Ready to Ride the Robotaxi Theme?
MMN Recommend
Here is a newsletter that is well worth a read if you’re looking to spot big opportunities early, Foresight by OPTO.
Each week, they profile a public company at the forefront of major trends like AI, robotics, and blockchain — with detailed, research-backed cases that go beyond the hype.
Every other week, they go even deeper with long-form features on the companies reshaping entire sectors.
I’ll let Foresight take it from here…
With autonomous vehicles likely to reach roads in the near future, OPTO has selected six companies at the forefront of the sector.
Key Takeaways
By 2035, robotaxis could cost as little as $0.25 per mile, compared to $2 per mile for a human-driven ride in 2024;
Alphabet's Waymo service is leading the self-driving charge, with new operations launching in Silicon Valley and a hook-up with Uber, while Tesla is testing the water in Texas;
With regulatory challenges and high investment costs, partnerships between ride-sharing platforms, automakers and creators of autonomous systems appear critical to the sector's success.
The idea of riding in a robotaxi may seem like a novelty, but it could one day be the most convenient and affordable mode of transport.
The cost per mile for a human-driven ride hail in the US was $2 per mile in 2024, according to ARK’s Big Ideas 2025 report,[1] compared to $1.10 for a personal car.
By 2035, the report details, hailing a robotaxi could cost as little as $0.25 per mile.
A major reason why robotaxis could become so cheap to ride is that electric vehicles (EVs) are structurally cheaper than their internal combustion engine counterparts.
The cost of running EVs is likely to decline over the next decade, if electricity prices fall as expected. This, plus the fact that autonomous technology will only improve over time, means robotaxis will be able to run more efficiently.
And, of course, you won’t have to cover the cost of a human driver.
Leading the robotaxi race right now is Waymo, whose fleet consists of all-electric Jaguar I-PACE SUVs[2] and Hyundai’s IONIQ 5 SUVs.[3]
Earlier this month, the Alphabet-backed [GOOGL] venture rolled out its service to a number of cities in Silicon Valley. This has put it ahead of competitors Zoox, owned by Amazon [AMZN], and Tesla [TSLA], both of which are testing their robotaxis on public roads in California but have yet to receive approval to operate commercially.
Bumps In the Road
There are as many robotaxi failures as there are robotaxi successes — if not more. Among them is Apple [AAPL].
The iPhone maker ditched plans to launch a driverless car, known as Project Titan, in February last year. Though it never publicly acknowledged it was working on it, the New York Times reported that more than $10bn had been spent on the project.[4]
But the most notable casualty has been General Motors [GM], which shuttered its robotaxi venture Cruise at the end of last year. Like Apple, GM had reportedly burned $10bn on the project since acquiring Cruise in 2016.[5]
GM had been at the front of the robotaxi pack until a near-fatal accident in 2023 that saw one of its robotaxis hit a pedestrian who had been knocked over by another vehicle, then drag her along the street. The Detroit-based automaker agreed to pay a $1.5m fine to resolve an investigation by the US Department of Transportation’s National Highway Traffic Safety Administration.[6] A further $500,000 fine followed a couple of months later after GM admitted submitting a false report to influence the outcome of the investigation.[7]
The company has decided that the best way forward is to focus on bringing its driverless technology to personal vehicles, rather than robotaxis, allowing drivers to operate their vehicles hands-off.
The decision to close the venture was derided by Cruise’s ex-CEO and Co-Founder, Kyle Vogt, who resigned in November 2023. “In case it was unclear before, it is clear now: GM are a bunch of dummies,” he posted to X.[8]
Like Apple and GM, Uber [UBER] also abandoned an attempt to launch its own self-driving car back in 2020, selling its technology to Pittsburgh, Pennsylvania-based start-up Aurora,[9] which makes sensors and software for autonomous vehicles, for approximately $4bn.[10]
However, Uber has now adopted a different strategy, preferring to partner with EV makers and autonomous driving technology companies. Rival ride-hailing service Lyft [LYFT] is taking a similar approach.
As autonomous driving accelerates, this model of bringing robotaxis to ride-sharing platforms by partnering with automakers, EV makers and fleet operators will become critical.
With this in mind, let’s take a closer look at six stocks within the robotaxi theme that are playing a role in shaping the industry through their partnerships and technology.
Two US Robotaxi Stocks
Tesla
Elon Musk’s ambition to launch a robotaxi has been dogged by years of setbacks and missed deadlines, but looks set to finally come to fruition.
