Autonomous Taxis Projected to Generate $4 Trillion in Revenue by 2027

Thirty-three years ago, a sci-fi movie by the title of ‘Total Recall' was released.  Set in 2084, the plot takes place on a colonized Mars, and envisions various futuristic technologies like augmented and virtual realities, and brain implants; each foreshadowing modern undertakings by companies like Meta and Neuralink.  Alongside these futuristic takes was another, less flashy example that is often overlooked due to its comical presentation – the autonomous taxi-service ‘Johnny Cab'.

While its presentation was a product of its time, the idea of a Johnny Cab is now a reality, with various companies set to launch their own iteration in the coming few years, and a couple overachievers already having left the gates.  The following is a brief look at this technology, and how it may change the way we travel in the not-so-distant future.

Manufacturers and Innovators

Before taking a closer look at how autonomous taxi services can change the way we approach travel, we have highlighted below a few companies actively working to make this type of service a reality.

Waymo

Waymo began its life as the company responsible for the original Google Self-Driving Car Project in 2009.  Now, with nearly 15 years of experience under its belt, and data from 20 billion miles driven, Waymo has established itself as a leader within the sector.  It was also the first to officially launch autonomous taxis in select regions like Phoenix, Arizona, and San Francisco, California.

Waymo is a subsidiary of Alphabet Inc., and sister company to Google.  To date, it has raised $5.5B over three funding rounds.

Tesla (TSLA)

While new competitors are popping up all the time, Tesla remains the face of Electric Vehicles (EVs).  Not only that, through its expansive fleet of vehicles on the road today, it has become a major data aggregator, allowing for it to develop the foundations for a future autonomous taxi service, and ancillary technologies like artificial intelligence.

While 2022 saw a sharp decline in TSLA stock, the tides have turned, with 2023 marking an impressive turnaround of +52.39% YTD at time of writing.  Despite a rough 2022, the company was still able to boast a revenue of $81.46B over this time.

Tesla is based out of Texas, United States.

Baidu (BIDU)

In China, Baidu is a technology giant.  Not only is the company the nations largest search engine provider, it is actively developing a plethora of forward-thinking technologies like artificial intelligence (AI), and autonomous driving.  Notably, Baidu has already launched a self-driving taxi service comprised of multiple vehicle models like the Apollo RT6.

Baidu is based out of Beijing, China.  Shares in the company have seen a spike in value since the beginning of 2023, up 24.85% at time of writing.  In 2022, the company was able to generate revenue topping $143.8 billion.

Autonomous Taxis

So we know that the cult-classic ‘Total Recall' has already proven to be prophetic in its portrayal of future technologies, and have already highlighted a few of the companies leading the charge forward with respect to autonomous taxis.  Why are these companies developing such technologies though? How are they making such quick progress? And what ancillary benefits can we expect from such services?

A Lucrative Opportunity

The ‘why' is easy.  Autonomous taxi services have the potential to be quite lucrative.  As stated, there is already a fervid race occurring among various vehicle manufacturers, as each work to scale their autonomous driving solutions.

With investment fund managers like ARK Invest forecasting that “autonomous taxis could generate $4 trillion in revenue in 2027”, it is no wonder why this is the case.

Source: ARK Invest ‘Big Ideas 2023', Page 113

Look forward to 2030, and that $4 trillion turns in to $9 trillion – a huge opportunity for those able to capitalize and gain a first-movers advantage.

So where is this revenue going to come from?  Beyond replacing existing taxi services, ARK Invest notes that there should be a transition away from short-haul flights that currently account for an annual revenue of ~$100 billion.  This sentiment, shared by ARK Invest, is based on a simple cost assessment of services, taking in to account dollars per mile.  It notes that if service providers can lower this to $0.25 per mile, autonomous taxi services will “be more cost effective than 95% of short-haul journeys.”

Data is King

As with the development of many technologies in the modern world, data is king.  Those who have access to the greatest dataset will typically have the ability to produce the best offering in the most timely manner.  With that in mind, there is a clear front runner, and its name is Tesla (TSLA).

Source: ARK Invest ‘Big Ideas 2023', Page 109

As it stands, Tesla is believed to have ~2.7M vehicles on the road today, each actively collecting and building an extensive dataset for developers to leverage in the creation of an autonomous taxi service.  In fact, Tesla is so far ahead of the game in this regard that it has nearly 10x the amount of vehicles actively collecting than all other market leaders combined.

Safety is Paramount

There are ancillary benefits to developing and launching autonomous taxi services beyond the potential for making money.  Arguably the most important of which, is safety.

For example, Waymo notes that 94% of crashes in the United States are the direct result of human error.  These crashed account for over 36,000 deaths annually in the United States, and 1.35M globally.

Source: www.waymo.com

Autonomous taxis do not speed, they do not get fatigued, and they can communicate their on-road intentions to similar vehicles well beyond what traditional signal lights ever could.

While some are yet to be convinced that autonomous taxis are safer than real drivers, it is important to remember that the technology is becoming smarter which every passing day; combined with the ability for EVs to communicate with one another, it is not hard to envision a future in which this truly is the case.

Final Word

We have known for years that this day would arrive eventually.  Autonomous taxi services are already here, and are set to play an increasingly large role in the way we travel.

With trillions of dollars in revenue up for grabs, it is no wonder we are seeing a growing list of companies giving it their all to scale their products and services to capitalize, and on a technology that can potentially save lives at the same time.