China's robotaxi industry eyes rapid growth at home and abroad

China's fast-developing robotaxi sector is approaching a "commercial breakout", industry sources say, supported by rapid deployment, government backing and lower vehicle costs, even as companies face profitability pressures and regulatory hurdles.

Financial firms expect the market to expand sharply. Goldman Sachs estimates industry revenue will rise from just over $50 million this year to nearly $50 billion by 2035, when 1.9 million robotaxis in China could make up about a quarter of the country's ride-hailing fleet.

UBS projects the market could reach around $180 billion in China alone by the late 2030s, says The Economist.

Major players include Baidu's Apollo Go, Pony.ai, WeRide and Geely's CaoCao Mobility. Apollo Go, the largest operator, runs more than 1,000 self-driving vehicles, mostly in China, and aims to expand to 20,000 worldwide by 2027.

Other contributors to the ecosystem include software developer Momenta, partnered with SAIC, and EV maker Xpeng, which plans to launch purpose-built robotaxis next year.

China's scale is a core advantage, with more than 50 cities allowing public-road testing of autonomous vehicles and at least ten hosting commercial services—about twice the number in the United States.

The country's 139 cities with populations above 1 million and its large urban base also create a sizeable potential customer pool.

Strong state support has accelerated deployment. National policymakers view self-driving technology as a way to boost domestic innovation, while local governments are expanding infrastructure to attract investment.

In the city of Wuxi, authorities have connected 1,723 traffic lights to intelligent networks and installed sensors at 330 locations to support robotaxi operations.

Lower vehicle costs also give Chinese companies an edge. HSBC estimates an average Chinese robotaxi costs roughly $40,000, compared with $130,000 to $200,000 for vehicles used by US operator Waymo.

Baidu's RT6, built with Jiangling, costs about $35,000. Domestic suppliers dominate key components: four Chinese firms, led by Hesai, account for about 90% of the global lidar market.

Despite these strengths, operators have yet to reach profitability. Low fares and relatively low taxi-driver wages in China make cost recovery difficult.

Goldman Sachs projects the sector will not break even in major cities until 2032. Access to customers is another constraint, as market leader Didi—holding about 70% of China's ride-hailing market—is unlikely to share its user base, prompting robotaxi firms to build their own apps or partner with smaller platforms.

Regulatory approval remains uneven. More than 70 new autonomous-driving regulations were issued in the first half of the year as officials prioritise safety and public acceptance.

Large cities such as Beijing and Shanghai have moved cautiously, and no operator has gained permission to run services across an entire city.

These domestic limits are pushing Chinese companies to accelerate global expansion. UBS estimates the robotaxi market outside China, excluding the United States, could exceed $210 billion by the late 2030s.

Several firms are already operating internationally. Pony.ai is testing in Luxembourg, running pilots in Seoul and has approval to operate across South Korea.

The company also has a presence in Dubai. Apollo Go has launched tests in Hong Kong, holds permits in Abu Dhabi and Dubai, and plans trials in Switzerland with PostBus.

It is also considering entry into Britain and Germany next year through a partnership with Lyft. WeRide has permits to test or run commercial services in six countries beyond China.

Industry analysts say Chinese robotaxi developers are using domestic scale, state-supported infrastructure and cost advantages to build capacity ahead of a broader global push, though their expansion is still constrained by regulatory demands and the need to achieve sustainable profits.