Robotaxis Scale in 30 US Cities by 2026

Key Quotes

"It's definitely all over the place and in a way it changes on a weekly basis. So we've kind of gone from being very excited about the entire AI basket to bifurcating between names that are exposed to Google or Gemini winning the AI race. Then we flipped to names that are exposed to OpenAI and ChatGPT winning the AI race. And then we've had a risk-off where investors have kind of moved away from the AI infrastructure-related part of the trade."

Ross Sandler explains that investor sentiment around AI is highly dynamic and shifts rapidly between different dominant players and technologies. Sandler notes that this volatility is characterized by initial broad excitement, followed by a focus on specific companies, and then periods of investor caution regarding infrastructure investments.

"So you're right that 2025 was mostly about announcements and about testing of small fleets. The only city, like I said, where you see the glimpse into the future is San Francisco. If you kind of walk down a city block, you can't go 10 feet without seeing half a dozen Waymos or other robotaxis cruising around. Every other city's going to look like this eventually. We have about 30 cities going from initial announcement to deployment stage in 2026, and we're going to see a similar trend outside the US and in some of the top international markets."

Patrick Coffey highlights that 2025 served as a testing and announcement phase for robotaxis, with San Francisco offering a preview of future widespread adoption. Coffey projects that approximately 30 cities will transition to deployment stages in 2026, with similar expansion expected internationally.

"So there's no national autonomous regulation in the US. You kind of have to go state by state. And what the regulators do, it's generally like the California Transportation Authority, they will look at the data from a robotaxi fleet. They'll assess how safe the service is. These companies have to provide what's called a disengagement report, which is the number of miles traveled before the cockpit driver has to override the system."

Ross Sandler describes the fragmented regulatory landscape for autonomous vehicles in the US, where approval is managed on a state-by-state basis. Sandler explains that regulators like the California Transportation Authority evaluate safety by reviewing operational data and disengagement reports, which document instances requiring human intervention.

"So this is like the first manifestation of AI kind of moving out of the data center into the physical world. Robotaxis are essentially driving robots with an intelligence layer added on. And you're going to want to watch Tesla because they have a unique approach with their full self-driving software, their intelligence stack, and they also are the one company that has in-house production, unlike Waymo who buys their cars from Jaguar or from Hyundai or others in the future."

Ross Sandler positions robotaxis as a prime example of AI transitioning from digital environments to physical applications, functioning as intelligent automated vehicles. Sandler points to Tesla's integrated approach, combining proprietary software with in-house vehicle manufacturing, as a distinguishing factor compared to companies that rely on external car manufacturers.

"Absolutely. The kind of human ride-hail providers are in a bit of a tricky situation. So they're partnering with a bunch of different technology companies. But the big problem that they have is that around 70% of human ride-hail trip volume lives in just the top 20 cities in the US. The remaining kind of suburbs and tier two cities only represent about 30% of trips, which makes sense because if you're in the suburbs, everybody's got two cars, they've got a garage, a driveway, they can park at the grocery store."

Ross Sandler explains that traditional ride-hailing companies face significant challenges due to the concentration of their customer base in major urban centers. Sandler notes that the majority of ride-hail trips occur in the top 20 US cities, with suburban and smaller city markets representing a smaller portion, often due to personal vehicle ownership.