Morgan Stanley projects the global robotaxi market will reach $1 trillion by 2040, fueled by sharply lower manufacturing costs in China and strong competition from both Chinese and American technology companies.
- China’s part costs to drop to $35,000-$40,000 by 2027
- Commercial robotaxi operations could break even by 2028
- Global fleet may reach 2.5 million vehicles by 2035
What happened
Morgan Stanley released a research note forecasting that the global robotaxi market will hit $1 trillion by 2040. This growth is largely attributed to the rapid reduction in manufacturing costs in China, which is expected to lower the cost of parts per robotaxi vehicle to between $35,000 and $40,000 by 2027. This cost decrease is expected to accelerate mass adoption of robotaxi services worldwide.
The research highlights leading Chinese companies such as Baidu, Xpeng, and WeRide as well-positioned to dominate the regional market alongside global leaders like Tesla and Waymo. Backed by advances in AI and improving regulatory clarity, robotaxis could cover their operating costs as early as 2028, paving the way for scaled commercial deployment by 2030.
Why it matters
Lower hardware costs coupled with sophisticated AI developments and established ride-sharing networks give Chinese companies structural advantages in the autonomous ride-hailing sector. This dynamic enables a faster transition from pilot projects to profitable operations, accelerating overall industry growth.
Morgan Stanley also notes a potential geographical shift as Europe and broader Asia may gain increasing importance in the robotaxi market by the mid-2020s. The evolving market is expected to move away from centralized fleet models toward a distributed mobility network, increasing availability and operational efficiency worldwide.
What to watch next
Industry watchers should monitor the pace at which Chinese part costs decline and how quickly companies like Baidu, Xpeng, and WeRide expand their urban deployments. Additionally, the financial performance of robotaxi services in early commercial operations will provide key signals of mainstream viability after 2028.
Global fleet size is projected to reach about 2.5 million robotaxis by 2035, supporting daily passenger volumes rivaling large countries such as South Korea, France, or Germany. Tracking regulatory developments, technological breakthroughs in AI, and the strategic moves of US competitors Tesla and Waymo will be critical for understanding market leadership and regional dominance.