- Tesla and Waymo are battling for robotaxi dominance, but the payoff still isn't clear.
- HSBC analysts found that it could take years for robotaxis to turn a profit, and the market is "overestimated."
- They said some of the biggest challenges were "overlooked" costs like parking and cleaning.
Tesla and Waymo are racing to build their own robotaxi empires, but not everyone is convinced the hype is justified.
A new report from analysts at HSBC found that the potential market for driverless taxis was "widely overestimated" and warned that it could take years before robotaxi fleets began returning a profit.
In a Monday note, HSBC analysts suggested that the idea robotaxis would be more profitable than their human-driven counterparts was based on a misconception.
Although robotaxi operators do not have to worry about the cost of paying a driver's wage, they said that driverless taxis face a slew of "overlooked" extra costs that would likely cut into profits.
According to HSBC's analysts, those include parking, charging, and cleaning fees, as well as teams of remote operators to intervene when things go wrong.
"When we factor in these costs, we believe robotaxis won't be break-even on a cash flow basis until 7-8 years after launch," the analysts wrote, adding that projections for robotaxi revenues vary from the "ambitious to the unrealistic."
Industry figures have been making bold claims about driverless cars for years.
Tesla CEO Elon Musk has said that robotaxis will add trillions of dollars to the company's market cap, and in May told CNBC that Tesla would have one million self-driving cars on the road by next year — a promise he also made back in 2019.
Amid the hype, driverless taxis are gradually becoming a reality. Tesla finally launched a pilot of its robotaxi service in Austin last month, and Alphabet-owned Waymo's autonomous Jaguar I-Paces have provided over 5 million paid rides over the past three years.
However, the division of Alphabet that includes Waymo continues to lose billions of dollars a year, and analysts estimate that Waymo's vehicles, which are outfitted with expensive sensors and lidar arrays, cost around $150,000 each.
The economics of Tesla's robotaxis are unclear, but Musk has suggested that the company's decision to use cameras and AI rather than lidar means they are cheaper to run than Waymo's.
Despite this, HSBC's analysts said the automaker faces numerous challenges in scaling its autonomous ride-hailing operation, ranging from regulatory barriers in China and Europe to upgrading the roughly 5 million Teslas on the road with hardware that is too old to run the company's robotaxi software.
They estimated that Tesla's robotaxi fleet would hit 20,000 to 25,000 cars by 2030, rising to 75,000 by 2035, and would not turn a profit until 2033.