Last October, Tesla unveiled the fully autonomous Cybercab, though Musk admitted it won’t go into full production until 2026. Nevertheless, the EV maker is set to launch a fleet of self-driving Models Ys and Model 3s as a “paid service” in Austin, Texas, with launches in other cities to follow before the end of the year.
“These Teslas will be in the wild with no one in them in June in Austin … This is not some far-off mythical situation. It’s literally five, six months away,” declared Musk on the Q4 2024 earnings call in January.[11]
Musk also revealed on the call that Tesla vehicles are already driving themselves the 1.2 miles from the Californian factory in Fremont to the loading docks they are shipped from.[12]
Tesla Targets 2026 US Rollout
Texas has likely been chosen for its driverless debut because of the state’s more lenient regulatory approach. Operators of driverless vehicles don’t require permits; they just need to be insured, equipped with data recording devices, and, above all else, obey traffic laws, as any human driver does.
As noted above, Tesla has yet to be approved to run a driverless taxi service in California. Its autonomous vehicles can be tested on the state’s roads, but only if a safety driver is riding in the driver’s seat.
Despite the regulatory hurdles, Musk said on the Q4 earnings call that he’s “very confident” Full Self-Driving (FSD) will roll out to several other major US cities, including those in California, by the end of this year, and “everywhere in America” next year.
The company is inching ever closer to achieving Musk’s vision of a Tesla Network, where Tesla owners could potentially earn money by renting out their privately owned autonomous vehicles as taxis when they’re not using them.
“We’re just putting a toe in the water, then a few toes, then a foot, then a leg to, you know, make sure everything’s cool,” he added on the Q4 call.
Uber
If robotaxis are going to be the future of mobility, then passengers need to be able to hail them easily.
This is where apps like Uber [UBER] come in.
In early March, the San Francisco-based company announced that its riders could now book a Waymo robotaxi for journeys in Austin.[13] The two parties are planning to bring the service to Atlanta in the near future.
Uber CEO Dara Khosrowshahi would love for Tesla to be on its network.
He was asked about it by technology and media analyst Ben Thompson for his newsletter, Stratechery.[14] “Yeah listen, no one wants to compete against Tesla or Elon, if you can help it,” said Khrosrowshahi in the interview, published on February 13.
He added there are currently around 15,000 drivers on Uber’s network that are driving Teslas. If their vehicles get FSD then “they’d love to plug it into Uber as well,” he said.
However, discussions with Musk about making Tesla’s planned robotaxis available on the Uber platform have proved fruitless.
“They want to build it alone, so to some extent in Austin, we and Waymo will be competing with Tesla when they launch,” Khosrowshahi told Bloomberg on the sidelines of the FII conference in Miami in February,[15] just eight days after the Stratechery interview was published.
Uber’s Strategy Showing Strength
Right now, sentiment around robotaxis is being driven by expectations that Tesla will finally launch later this year. But if Musk doesn’t deliver on his promise, then this excitement will wane, warn Oppenheimer analysts led by Jason Helfstein.
Despite this, the impact on UBER stock would likely be muted, they wrote in a note to clients in February, adding that the Waymo partnership seems to be progressing well.
“Over time we expect investors will gain confidence Uber’s [autonomous vehicle] strategy is working,” the analysts wrote.[16]
Two Chinese Competitors
US companies may dominate headlines about robotaxis, but Chinese competitors are close behind. In fact, while Waymo is way out in front in terms of commercial rides to-date, in second and third place are Baidu’s [BIDU] Apollo Go and Pony AI [PONY], with Tesla and Zoox making up the top five.
Baidu’s Apollo Go
Better known for being a search engine giant, the Chinese tech stock has been in the driverless technology game for the past decade.
Baidu rides have been available commercially in China since August 2022 when it was granted its first permit to operate in Chongqing and Wuhan,[17] before expanding to Beijing the following year.[18]
In Q4, Apollo Go provided 1.1 million robotaxi rides, up 36% year-over-year, the company announced in its latest earnings report last month. In January, the total number of rides hit 9 million.[19]
“This year will be a paramount year for our expansion. We expect to grow our fleet size and ride volumes faster than ever,” said Baidu CEO and Co-Founder Robin Li on the Q4 earnings call.[20]
The company is now targeting global expansion. Last November, Apollo Go was granted a license to test its robotaxis on Hong Kong’s roads, marking its first entry into a right-hand drive, left-hand traffic market.
