Elon Musk, for example, thinks that there will be millions of robotaxis from Tesla alone on the road by 2026. I think that hallucinogens were involved with that particular prediction, but he has been wrong so many times in the past that he is bound to be right sooner or later. Optimists see robotaxi expansion as a revolutionary advancement in transportation technology that will transform our lives for the better. They see robotaxis as so prevalent, so reasonably priced, and so useful that families will give up their second or third cars, and perhaps eventually all of their privately owned cars.
Others, however, see robotaxis in more apocalyptic terms. They see hordes of empty vehicles clogging city streets in search of their next rider, similar to zombies wandering the streets searching for their next victim. To them, robotaxis are a “solution” that only makes the problem of urban transportation worse. They worry that the initial public excitement over robotaxis may be the final nail in the coffin for mass transit systems, but that robotaxis will inevitably fail to deliver an affordable and scalable option for a large swath of urban residents.
My goal with this post is to bring some sanity to this topic. Yes, there are distinct advantages that robotaxis bring to the table that will continue to fuel their expansion. But there are also clear constraints that will slow that expansion and limit its eventual penetration of the urban transportation market. Those advantages and constraints will mutate over time, but it will not be a particularly quick process. As I have pointed out before, urban forms and systems (and human behavior) change slowly.
Near Utopia
The key for those who see explosive expansion is a rapid decline in the price per mile for a typical robotaxi ride. Optimists think that the average cost per mile could be as low as $0.25 to $0.50 by 2030, or soon after. [1] That is a significant savings over the cost of a typical Uber or Lyft ride which is currently estimated to average $1.25 to $2.00 per mile (and often much more in congested cities, or during surge pricing periods). The aggressive cost per mile estimates are based on falling vehicle costs as mass production kicks in, the lower maintenance costs and longer life spans of electric vehicles typically used for robotaxis, and the absence of a human driver.
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| Volkswagen Robotaxi Prototype |
No wonder that robotaxi evangelists foresee the rapid replacement of human-driven Uber rides with autonomously driven rides. In fact, at the cost per mile rates estimated above, a robotaxi trip is arguably cheaper than driving your own car, particularly if you have to pay for parking at the trip destination. If robotaxi trips start replacing a broad range of trips in privately owned vehicles then the potential market does indeed explode.
Broader mobility. The most obvious advantage of this Utopian vision is that many people who can’t (or shouldn’t) drive their own car suddenly have a reasonably priced and highly flexible transportation option. The elderly, teenagers, people with certain disabilities, or even the poor may find that robotaxis give them a level of mobility that is far better (more precise, more private and less stressful) than their current options.
Cleaner and quieter. Since most robotaxi rides would replace a ride in an internal combustion vehicle with one in an electric vehicle, urban environments would benefit from less ground-level pollution and less vehicular noise. Although electric vehicles are not pollution free, there would likely be a reduction in total greenhouse gas levels.
Better land utilization. If private car usage drops, then that also means that parking demand would drop as well. As I have pointed out in previous posts, most urban areas need a greater level of tax revenue per square mile of service area in order to achieve a reasonable level of fiscal stability. Replacing low-value surface parking lots with more intensive, high-value buildings would be an important step in the right direction.
Productive time. City driving is generally more stressful than enjoyable, so a competent autonomous driver would free us to do other things instead of navigating through a chaotic urban environment. People might choose to send emails or texts, check their social media accounts, or just relax by listening to music or playing a game. Whatever option you choose, a robotaxi ride could recapture time that previously was lost to driving.
