Even if Tesla solves the technical problem of autonomous driving, the investment question remains: can robotaxis make money, and how big is the market? The answer depends on three variables — cost per mile, pricing per mile, and fleet utilization — each of which is highly uncertain at this stage.
Below $0.56/mile, autonomous rides become cheaper than car ownership for the average American. This is the TAM expansion threshold — it transforms robotaxi from a taxi replacement into a car replacement, expanding the addressable market from $150B (current ride-hailing) to potentially $3-6 trillion (total transportation spending).
The economics threshold
The bull case requires cost per mile below $0.56 — cheaper than owning a car. At Tesla's current $1.40/mile Austin pricing, this requires a 60% cost reduction over the projection period. Goldman projects this is achievable by 2040, driven by vehicle depreciation falling from $0.35/mile to $0.05/mile as purpose-built Cybercabs replace converted Model 3s.
What is Waymo's actual all-in cost per mile including Alphabet's cumulative $10B+ R&D amortization?
The Core Economic Comparison
Human-driven rideshare costs $2-3 per mile. Autonomous could eventually reach $0.25-1.00 per mile by eliminating the driver (50-60% of ride-hailing costs) and running vehicles more hours per day. Today's reality: Tesla charges $1.40/mile in Austin, Waymo charges $1.66-2.50/mile depending on city.
| Vehicle depreciation | $0.15-0.35/mile | $0.10-0.15 | $0.05-0.15 |
| Energy (EV) | ~$0.05/mile | ~$0.05 | ~$0.04 |
| Insurance | $0.23-0.50/mile | $0.20-0.30 | $0.15-0.23 |
| Maintenance | $0.05-0.10/mile | $0.05 | $0.05 |
| Remote operations | $0.05-0.15/mile | $0.03-0.05 | $0.01-0.03 |
| Fleet mgmt/cleaning | $0.05-0.10/mile | $0.05 | $0.05 |
| TOTAL (vehicle only) | $0.58-1.25/mile | $0.48-0.65 | $0.35-0.55 |
Insurance Is the Biggest Unknown
Insurance ($0.23-0.50/mile) has the widest cost range and largest uncertainty. It is comparable to the entire driver cost that autonomy is supposed to eliminate. Until AV insurance frameworks are resolved, the 'eliminate the driver' cost advantage may be partially offset by higher insurance burdens.
The Utilization Multiplier
An autonomous vehicle can theoretically operate 16-20 hours per day versus roughly 4 hours for a human Uber/Lyft driver. This 4-5x utilization advantage spreads fixed costs over far more revenue miles and is central to every bullish robotaxi model.
Insurance: The Single Largest Uncertainty
AV insurance currently adds roughly $0.50/mile to operating costs -- comparable to the entire driver cost that autonomy is supposed to eliminate. Goldman Sachs projects this declining to $0.23/mile by 2040, but that assumes dramatically better AV safety records than human drivers.
Industry Not Yet Pricing In Autonomy
The NAIC reports 42 states have enacted AV-related legislation, but insurance frameworks remain fragmented. Fitch Ratings projects no 'meaningful impact' on insurers from AVs in the next decade, suggesting the insurance industry has not yet begun pricing the autonomous revolution into its models.
The Most Contested Number in the Tesla Thesis
TAM estimates range from $25B (Goldman Sachs conservative, ride-hailing only) to $10T+ (ARK Invest, full transportation disruption). The 14x spread in market research estimates directly explains why Tesla's implied robotaxi value ranges from $0 (bear) to $4.1T (bull).
| Goldman Sachs | US robotaxi (conservative) | $25B+ | ~90% |
| MarketsandMarkets | Global robotaxi | $45.7B | 91.8% |
| Grand View Research | Global robotaxi | $147.25B by 2033 | 99.1% |
| McKinsey | Full mobility disruption | TBD | N/A |
| ARK Invest | Global transport disruption | $10T+ | N/A |