As it looks to enter other countries and expand its fleet size and ride volume, partnerships will be key, stressed Li.
“We have identified a variety of potential partners, including mobility service providers, local taxi companies, third-party fleet operators, and other potential partners … This asset-light approach will allow us to scale up efficiently while maintaining flexibility,” he added on the Q4 call.
Apollo May Be Underappreciated
Apollo Go may be gaining ground in the robotaxi market, but the potential value of Baidu’s intelligent driving business could be underestimated.
Back in February, Benchmark analyst Fawne Jiang reiterated the firm’s ‘buy’ rating. Though there are concerns about slowing search engine ad revenue growth, the “minimum asset value recognition in robotaxi” means BIDU stock has “an attractive risk/reward profile”, Jiang wrote in a note to clients.[21] Benchmark’s price target of $130 implies an upside of 32.3% from the most recent closing price of $98.24.
In truth, it’s difficult to attribute a value to Apollo Go, given that the robotaxi network is still in its infancy. But as Baidu’s driverless technology evolves and the company announces new partnerships to help expand its network globally, it should become easier to project the kinds of revenue that the intelligent driving business might generate.
Baidu currently doesn’t disclose the segment’s income, but an internal letter from Wang Yunpeng, head of the firm’s Intelligent Driving Business, seen by South China Morning Post last April, said that it’ll strive for “RMB10m of revenue and RMB10m of profits.”[22]
Pony AI
The Chinese mobility company is one of the youngest stocks in the robotaxi race, having IPO’d last November.
Though Pony AI currently has just over 300 vehicles on roads in China, it has grand plans to scale this to 1,000 by the end of this year and to 10,000 within the next three years, according to CEO James Peng, speaking to the Wall Street Journal earlier this month.[23] He hopes that the company can turn profitable by 2029.
Peng also spoke to CNBC recently, during which he argued that robotaxis will “gradually become just a de facto mode of transportation for the local residents.”[24]
Pony doesn’t have any plans to expand to the US right now. It has previously conducted testing there, but has run into issues, including having its license in California temporarily revoked in 2022 after failing to keep records of the safety drivers on its testing permit.[25]
Two Self-Driving ‘Picks and Shovels’
Tesla operates a vertically integrated business model because it develops both its own hardware (vehicles) and software (FSD). Then there are ride-hailing services, like Waymo, that build and install their software into vehicles from third-party fleet operators. There are also companies that sell autonomous driving technology to automakers, and can help even legacy players turn their vehicles into robotaxis.
The global autonomous driving sensors market could grow from a valuation of $11.8bn in 2023 to $40.29bn in 2030, according to one research report.[26] Luminar [LAZR] and Mobileye [MBLY] were named as two market leaders.
Luminar
Orlando-based Luminar is a manufacturer of LiDAR systems (short for ‘light detection and ranging’). The technology uses lasers to produce 3D images of a vehicle’s surroundings so it’s able to identify objects and obstacles, such as broken-down vehicles or pedestrians crossing the road.
Luminar was founded in 2012 and went public in December 2020 through a SPAC deal. The LAZR share price is down 96.8% since its debut.
There’s an ongoing debate around how useful LiDAR systems actually are. For instance, Musk has a history of criticizing the technology; on Tesla’s Q4 earnings call he observed that “humans drive without shooting lasers out of their eyes — I mean, unless you're Superman.” [27]
Despite Musk’s criticism, Tesla bought more than $2.1m worth of Luminar’s LiDAR sensors in Q1 2024. According to Luminar’s quarterly filing with the SEC, the EV maker accounted for 11% of total revenue of $20.9m in Q1.[28] It helped Luminar to achieve its second-best quarter on record since going public.[29]
It’s not clear why Tesla bought Luminar’s LiDAR sensors, given Musk’s disapproval, but it’s believed that Tesla is using them to test and validate its FSD system.[30] However, neither Luminar’s Q2[31] or Q3[32] filing mentions Tesla, and considering quarterly revenue fell to $16.5m and $15.5m respectively, it could be assumed that Tesla didn’t follow up with further orders.
Volvo Partnership Revs Up
LAZR stock did get a vote of confidence earlier this month when Volvo [VLVLY] announced that its upcoming ES90 model will feature Luminar’s technology. It’s already installed on the automaker’s EX90.
While Volvo is yet to officially enter the robotaxi race, the company said towards the end of last year that “the EX90 is hardware ready for autonomous driving but it's not available for customers at this time”.[33] When it is, Luminar could potentially get a revenue boost.