Paradise Lost
Robotaxi naysayers see just another variation on our love affair with the automobile, and arguably one which is worse for urban life than what we have now. After all, robotaxis will simply replace a human-driven trip in a car with a computer-driven trip in a car. There is no particular reason to think that the number of occupants per vehicle will suddenly go up, and cautious robo-drivers might actually slow vehicle throughput down. In addition, robotaxis are likely to cause the total vehicle miles traveled (VMT) to go up which will worsen current congestion levels. A robotaxi trip (or any ride-hailing trip) isn’t just from my house to my destination, it is from some random starting point to my house and then to my destination. This increase in trip length (not to mention empty trips waiting for the next rider) might not be a problem during off-peak hours, but it is a potential disaster during rush hours in dense urban areas. [2]
What big cities desperately need is a transportation option that increases passenger density and robotaxis do not currently offer that type of solution. The core problem is that urban transportation is inherently “peaky” and concentrated. People do not move from random point to random point at evenly distributed times throughout the day. There are distinct peaks where transportation demand is focused on certain times (e.g. rush hour) or certain places (e.g. an office district, a factory, a school, etc.). This pattern creates an obvious physical problem – not enough street space to accommodate vehicles carrying just one or two people – but it also creates a financial problem that undercuts robotaxi profitability.
If there are enough robotaxis to meet peak demand, then there will be far too many during off peak hours. Robotaxis will only be profitable if they have high utilization rates, which means that the number of robotaxis that the free market will provide will always be well short of peak demand. This, in turn, means that during peak hours robotaxis will be in short supply which means that surge pricing will kick in which means that the magical $0.25 to $0.50 per mile price point goes out the window for the most important times of the day and the busiest places. Thus robotaxis will be just numerous enough and just inexpensive enough to stay busy the vast majority of the time, but not numerous enough or cheap enough to be a paradigm-shifting transportation option for the next decade or so.
In addition, a robotaxi is not a good fit for many of the trips that we take on a daily basis. Do I really want a robotaxi to drive me to the supermarket, come back in 20 minutes to pick me up and take me to the dry cleaners, then inch through the drive-thru lane at Chick-Fil-A to get some lunch, and then wait patiently at the curb while I carry all my stuff into the house? And if my trip includes small children, do I have to carry car seats with me and figure out how to install them in various robotaxi vehicles? Not ideal. The fact of the matter is that most of us treat our cars like a combination of a rolling storage locker and a school bus – we haul things and people in all sorts of combinations and situations, some of which we can’t always anticipate when we start our trip. For example, I have my golf clubs, shoes and an assortment of hats in my trunk from March to November in case a driving range and a free hour of time happen to coincide. Despite its faults, a personal car gives people a great deal of flexibility that reliance upon a robotaxi would not.
One last problem to burst the robotaxi bubble: think of the curb space chaos in front of the departure gates at most major airports, with vehicles stacked two or three deep as people jump out and try not to get run over. Now extrapolate that mess to every office building, factory or school as hundreds of robotaxis fight for space to drop off or pick up their riders all at the same time. Airports are just now figuring out how to handle pick-up and drop-off lanes in a rational manner, but cities are nowhere near ready for that kind of transportation adjustment. Curb space is already in short supply because of demand for parking spaces and delivery zones – robotaxis will be queued up around the block waiting for what limited curb space exists to become available for their needs or people will get frustrated and disembark in the middle of the street.
The Likely Middle Ground
In order to get a realistic grasp on what the robotaxi world will be like over the next five to ten years, I think it is important to keep three things in mind. First, autonomous driving is really hard. This is a problem that the smartest minds in the business thought would be solved ten years ago and yet true autonomous driving (known as SAE Level 5) is not available in any production car or in any operational robotaxi. [3] The best that is currently available (and likely to be available for the next few years) is Level 4 which provides autonomous driving without any user engagement, but only in limited circumstances.
This is why all robotaxi services to-date operate in limited geographic areas that have been extensively mapped and carefully vetted so that vehicles avoid confusing or dangerous routes. This approach, known as “geo-fencing,” is why a Waymo ride in Phoenix won’t take you to some of the outer reaches of the metro area and why the route will often avoid using interstate highways even when that would be most efficient.
Second, no one is making money providing robotaxi services and no one is likely to make money for several more years. This is why all the leading players are huge corporations with very deep pockets that can afford to lose money while they perfect their service and build market share. This is an industry that is going to experience serious consolidation at some point in the future which is why the big players are desperate to have enough market presence to remain standing when the mergers and bankruptcies start to happen.
