Morgan Stanley: China's Cost Reduction to Drive Global Robotaxi Market to $1 Trillion by 2040
Miles Bennett
Morgan Stanley projects the global robotaxi market will reach $1 trillion by 2040, powered by falling Chinese supply-chain costs — a signal that autonomous driving is shifting from a tech race to a race on cost and scale.
Where does the trillion-dollar conviction come from?
The core logic: Chinese-made robotaxi per-vehicle component costs are forecast to drop to $35,000–$40,000 by 2027, sharply lowering the bar for commercial deployment.
This means → hardware is no longer the bottleneck; the cost curve is the variable that decides who cracks the business model first.
With hardware costs falling, AI advancing, and regulations clarifying, robotaxi services could break even operationally around 2028 and enter large-scale commercial operation before 2030.
How big could the fleet get by 2035?
Morgan Stanley estimates the global robotaxi fleet will reach roughly 2.5 million vehicles by 2035.
In plain terms = that fleet's daily capacity would match the entire population of South Korea, France, or Germany.
This reflects a shift: robotaxis are moving beyond proof-of-concept toward the scale of national-level transport infrastructure.
Who is leading — the US or China — and how?
US camp: Waymo and Tesla lead globally on fleet scale and technology depth.
Chinese players are building differentiated moats: WeRide and Pony.ai accumulate real-world city data; Baidu combines computing power with consumer reach; XPeng embeds autonomy into its EV product line; DiDi leverages its massive ride-hail passenger network for traffic advantage.
This means → Chinese firms are not copying the Waymo model — each has locked onto a distinct moat entry point: data, compute, hardware, or traffic. Four parallel paths.
Is there room for Europe and broader Asia?
The US and China dominate the robotaxi landscape today, but Morgan Stanley explicitly flags that Europe and pan-Asia will grow in importance over time.
In plain terms = a trillion-dollar market won't stay a two-player pool; any region that opens its regulatory gates could become the next growth node.
What does the endgame business model look like?
Morgan Stanley's view: the industry will evolve from centralized fleet deployment to a decentralized transport network.
Put simply = the future isn't one company owning every car — it's more like today's internet, with multiple parties plugging in and operating independently.
This means → the ultimate winner won't be whoever has the most vehicles, but whoever breaks through on scale, cost, and regulatory compliance at the same time.
Content is for reference only, not financial advice.