Luminar CEO and Founder Austin Russell said the ES90 integration “will help scale our safety-critical technology at a time when consumers, automakers, and regulators alike are demanding the most advanced sensing capabilities in their roadmaps — and this is just the beginning.” [34]
Mobileye
One company that supports Musk’s anti-LiDAR stance is Mobileye, which was spun out of Intel [INTC] and went public in 2022.
Last September, Mobileye decided to shutter its LiDAR business, eliminating more than 100 jobs in the process, declaring LiDAR “less essential to our roadmap for eyes-off systems”.[35]
The focus going forward is instead going to be on the “substantial progress” the company has made with its EyesQ6 computer vision perception system, along with the “increased clarity on the performance of our internally developed imaging radar”.
Axing its LiDAR systems “has no bearing on Mobileye’s commitment to the development of our in-house imaging radar”, which is due to enter production this year, management said. “In terms of Mobileye’s internal sensor development, imaging radar is a strategic priority.”
The press release concluded that the decision “will result in the avoidance of LiDAR development spending in the future”. This is an important point to make. Mobileye has been struggling to turn a consistent profit in recent years. It swung to a net loss of $71m in Q4[36] from a net profit of $63m in the year-ago quarter. Net loss for full-year 2024 came in at just over $3bn, largely due to a $2.7bn one-time loss for goodwill impairment recognized in Q3.[37]
Nevertheless, operations generated $400m in cash flow last year, above 2023’s level, and the company ended the year with $1.4bn in cash reserves.
Lyft Partnership Could Accelerate Revenue Growth
Mobileye is working with Lyft to bring driverless vehicles to its platform.
The partnership was first revealed back in November, with Mobileye CEO and President Amnon Shashua saying that “cooperating with leading mobility providers and operators are essential steps to bring autonomous mobility services to reality”.[38]
In February it was announced that Lyft customers in Dallas, Texas, will be able to book driverless vehicles that use Mobileye technology and are owned by Tokyo-based fleet financing firm Marubeni [MARUY].[39]
Following the news, JP Morgan raised its price target on MBLY stock from $10 to $11. Analyst Samik Chatterjeeri, writing on behalf of Doug Anmuth, who covers the stock, said that this incremental increase reflects the modest increase in revenue Mobileye should see from the Lyft roll-out.
Conclusion
More companies are likely to join what’s becoming a crowded market in the coming years. There will inevitably be both high-profile successes and high-profile failures.
Investors seeking exposure might choose to buy a range of stocks with a stake in the robotaxi theme, from automakers and EV makers, to ride-hailing companies and autonomous driving software makers.
This is for informational purposes only. OPTO Markets does not recommend any specific securities or investment strategies. Investing involves risk and investments may lose value, including the loss of principal. Past performance does not guarantee future results.
[2] https://waymo.com/blog/2018/03/meet-our-newest-self-driving-vehicle
[3] https://waymo.com/blog/2024/10/waymo-and-hyundai-enter-partnership
[4] https://www.nytimes.com/2024/02/28/technology/behind-the-apple-car-dead.html
[8] https://x.com/kvogt/status/1866612270815494639
[11]
[12]
[16] https://finance.yahoo.com/news/uber-reiterated-best-idea-oppenheimer-144935795.html
[18] https://cnevpost.com/2023/03/17/baidus-apollo-go-gets-permit-fully-driverless-rides-beijing/
[19] https://ir.baidu.com/news-releases/news-release-details/baidu-announces-fourth-quarter-and-fiscal-year-2024-results
[24] https://www.cnbc.com/2025/03/12/ponyai-ceo-doubts-if-tesla-can-launch-its-robo-taxi-service-soon.html
[26] https://www.researchandmARKets.com/report/autonomous-vehicle-sensor
[27]
[28] https://investors.luminartech.com/sec-filings/quarterly-reports##document-723-0001628280-24-022459-2
[29] https://stockanalysis.com/stocks/lazr/revenue/
[30] https://www.theverge.com/2024/5/7/24151497/tesla-lidar-luminar-elon-musk-sensor-autonomous
[33] https://insideevs.com/news/732548/volvo-ex90-autonomy-hardware/
[35] https://www.mobileye.com/news/mobileye-to-end-internal-LIDAR-development/
[39]https://x.com/davidrisher/status/1888948599368953884
Nothing in this email is intended to serve as financial advice. Do your own research.
 | A guest post by
|