Eventually, of course, shareholders and corporate activists are going to insist that robotaxi services turn a profit. This pressure to be profitable is why, in my opinion, the rosy forecasts of average ride costs below $0.50 per mile are mostly fantasy for at least the next five to ten years. The pressure to be the absolute lowest cost provider is not something that happens in a young, rapidly growing industry, but rather in a mature industry where growth is hard to come by. Thus I expect the cost for robotaxi rides to hover just below the cost of a human-driven Uber ride until robotaxi services are routinely profitable. This is low enough to cannibalize business from human-driven ride-hailing platforms but not so low that people will ditch their cars for the robotaxi lifestyle.
Third, the regulatory environment is a complicated, patchwork mess. Some states have lenient laws that favor autonomous driving, but most either have very strict regulations, vague regulations or regulations that include limits which are unfriendly to robotaxi businesses. Major cities are generally interested in being part of the “leading edge” so that they are seen as progressive and tech-savvy, but they are absolutely paranoid about being so compliant that they become the “bleeding edge” where the blood is literally from their citizens. As a result, no jurisdiction is anxious to cede control to a higher level of government unless mandated by State law. No one is fast-tracking an overriding Federal standard for robotaxi regulations because most local governments want to remain “hands on” in protecting the safety of their residents.
This means that robotaxi expansion is going to be a slow (and expensive) city-by-city slog rather than a tidal wave that washes across the country. It also means that expansion is likely to be labor intensive because cities where service is new are going to want plenty of personnel on hand to (1) deal with operational glitches that block traffic, (2) provide tele-operators monitoring each ride so that citizens feel safe, and (3) keep vehicles clean so that the ride experience is as positive as possible. This is great for making the rollout of robotaxi service seem successful from a politician’s point of view, but it is another obstacle on the road to profitability.
The Impact on Cities
The most obvious initial impact is that robotaxis will steal rides away from human-driven taxis and riding-hailing apps. Uber, Lyft and other ride-hailing companies will be willing participants in this process because their main source of profit comes from being the platform that arranges the ride and processes payment – they have no innate preference for humans versus computers when it comes to who is driving the vehicle. How fast this transition takes place depends on a variety of factors, but mainly upon how quickly costs per mile can fall so that robotaxi services can turn a profit, or at least break even. My guess is that profitability is still a few years away so the transition will be relatively slow to keep losses from becoming so huge that they are unsustainable.
Still, in the next two or three years I expect there to be robotaxi operations in 15 to 20 cities in the U.S. alone. There will be four or five major players (perhaps more if the Chinese can break into the market) and the total robotaxi fleet will be in the tens of thousands of vehicles. That may sound like a lot, but it is really just a drop in the proverbial bucket. Uber by itself is currently estimated to have roughly a million U.S. drivers.
If my guess is correct, then the initial impact on most urban areas will be fairly minimal. Robotaxi service won’t expand the ride hailing market substantially until the cost drops significantly. If the cost does drop substantially (and this is a big “if”), the result will be a dramatic increase in robotaxi trips which in turn will increase total vehicle miles traveled and overall congestion levels. Depending on where this happens, the result could vary from mildly annoying to disastrous. Think of the impact, for example, of adding thousands of new trips to the Chicago loop if a door-to-door robotaxi ride becomes cheap enough to woo the more affluent commuters off of the “L.”
The trick will be figuring out at what point on the path of “falling average-price-per-mile” will people shift in significant numbers from trips in their own personal car or trips on mass transit to a robotaxi trip. That tipping point could potentially have a huge impact on urban life as some of the negative side effects discussed above (e.g. increased congestion and insufficient curb space) become readily apparent. At that point there is likely to be some public pushback on the robotaxi movement, quite possibly leading to local regulations that limit the number of allowed robotaxis (or ride-hailing services generally) and their allowed distribution throughout the metro area. If that happens, the market will raise the price of robotaxi rides that now are under-supplied relative to demand. This in turn will scale back demand, but the damage to urban transportation infrastructure may already have been done. If middle-class commuters are lured into robotaxi rides from the subways and buses, will they ever return to mass transit even if costs and travel time creep back up? Most mass transit systems are on thin financial ice already so even short term shifts could be catastrophic.
