2022 versus Waymo’s current annualized run-rate of 12.0 million with its commercial service, which should give the scale of the opportunity for such AI drivers. With the cost per mile of fully autonomous EV drivers targeted to drop below: (1) ride-sharing services such as Uber and Lyft (2) personal car ownership (3) public transport over the next 5 years, the revenue opportunity for such digital chauffeurs is in the “hundreds of billions” of dollars just in the US, in our view! Especially as Waymo has the potential to undercut Uber prices by up to 40% as it scales its fleet of vehicles…
In this regard, it is noteworthy that Waymo’s driver-less robotaxis are already boasting > 20% share of the ride-hailing market in San Franciscoand having overtaken the Lyft ride-hailing service in November 2024:
The two largest players in this market in the US are Google Waymo and Tesla (which has now launched its FSD 13 software platform), while China boasts Baidu (BIDU US) which is targeting 30% of the taxi and ride-hailing market in China by 2030 competing with Didi and Pony AI. Baidu currently offers 50 – 70% lower pricing versus Didi following the launch of its RT6 software platform.