China's supply chain will determine the winner of the global Robotaxi race!
According to the latest research by Morgan Stanley, driven by the global technology race, regulatory support for autonomous driving in China will strengthen, and the number of Robotaxis operating on the road is expected to grow by twofold. Chinese supply chain companies are set to be early beneficiaries thanks to cost and efficiency advantages.
According to data from Wind Trading Desk, analyst Tim Hsiao from the bank released projections on the 21st, stating that China’s Robotaxi sales will have a compound annual growth rate of over 70% in the next five years, with more upside risk than downside risk. The Robotaxi ecosystems in China and the U.S. have established global leadership in the L4+ autonomous driving sector through a more complete industrial chain.
Looking at the global market, about 10 to 15 million active vehicles on taxi and ride-hailing platforms provide over 70 million trips daily. Excluding the 40% market share long dominated by domestic companies in the U.S. and China, the remaining 60% of the global market—especially developing markets where driver costs are high—will become strategic high ground. More than 120,000 taxis and ride-hailing vehicles in the Middle East represent significant opportunities, while Europe and ASEAN markets such as Singapore may see the most notable benefits from the proliferation of L4+ technology.
Morgan Stanley believes that, from the perspective of global supply scarcity, Chinese hardware manufacturers—especially Robotaxi and LiDAR companies—will be early beneficiaries.
Time Window Determines Market Structure
Morgan Stanley emphasizes that capturing market timing is crucial. Leading Robotaxi companies not only want to secure their domestic markets but also aspire to enter the global arena.
The bank points out that companies that can be the first to remove drivers from the top 1% of the 15 million global taxi and ride-hailing vehicles may see their market value multiply, while latecomers are likely to fall into homogenized competition. This “winner-takes-all” market dynamic is driving major global Robotaxi players to accelerate their layout.
Outside the U.S. and China, where domestic companies will continue to dominate, the other 60% of global market share has become a key focus for competition. The typically high driver cost in developing markets provides stronger economic incentives for autonomous driving technology.
China’s Supply Chain Advantage Becomes Apparent
Beyond technological advancement, pursuing cost-effectiveness and scalable operations is becoming a bigger challenge. Morgan Stanley’s research shows that although improving vehicle utilization and reducing operating costs requires forming strategic alliances with local partners, sustained reductions in bill of materials (BoM) costs and rapid expansion will depend heavily on Chinese solutions.
The bank estimates that the Chinese supply chain can save about 40% of listing time and 30% of costs. By 2026, the cost advantage of Chinese solutions could reach $30,000 to $35,000. This cost and efficiency advantage means global Robotaxi companies will increasingly collaborate with Chinese supply chain companies to maximize market potential and unit economics, viewing them as a key driver for realizing L4+ autonomous driving.
Morgan Stanley believes that the continuous lowering of material costs and rapid scalable expansion capabilities are the core competitiveness of Chinese supply chain firms.
Based on the judgment of relative scarcity in global supply, Morgan Stanley thinks Chinese hardware manufacturers will benefit first, with Robotaxi and LiDAR companies standing out in particular.
The bank believes that Hesai Technology and WeRide are poised to stand out in the competition. Starting from a strong domestic foundation, quickly ascending to the international stage is becoming the development path for Chinese autonomous driving companies.
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