Morgan Stanley Heavyweight Robot Yearbook (VI): Autonomous Driving on the Verge of Breakthrough, China Has Taken the Lead

The global automotive industry is standing at a major turning point. According to Morgan Stanley’s “The Robot Almanac Vol. 6: Autonomous Vehicles” released on the 21st, analyst Adam Jonas and his team point out that although humans currently spend a cumulative 82 million years annually inside cars, this traditional driving model is about to be disrupted, with autonomous driving technology on the eve of a breakthrough from “0 to 1.”

In this round of global technological competition, Morgan Stanley makes it clear that China is already in the lead. According to Trend Trading Desk, report data shows that China currently accounts for about 60% of the global share of L2+ autonomous vehicles. This is not only due to China’s success in the electric vehicle (EV) sector, but also its advantage of building a “data probe” through its massive fleet of electric vehicles.

At the same time, the competitive landscape in the U.S. market is undergoing profound changes, with the rivalry between Waymo and Tesla intensifying. Waymo is rapidly expanding from Phoenix and San Francisco to major cities across the U.S., such as Los Angeles, Austin, and Atlanta. Its operational mileage is expected to see explosive growth in the next few years; meanwhile, Tesla’s pure vision solution is considered “just starting out”—the hardware costs are extremely low, but it aims to achieve breakthroughs through vast fleet data. The report compares the current sensor technology dispute to the late 19th century “War of the Currents,” believing that different technological paths may coexist for a long time in the future.

Morgan Stanley is highly optimistic about the long-term adoption of autonomous driving. The report predicts that, although the initial stage will be slow, the trend is irreversible. By 2030, it is expected that 2.2 million robotaxis will be in use globally, skyrocketing to 245 million by 2040, and finally reaching 722 million by 2050. Morgan Stanley emphasizes that autonomous driving will be the “ultimate accelerator” for the EV industry, completely changing humanity’s modes of travel and economic models.

China’s Dominance: Victory of Scale and Data

The report points out that China may have already won the electric vehicle race and is leading the autonomous driving race. Taking the Xiaomi YU7 as an example, its starting price is about $35,000, showing China’s tremendous cost-control advantage. More importantly, EVs are inherently better suited for autonomous driving: they natively use drive-by-wire systems, and abundant electricity can greatly reduce per-mile operational costs for fleets, thus shortening the investment return cycle.

The report especially highlights the concept of “data probes.” EVs are not just transportation tools, but also mobile data collectors. Through a closed loop of constant “collect-improve-recollect,” China’s vast EV fleet is training ever smarter AI algorithms. Morgan Stanley believes that Western countries, without collaborating with China, will find it hard to economically produce vehicles with equivalent data collection capabilities—especially without profit and scale. China’s comprehensive strategy in sensors, “brains” (computing platforms), and applications has enabled it to capture about 60% of the global L2+ vehicle market.

U.S. Market Route: Competition Between Redundancy and Simplicity

In the U.S., autonomous driving technology is advancing along two very distinct paths. Morgan Stanley attributes this mainly to Waymo, representing the “sensor redundancy” camp, and Tesla, representing the “sensor parsimony” camp.

Waymo uses an L4-level solution, with vehicles equipped with LiDAR, radar, and cameras—the sensor and computing hardware cost per vehicle is about $30,000. This approach emphasizes safety redundancy and features night vision capability. Currently, Waymo has fleets ranging from hundreds to thousands in Phoenix, San Francisco, and Los Angeles, with plans to expand to more cities like Miami and Washington, D.C.

In comparison, the hardware cost of Tesla Model Y’s FSD is only about $3,000, relying solely on a pure vision solution—neither LiDAR nor radar are used. Morgan Stanley’s analysis points out that this triggers a debate about whether “pure vision is viable.” The report believes that if AI can make every driver the “best driver” and drastically reduce daily traffic fatalities (currently about 110 per day in the U.S.), then pure vision is logically feasible.

Morgan Stanley compares this to the historical AC vs. DC battle: the first mover isn’t always the winner, and low-cost, scalable solutions (like AC) may have an advantage at scale in the long run, though both have a place in specific use cases.

Long-term Prospects and the Global Landscape

Looking ahead, Morgan Stanley outlines a steep adoption curve. According to its predictive modeling, the penetration rate of autonomous vehicle sales will surge from almost zero to nearly 100% over the coming decades.

2030: About 2.2 million fully autonomous vehicles globally.2040: This number will jump exponentially to 245 million, by which time most cars on the road will be smart.2050: The total global stock of autonomous vehicles will surpass 722 million.

Not only in China and the U.S., but a wave of emerging companies globally is accelerating this trend. The report mentions the UK’s Wayve, which aims to achieve autonomous driving using “AV 2.0” end-to-end AI models; the U.S.’s Applied Intuition, providing simulation and software verification tools to automakers; and China’s WeRide and Pony.ai, both operating robotaxi services in major Chinese cities and expanding into the Middle East and Europe, and both listed on U.S. stock markets. Morgan Stanley concludes that, as technology matures and costs drop, autonomous driving will shift from a science fiction concept to a substantial force in the global economy.

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Above excerpted from Trend Trading Desk.

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