Cities (or metro areas) will be searching for the right balance, but are likely to find that the right point is hard to pin down and shifts over time. Unfortunately, people may come to view robotaxi service as the urban transportation version of Pandora’s Box, with “evils” being released before the lid can be slammed back into place. The hard truth is that most urban areas during rush hour would be hard pressed to handle even a 10 percent increase in VMT without commute times spiraling to unacceptable levels.
Another Option
There is potentially another path that would allow substantial robotaxi expansion without as many negative side effects. As mentioned above, what urban areas need are transportation options that increase passenger density – in other words, more people being moved per lineal foot of available street lanes. In the U.S., nearly 75 percent of all commuters drive alone which is 15 to 18 feet of lane space (ignoring the space between cars) per person. The average for all automotive trips is not much better at roughly 1.5 occupants per vehicle (or approximately 10 to 12 feet per person). A bus on the other hand, might be just 1 to 3 feet of lane space per person. Ride-hailing vehicles are currently no better than other automotive trips (excluding the driver). Precise numbers aren’t available, but estimates are that only 10 percent of Uber rides have three or more passengers. But what if cities could push robotaxi companies (and ride-hailing companies generally) to increase average passengers-per-trip numbers?
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| Zeekr Robotaxi Prototype |
Current designs for custom-made robotaxis such as the Zoox (Amazon) or Zeekr RT (Waymo) are 12 to 15 feet in length and can comfortably accommodate 4 people. If occupancy levels during peak times (or in peak areas) could average 2.5 or 3, then lane space per person might fall to 4 to 6 feet. Doubling or tripling passenger density versus privately owned cars would be a potentially huge benefit in terms of roadway congestion.
I know what you’re thinking: “No way am I sharing my robotaxi ride with a stranger,” but hear me out. Obviously many robotaxi trips will continue to be similar to a typical riding-hailing trip where you (or you and a friend) go from point A to point B, but I think there are a variety of scenarios where a robotaxi “trip” could include multiple stops and/or include passengers that you either don’t know at all or know only tangentially.
Uber is already experimenting with this type of service with an option called Route Share, which is currently available in half a dozen cities. This service, targeted toward commuters, has a vehicle running a fixed route every 20 minutes during the morning and evening rush hours. Riders can reserve a space and select their pick-up and drop-off location. Since it is not a door-to-door service, riders may need to walk at either end of the ride, but in return they can save up to 50 percent off the cost of an UberX. [4] Although it is being tested now with human drivers, this service would be ideal for an autonomously driven robotaxi since the route could be mapped in great detail and optimized for safety and efficiency.
I envision a more flexible service that is actually door-to-door so that it feels less like a bus ride and more like a limousine service. It should take advantage of the ride-hailing platform’s computing ability to optimize routes, adjust for exceptions, and handle billing. What if, for example, your employer joint-ventured with a robotaxi company to provide rides to work. You could pick which days you wanted to participate and approximately when you would like to arrive. The robotaxi’s computers would find other employees near your home who also want a ride, select the best route, and notify you of your pick-up time. Since each trip would be limited to three or four people, the added inconvenience would be minimal and your cost per trip would drop substantially – and perhaps even be subsidized by your employer as an incentive to return to the office! Need to stay late for an emergency meeting or leave early because your daughter is sick at school? No problem; just cancel your spot on the shared ride, arrange for an individual ride, and pay a few bucks more.
