(Yicai) July 15 -- China’s robotaxi market is set to reach USD44.5 billion by 2035, with a compound annual growth rate of 96 percent over the next 10 years, according to a report released today by Chinese market research firm TrendForce.

Baidu, Pony.ai, WeRide and many other Chinese autonomous driving companies are actively competing in this space, Taipei-based TrendForce said. Thanks to the rapid growth in the size of fleets and strong support from local electric car manufacturers and supply chains, the hardware cost of Robotaxis and their autonomous driving systems are coming down fast. This, in turn, will help reduce the price of a ride, encouraging more people to give Robotaxis a try.

US electric vehicle startup Tesla is also testing its own Robotaxi technology in Texas and intends to expand its services to the San Francisco Bay Area, drawing significant attention from the industry.

The US Robotaxi market will be dominated by Tesla and Waymo, and will reach a size of USD36.5 billion by 2035, with a compound annual growth rate of 61 percent between this year and 2035, TrendForce said.

Despite its huge growth potential, the Robotaxi industry still faces plenty of challenges, the report said. For instance, differences in autonomous driving regulations across countries and regions could slow the pace of expansion. Also, the complexity of the technology and high R&D costs will make it difficult for newcomers to enter the market.

Robotaxi companies often face long payback periods on their investments, making it difficult to predict when they will start making a profit, it said. Other factors such as potential job losses for drivers, concerns over vehicle safety and public trust around data privacy will also affect how the industry develops.

Editor: Kim Taylor