Morgan Stanley Forecasts $1 Trillion Robotaxi Market by 2040

Key Facts

In a move reflecting growing optimism for smart mobility, Morgan Stanley predicts the global robotaxi market will reach a valuation of $1 trillion by 2040. The bank suggests this massive expansion is primarily driven by significant reductions in technology and hardware costs in China, making mass commercial adoption feasible by 2030. Furthermore, the cost of parts for Chinese-made robotaxis is forecast to drop to between $35,000 and $40,000 by 2027.

These forecasts arrive as competition intensifies among industry leaders, with Tesla striving to cement its dominance while Chinese firms like Xpeng and Alphabet's Waymo expand their footprint. Per market data, the costs of sensor systems and Lidar have seen a marked decline, supporting future profit margins for these entities. Analysts compare this trajectory to the EV sector's growth, which leveraged Chinese manufacturing economies of scale to lower global price points.

Regarding market performance, TSLA stood at $393.45 (close July 02, 2026), while 9868.HK closed at HK$51.7 (close July 03, 2026). Investors are closely monitoring upcoming regulatory updates from Beijing and Washington regarding autonomous driving safety standards, as legislation remains the critical factor in the pace of commercial fleet deployment across global markets.