There are a wide variety of situations in which this “super car-pooling” approach to robotaxis would be useful. A retirement community, for example, might arrange a ride that drops a group of seniors at the shopping mall and returns an hour later to pick them up. Parents might arrange for their 14 year old son and two of his teammates to be picked up from Middle School and taken to swim team practice (including sending a video clip to verify safe drop-off). Or perhaps you arrange for a robotaxi to take you and your BFFs out clubbing, and then return at 1 AM to take you home. Since virtually everyone has a smartphone, these rides would be easy to set up, easy to adjust and easy to pay for. Phones could be used to notify you when your ride is approaching so you don’t forget or keep others waiting, and to verify identities so that your fellow riders are vetted by the robotaxi company.
The real payoff for sharing your ride, of course, is that you might actually approach a cost-per-mile threshold where ditching your car saves you money without imposing a great deal of inconvenience. Plus there are the added bonuses of being able to relax in a comfortable seat, avoid the stress of urban driving, go online while traveling, and skip the hassle of searching for a parking spot. The end result might be a transportation option that fills the gap between driving your own car and taking mass transit. It will not, however, meet so many people’s needs that robotaxis take over the world – but it might make their expansion mostly beneficial rather than mostly detrimental.
The Bottom Line
Robotaxis are coming and my guess is that they will be operating in the vast majority of the top 50 metro areas within five or six years. This gives cities some time to prepare, but planning for this change needs to start now. In particular, cities need to ramp up lobbying efforts at the state and national levels to make sure that they retain the ability to impose reasonable restrictions on robotaxi operations. I don’t favor the ability to ban robotaxis (or autonomous vehicles generally) but some local control is essential. Robotaxi regulations may end up being similar to the way cities restrict electric scooter-sharing or ebike-sharing businesses. In areas with an effective regional government, cities might need the ability to cede some operational control because a regional set of rules makes a lot more sense than city-by-city rules.
Cities also need to be able to require data sharing from robotaxi companies. Details such as pick-up point, drop-off point, time, date and number of passengers will be essential for integrating robotaxis into transportation systems and infrastructure. Locational data can be generalized to protect privacy, but the more data cities have the more likely robotaxi expansion will be positive rather than negative. Robotaxi companies are likely to resist by claiming this data is proprietary or that it violates their customers’ right to privacy, but cities need to insist on data sharing even if they have to sign some type of nondisclosure agreement.
Cities also need to insist on clear lines of communication with robotaxi operations. There will inevitably be problems with the rollout of this type of technology, but effective communication channels can minimize major issues. As self-driving software improves, there will be less and less need for human monitoring but robotaxi companies need to demonstrate that their vehicles can be safely integrated into an urban area before that happens. Police Departments, in particular, need to have communication protocols in place so that accidents and stalled vehicle incidents can be resolved quickly and effectively.
In the long term, cities need to build the ability for transportation infrastructure to share data back to robotaxis and other autonomously driven vehicles. Congestion levels, signal timing data, accident locations, and construction zones are examples of types of information that vehicle computers will eventually be able to process in order to optimize route and speed decisions. A truly “smart city” will share as much data as possible as transparently as possible.
I am generally an optimistic person when it comes to new technology, but I must admit to having some concerns when it comes to robotaxi expansion. I fear that an unfettered rollout could lead to an unmitigated disaster. The potential is high but the dark side can’t be ignored.
Notes:
1. Kyle Harrison; “The Trillion-Dollar Battle To Build a Robotaxi Empire;” April 2025; Contrary Research; https://research.contrary.com/deep-dive/the-trillion-dollar-battle-to-build-a-robotaxi-empire
2. Jeral Poskey; “The unseen environmental costs of autonomous cars;” February 2025; Smart Cities Dive; https://www.smartcitiesdive.com/news/robotaxis-environmental-costs-ghg-sustainability/740947/
3. “SAE Levels of Driving Automation Refined for Clarity and International Audience;” May 2021; SAE International; https://www.sae.org/blog/sae-j3016-update
4. “Introducing Route Share: Uber’s More Affordable, More Predictable Commute”; May 2025; Uber Blog; https://www.uber.com/blog/route-share/#:~:text=What%20is%20Route%20Share?,with%20more%20cities%20to%20come.
