Robotaxis win early praise ahead of Tesla event, but tech concerns persist

Robotaxis are still an emerging technology but new research is shedding light on rider experience and consumer adoption.

Driving the news: Tesla’s Robotaxi event is right around the corner, bringing a new wave of interest from both consumers and investors. But do current generations of driverless vehicles actually provide a quality experience or are they being overhyped by the tech enthusiast crowd? J.D. Power’s survey of robotaxi customers and non-customers sheds light on this new sector of ridesharing.

• Robotaxi riders are more likely to have a positive experience than not, with overall customer satisfaction resting at 8.53 points on a 10-point scale.

• Most research participants gave high ratings for their vehicle’s navigation abilities. Robotaxis received top marks for obeying traffic laws (8.36) and maneuvering in normal traffic (8.30) in the technology category.

Zooming in: So far, robotaxis seem to be meeting consumer expectations, scoring relatively well for a new technology. Unfortunately, several factors make it difficult to predict if the level of satisfaction will remain constant as the level of adoption increases.

• According to J.D. Power, one of the biggest challenges facing robotaxis is that current customers are not using them as a solution to a problem they face but rather as a novelty. Researchers identified two factors behind this trend: service area coverage and ride cost.

• It’s easy to see how coverage might affect adoption. Self-driving cars currently have limited access to roads in Seattle, San Francisco, Los Angeles, Las Vegas, Phoenix, Austin and Miami.

• On the other hand, prices range heavily depending on time and demand, making it difficult to pinpoint their impact. Current rates are also unlikely to reflect the final business model since most robotaxi companies are still in the early stages of development.

Zooming out: It’s common for emerging tech to see positive ratings from early adopters but struggle to form a profitable consumer base. For instance, it took Uber more than a decade to post its first annual profit in 2023. However, robotaxis face unique challenges that other forms of new technology might not face.

• Consumer confidence in the technology (among non-riders) is extremely low, falling to 20% among the general population and 34% among respondents who lived in a city with active robotaxis, based on J.D. Power’s research.

• This does indicate that experience with autonomous vehicles improves confidence, but the overwhelming negativity will be challenging for companies to overcome.

Behind the scenes: In addition to facing challenges in consumer adoption, robotaxi providers will also need to overcome internal difficulties if they hope to build a sustainable platform.

• Self-driving taxis are extremely expensive to make. Analysts from the Bernstein investment firm estimate that the cost of replacing the current ridesharing fleet would exceed $50 billion, with each vehicle costing an average of $150,000.

• Analysts acknowledged that Tesla may be able to manufacture robotaxis for much cheaper than its competitors. However, long-term expenses like maintenance, vehicle replacements and remote monitoring are also a concern for robotaxi providers.

• Plus, self-driving cars continue to cost money even when passengers aren’t aboard, a factor referred to as “deadheading.” For example, around 30%-40% of the distance driven by Waymo taxis in May were “deadhead miles.” Waymo is the driverless car division of Alphabet Inc. and currently offers rides in San Francisco, Phoenix and Los Angeles.

Bottom line: On the surface, robotaxis appear to be making a good impression on early adopters. Tesla’s entrance into the market could also be a major game changer; the company has a proven track record of driving profits in a sector where competitors continue to fail. At the same time, self-driving vehicles face problems that evade other technologies. This makes the future of adoption uncertain, despite the current enthusiasm from companies.

Become an automotive insider in just 5 minutes.

Get the weekly email that delivers transparent insights into the car market.

Join 80,000 others now, it's free:

In today's automotive landscape, car buyers invest more time than ever in researching, considering, and comparing options. But for dealers, the challenge lies in pinpointing the audience ready to make a purchase.

Enter Premier by Edmunds.

Premier offers dealers a groundbreaking way to connect with in-market car shoppers precisely when, where, and how they prefer. With over 20 million monthly visits, Edmunds.com is the go-to destination for buyers seeking market insights, expert advice, and budget tools to make informed decisions.

Through Edmunds Premier, dealers gain access to this highly coveted audience. Simply list your new and used inventory on Edmunds, and watch as qualified, in-market traffic flows directly to your vehicle detail pages on your website.

Don't miss out on this opportunity to elevate your dealership's visibility and sales performance. You can sign up for Premier today at Edmunds.com/CDG.