Another major bank supports! UBS: China's Robotaxi is on the eve of large-scale deployment, and leading companies are expected to achieve "single-vehicle profitability" by 2026

Robotaxi - a concept that once only existed in science fiction movies, is now speeding into the streets of Chinese cities at an unprecedented pace.

According to news from the Chasing Wind Trading Desk, UBS has clearly stated in its latest report that China's Robotaxi industry is on the eve of large-scale commercial deployment, with a massive market worth hundreds of billions of dollars about to be activated. With technological maturity, cost reductions, and regulatory relaxations, the industry is set to welcome an important milestone.

A massive market of nearly $400 billion is opening up

UBS paints a grand blueprint in its report. It predicts that by the late 2030s, the potential size of China's Robotaxi service market (TAM) will reach $183 billion, with approximately 4 million Robotaxis expected to be in operation nationwide.

Looking globally, the prospects are even broader. If overseas markets excluding the United States are included, the potential market size will soar to $394 billion, with a total of 6 million operational vehicles (2 million outside the Chinese market).

UBS believes that this growth path will be achieved in phases. In the early 2030s, only the first-tier cities in China (Beijing, Shanghai, Guangzhou, Shenzhen) are expected to deploy 300,000 Robotaxis. This judgment is based on a simulated analysis of data from Manhattan, New York: a 60 square kilometer area of Manhattan requires 4,500 Robotaxis to cover, while the core urban areas of China's four major first-tier cities exceed 3,000 square kilometers, indicating huge demand potential.

Path to profitability: "Break-even per vehicle" expected by 2026

For investors, while market size is important, profitability is the touchstone for the success of a business model. UBS provides a clear and optimistic timeline: Leading Robotaxi companies could achieve break-even on a per-vehicle basis as early as 2026.

The core driving force behind achieving this goal lies in rapid cost reductions and improved operational efficiency. UBS's calculation model shows that the key assumptions for achieving break-even include:

• Hardware costs: The hardware cost of Robotaxis successfully drops below $50,000 (approximately 350,000 RMB). The report notes that the material costs (BOM) of the new generation models from XPeng and WeRide have already fallen below 350,000 RMB.

• Operational efficiency: Each Robotaxi completes an average of 15 orders per day, with an average driving distance of 8 kilometers per order. This assumption is considered conservative, as Baidu Apollo has reported an average of 20 orders per day in Wuhan, and XPeng also reached an average of 15 orders per day in the first half of 2025.

• Pricing strategy: Charging 2.6 RMB per kilometer.

Under these conditions, UBS expects that by 2026, the per-kilometer operating cost of Robotaxis will drop to 2.1 RMB, on par with traditional taxis or ride-hailing services. The main sources of cost reduction are vehicle depreciation (with procurement costs expected to drop to 300,000 RMB by 2026), insurance costs, and the dilution of remote safety officer costs (with each safety officer expected to monitor 20 vehicles by then) Currently, there are 10 vehicles.

Who are the leaders? UBS's field tests reveal differences

In the face of numerous participants, who will ultimately prevail? UBS analysts conducted field tests in Guangzhou to compare Pony.ai, WeRide, and Baidu Apollo, providing differentiated evaluations. They believe that Pony.ai is best positioned in terms of technical capabilities, while WeRide is making faster progress in overseas markets.

• Pony.ai: Impressive technical processing capabilities. Although it encountered longer wait times during testing, its fully autonomous vehicles performed excellently in handling complex road conditions (such as multi-lane merging and avoiding suddenly stopped buses), demonstrating strong technical capabilities. UBS has therefore given it a "Buy" rating with a target price of $20.

• WeRide: Smooth ride experience and leading overseas layout. WeRide's vehicles offer a smooth riding experience, with a greater emphasis on safety (test vehicles are equipped with safety drivers), but are slightly conservative in driving strategies. Its business is more diversified, covering Robobus, Robovan, etc., and has made faster progress in overseas markets such as the Middle East and Europe. UBS also gives it a "Buy" rating with a target price of $12.

• Baidu Apollo: Large fleet size, but experience needs improvement. Apollo's vehicles have the highest visibility on the road, indicating potentially higher utilization. However, the testing experience was slightly lacking, with UBS observing human intervention during vehicle start-stop and handling difficult scenarios.

  

The key data summary from UBS's Robotaxi test rides of Pony.ai, WeRide, and Baidu Apollo is shown in the figure below, including data on vehicle models, travel distances, travel times, fixed stops, safety drivers, human interventions, maximum speeds, fare collection, starting fees, mileage fees, and discounts:

The report also pointed out that Pony AI and WeRide both plan to expand their fleet size to 1,000 vehicles by 2025, which will be an important step for industry-scale expansion.

Valuation Gap: Chinese Players Only 10-15% of Overseas Giants?

From an investment perspective, the huge valuation difference signifies potential opportunities. The UBS report emphasizes that the current market capitalization of Pony AI (approximately $4.9 billion) and WeRide (approximately $2.6 billion) has a significant gap compared to their overseas counterparts.

In comparison, Waymo, a subsidiary of Alphabet, reportedly reached a valuation of $45 billion after its latest funding round, while UBS's valuation of Tesla's Robotaxi business is as high as $350 billion.

The report analyzes that the current valuations of leading Chinese players may only reflect the market's perception of their success probability of becoming the "Chinese version of Waymo or Tesla" at 10-15%. Considering China's vast market size and leading technological applications, once their business models are validated and market share begins to concentrate among the leaders, their valuations will have significant revaluation potential.

UBS predicts that the compound annual growth rate of revenue for Pony AI and WeRide from 2025 to 2030 will reach 96% and 71%, respectively, which means their price-to-sales ratio (P/S) will rapidly decline, providing solid fundamental support for value revaluation.

Another Major Bank's Perspective: The Industry is on the Eve of an Electric Vehicle Explosion

Coincidentally, a recent report from Barclays also expressed strong optimism about China's Robotaxi industry, echoing UBS's views.

Wall Street Journal article stated that Barclays analysts believe the current development stage of China's Robotaxi industry is similar to the electric vehicle market in 2015-2016, where technology has matured and is on the verge of large-scale explosion.

Barclays predicts that by 2030, China will deploy 300,000 to 500,000 Robotaxis, with a market penetration rate of 5-10%. Their analysis also views cost reduction as a core driving force, noting that the manufacturing costs of Robotaxis have decreased by 80% over the past five years, primarily due to the "plummeting" prices of core hardware such as lidar Barclays expects that by 2030, the manufacturing cost of Robotaxi will decrease by more than 30%, with annual operating costs likely to drop to 80,000 RMB, and the cost per kilometer to 0.7 yuan, a reduction of about 60% from current levels. This view further strengthens the certainty of the Robotaxi business model achieving profitability in the coming years.

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