• Global ride-hailing leader Uber has partnered with the US’ leading autonomous vehicle company Waymo to provide robotaxi services through its app.
• Through this partnership, Uber hopes to build upon its experience in fleet management, go-to-market operations and utilization aspects of the robotaxi deployment. On the other side, Waymo gets to focus on its technology, testing and validating it faster and across more cities.
• As technology costs come down, robotaxis will gain a significant cost advantage. This will be the point when Uber and Waymo’s ambitions will converge, paving the way for a merger or acquisition between the two companies.

Waymo and Uber announced a partnership in May 2023 where Waymo’s robotaxi would be available for rides on Uber’s app. The companies expanded the partnership in September 2024 to cover new cities where Waymo was launching its robotaxis. This partnership is a landmark as the two companies seemingly have an overlapping mission to become the ride/taxi of choice for the masses. Uber has already gained global leadership through its human-operated ride-hailing service and Waymo has done so as the leading autonomous vehicle company which currently has the largest fleet of driverless robotaxis in operation in the US, serving select cities.

Waymo’s technology play
Waymo, with robotaxi operations in San Francisco and Los Angeles in California, and in Phoenix, Arizona, has had great momentum in 2024, achieving more than 4 million paid driverless rides and surpassing 25 million driverless miles on public roadways. Waymo deploys an estimated 700 Jaguar I Pace electric vehicles across the three major metropolitan cities, covering nearly 500 square miles and making over 150,000 trips per week.

Waymo received fresh funding of $5.6 billion in October 2024, led by parent company Alphabet and pegging its valuation at an estimated $45 billion. This funding puts Waymo on a strong footing to invest in its expansion. It has already announced to start testing its robotaxis in new cities (Austin, Texas and Atlanta, Georgia) in the US and abroad (Tokyo, Japan) in 2025. Besides, Waymo may consider extending its business to local delivery and trucking and licensing its technology to automotive OEMs. Local delivery and trucking also overlap with Uber’s business, with Uber having consistently grown its delivery business for several years and maintained its freight business.

At the recently concluded CES 2025, Waymo showcased its sixth-generation Waymo Driver sensor suite on new robotaxi electric vehicles. These vehicles included Hyundai’s Ioniq 5 and Zeekr’s purpose-built van RT. Waymo has optimized the cost for this sixth-generation self-driving system by reducing the number of cameras from 29 to 13 and LiDAR from 5 to 4. Waymo is also working on its end-to-end multimodal model for autonomous driving (EMMA) powered by Gemini — Google’s multimodal large language model (LLM) that can work with a camera-only system, eliminating the need for more expensive LiDAR and radar sensors. Although this is currently in the research stage, it shows great promise for potential future cost reduction of Waymo’s autonomous driving technology.

Uber’s operational play
Uber, the global leader in the ride-hailing market, knows a thing or two about managing vehicle fleets and back-end operations. It currently offers a tool for fleet operators that has business transaction and fleet management capabilities, enabling the operators to manage the addition and removal of vehicles and drivers from their operations, analyze driver earnings and vehicle usage, and optimize operations through cost reduction and ensuring safety and efficiency.

The key challenges in fleet management that Uber tackles and are relevant for robotaxi fleets include:
•    Vehicle maintenance: This includes cleaning, regular maintenance and repairs.
•    Fueling/charging management: Fuels can account for ~25% of the expenditure for internal combustion engine (ICE) ride-hailing vehicles. For electric vehicles, charging to cover daily operations is critical. In both cases, more efficient routing results in energy efficiency, making a significant difference in uptime and controlling charging costs.
•    Safety and regulatory compliance: In-vehicle monitoring and ensuring vehicles remain up-to-date with local regulations and standards, like vehicle fitness, are critical to ensuring uptime as well.

Uber’s combination of its fleet management tool and operational capabilities is exactly what it is leveraging in its partnership with Waymo.

From courtship to marriage
The end goal of both Waymo and Uber’s operations is to create value by transporting riders from point A to point B, except one does so using human drivers while the other does so without using human drivers. The human drivers, of course, are among the biggest operational costs for Uber, while technology is currently the biggest investment cost for Waymo.

Uber, in recent years, has continued to grow at 15% YoY, as the ride-hailing market continues to grow. However, ~70% of the gross bookings (what each rider pays for a ride) goes to the driver, limiting the company’s margin growth potential. But herein lies the robotaxi opportunity. By eliminating the driver, Uber not only can improve its margins but also offer cheaper rides, further boosting growth in the ride-hailing market. For Waymo, currently, the cost per vehicle is too high, estimated in the region of $150,000. Therefore, even with high utilization rates, the time taken to achieve breakeven is estimated to be over two years. This, however, is expected to change over the next few years with the maturing of autonomous vehicle technology and the lowering of its cost. The lowering of autonomous vehicle costs in turn leads to convergence for both Uber and Waymo, which are vying for the same ride-sharing market – where the winner takes all (or most!).

Counterpoint estimates that Waymo, which had a 700-vehicle fleet in 2024, may be able to raise this number to 250,000 by 2035, doing it alone. This would still represent only a single-digit percentage of the US ride-hailing market, currently dominated by Uber with over 75% share. Having a 10% share of Uber’s (owner-owned) fleet as robotaxis could represent four to six times more robotaxis than Waymo could achieve on its own. It is clear that the opportunity to grow robotaxi services is enormous, but most importantly, it is faster scaling that can really bring in early profits and market domination.

With Uber’s large market share in the ride-hailing business and its vast experience in maximizing efficiency of operations, the company may be in a formidable position for early deployment of driverless robotaxis. Waymo, with Alphabet as its key backer, has made significant investments in its effort to address the challenges in the autonomous vehicle technology market and will want to see a faster path for returns on its investment. The synergistic strengths and goals make Uber and Waymo ideal partners to maximize returns, whereas competing with each other will only delay the wide-scale adoption of robotaxis (and its associated profit pool).

Investors of these two California-based companies who have long invested with the holy grail of the robotaxi business as their end goal would like to convert this current courtship (partnership) to marriage (merger or acquisition). In a recent statement to a TV channel, Uber CEO Dara Khosrowshahi said he expected the autonomous vehicle technology itself to be ready for what he called “primetime” between “now and two years from now”. Counterpoint forecasts that the pivotal stage for Uber and Waymo to combine forces, and become the number one robotaxi company unlocking huge value and potential, will come in the next few years when Waymo makes progress and achieves an average fleet deployment of 1,000 robotaxis in 15-20 US cities.