Market Data 
- Robotaxis have hit the mainstream, with Waymo and Tesla planning major expansions in 2025.
- Concerns about the huge cost of self-driving vehicles have prompted Ford and GM to exit the race.
- May Mobility CEO Edwin Olson told Business Insider that robotaxis are a “brutal” business.
The robotaxi wars have begun — but questions over cost are already forcing some contenders to wave the white flag.
The likes of Ford and General Motors are giving up on robotaxis because they’re a “brutal business,” Edwin Olson, the CEO of autonomous driving company May Mobility, told Business Insider in January.
Olson, who founded May in 2017, said the sheer cost of scaling up autonomous ride-hailing services was leading companies to back away from robotaxis, with firms such as Waymo only able to expand thanks to the massive checkbooks of their Big Tech-backers.
“Robotaxis are a brutal business. The revenue per hour that you can earn is maybe $30 or so, and that drops off outside peak hours,” he said.
“The revenue potential is quite low. You have to go to the very largest markets where you can drive your asset utilization as high as possible so that you can get as close as possible to $30 an hour, 24 hours a day, seven days a week. Then you have a chance of being able to make some money.”
The robotaxi industry has seen a dramatic expansion over the past year, with Google-backed Waymo hitting 150,000 paid rides a week and Elon Musk unveiling Tesla’s dedicated “cybercab” robotaxi.
At the same time, the long-awaited arrival of self-driving cars has proven highly expensive.
Despite its rapid growth, Waymo is not yet profitable, with Alphabet’s “other bets” division (which includes Waymo, as well as other subsidiaries) losing $1.17 billion in the fourth quarter of 2024.
A recent McKinsey study found robotaxis could cost about $8.20 per mile to run, and Bernstein analysts estimated that the cars themselves can cost roughly $150,000 each.
The hefty price tags have already forced some players out of the game.
Legacy automakers Ford and General Motors have both scrapped plans to build dedicated robotaxis, with GM pulling funding for embattled self-driving firm Cruise despite spending billions on the company. Cruise said in early February it would lay off around 50% of its staff.
“I think GM, Ford, they were all looking at price tags well north of $10 billion. And they just decided, let’s call it a day,” said Olson, who previously worked at Ford’s autonomous vehicle unit.
“Even if the technology was perfect … they’re still years, maybe a decade, from reaching the breakeven point. In the meantime, they’re going to continue to burn billions of dollars a year,” he said.
Waymo’s cash advantage
One company that is less cash-constrained than its legacy auto-backed rivals is Waymo. The robotaxi startup is owned by Google parent Alphabet, which led a $5.6 billion funding round in October.
“That’s why Waymo is still here — they’ve basically got Alphabet’s checkbook,” said Olson.
“I think people have a lot of confidence that they’re going to be able to continue to cough up the cash, to just push through to profitability however long it takes,” he added.
May runs autonomous vehicle services in 10 cities across North America and Japan and has adopted a different strategy as it seeks to compete with Waymo.
The company has mainly focused on long-term public transport contracts with businesses and governments. Olson said that strategy offers much higher revenue potential than ride-hailing and has enabled May to make money on nearly all of its US sites.
“We have probably at scale the autonomous vehicles that would have the lowest price point,” Olson said. “We’ve brutally optimized this vehicle to operate in the places where buses go, and that’s allowed us to bring the cost down.” May’s total compute footprint was around a third of its competitors, he added.
Olson said this has put May in a good position to finally enter the robotaxi market this year, with the company set to deploy robotaxis on the Lyft app in Atlanta in the coming months.
Saber Fallah, a professor of Safe AI and Autonomy at the University of Surrey, told BI that May’s approach of prioritizing public transport contracts may signal a more sustainable strategy for self-driving startups.
“Unlike robotaxis, which operate in highly dynamic and unpredictable urban environments, autonomous public transport systems benefit from predefined routes and structured operating conditions,” Fallah said.
“This level of predictability significantly reduces the complexity of autonomous driving, making deployment more feasible in the near term,” he added.
Running robobuses has other advantages over the cut-throat world of ride-hailing. Michael Lenox, a professor of business administration at the University of Virginia, told BI that robotaxi firms like Waymo might find that their margins are squeezed as competition heats up.
“The advantage of public transit contracts is the ability to be the sole provider in a given market, basically becoming a monopoly provider,” Lenox said.
Tesla enters the race
Although Olson is confident that May can take on Waymo, the company is also set to contend with Tesla’s looming entry into the robotaxi business.
Elon Musk unveiled the steering-wheel-less Cybercab at a glitzy Hollywood event in October and has said Tesla plans to launch a robotaxi service in Austin in June.
Olson said he was skeptical about the approach taken by Tesla, with Elon Musk’s company relying on cameras and AI to run its Full Self-Driving technology.
“It’s clear that eventually you’ll be able to do this purely optically using cameras … but that’s not where the camera technology is today,” said Olson. “The computer vision networks are just not good enough to achieve the level of reliability.”
Musk’s robotaxi ambitions could be boosted by his influence with President Donald Trump, with reports suggesting federal rules for self-driving cars may be one of the new administration’s transport priorities.
Despite fears in some quarters that Musk could use his position to boost his own prospects at the expense of his rivals, Olson said that his presence could help shake up the “patchwork” rules around robotaxis in the US.
“I think in general, given who’s at the helm, if they are able to push through new federal-level regulatory standards, they’re likely to be favorable to the AV industry,” said Olson.
Do you work in the robotaxi industry or have thoughts to share? Get in touch with this reporter at [email protected]
