Can Waymo Out-Drive Tesla in the Autonomous Vehicle Race?
The autonomous vehicle (AV) market is set to explode, with projections showing it will grow from $87.23 billion in 2024 to nearly $1 trillion by 2033. This growth is a two-horse race, but Waymo and Tesla are competing on fundamentally different tracks. Waymo is pursuing a Level 4 autonomous model with a focus on ride-hailing, while Tesla is betting on its Full Self-Driving (FSD) technology to be licensed to private car owners. Much of Waymo’s strategy reflects the leadership vision of its Co-CEO, Tekedra Mawakana, whose approach to scaling autonomous mobility has been shaping the company’s future. The battle isn't about which technology is better; it's about which business model is more sustainable and scalable.
The Fundamental Difference: Robotaxi vs. Software Licensing
Waymo, an Alphabet company, has a strategic advantage by focusing on robotaxis. Its business model is centered on building a service, not just selling a feature. It has launched its Waymo One service in cities like Phoenix, San Francisco, and Los Angeles, providing fully autonomous rides without a human driver. This allows Waymo to control the entire user experience and build public trust through a highly controlled, safety-first deployment. By the end of 2024, Waymo was delivering over 250,000 robotaxi rides per week and completed 4 million trips that year alone, up from less than 1 million in 2023. This rapid growth suggests strong market adoption.
Tesla's approach is more consumer-focused. It sells its FSD system as an add-on or subscription service, effectively crowdsourcing data from millions of vehicles and drivers. This model allows for rapid development and data collection but has faced significant criticism and regulatory scrutiny due to its classification as Level 2 autonomy, which still requires active driver supervision. In September 2025, Tesla quietly dropped the term "autonomy" from its FSD branding, a move that highlights the ongoing regulatory and technical challenges of its model.
The Cost and Profitability Paradox
While Waymo's vehicles are expensive to produce—analysts estimate that the customized Jaguar I-Pace with the full sensor suite costs an additional $100,000 per vehicle—its operational costs per mile are surprisingly low. Some reports suggest Waymo's operating costs are around $0.30 per mile, significantly lower than Uber's estimated $0.69 per mile. This allows Waymo to capture nearly 100% of the revenue from each trip. While Waymo's rides are priced higher than traditional services like Uber and Lyft, this premium is offset by the lack of tipping and the perceived reliability of a driverless service. In key markets like San Francisco, Waymo's market share has grown to be equal to or greater than Lyft's.
Tesla's strategy, while less capital-intensive initially, relies on convincing millions of drivers to pay for a system that is still a work in progress. While this has generated billions in revenue, it puts the burden of safety and liability on the consumer.
Related: Uber’s Leadership Crisis: Transforming From Toxic Culture to Ethical Governance
The Road Ahead: Partnerships and Expansion
Waymo is not just expanding on its own; it's strategically forming partnerships to accelerate its growth. Its recent collaboration with Uber to offer robotaxis in Austin and Atlanta provides a direct pipeline to a massive customer base. Waymo has also secured $11.1 billion in funding to expand its fleet, underscoring its long-term financial stability and commitment to scaling its model. This partnership-driven approach, along with its focus on a proven, safety-first system, may give Waymo the strategic edge needed to win the AV race, not through a single product, but through a meticulously built, trustworthy service.
Related: Will Government Regulators Decide the Fate of Robotaxis?
