As the era of RoboTaxi approaches, a significant allocation of new profits in the trillion-dollar mobility market is set to unfold. Who will emerge as the biggest beneficiary?
According to a recent report from JPMorgan Chase dated October 19, while consumers will benefit the most through lower “ride fares” amid this transformation, mobility platform operators, particularly DiDi
The report envisions the future of the RoboTaxi industry as a competition to share the substantial savings generated from “cost reduction.”
JPMorgan clearly states that transitioning from traditional ride-hailing to RoboTaxi fundamentally transforms the cost structure by eliminating driver wages, which account for 75-80% of Gross Transaction Value (GTV). Even after accounting for vehicle depreciation, technology, and financing costs, about half of the economic surplus can still be released, leading to significant cost savings of around 50% of GTV in shared mobility.
This economic surplus created by the shift from human-driven to automated driving will be redistributed among four key stakeholders: consumers, platform operators, technology enablers, and financiers.
Redefining Benefits: Who Holds Power in the Value Chain? The report categorizes the RoboTaxi ecosystem into four core roles:
- **Mobility operators (like DiDi)**: Tasked with aggregating demand and network management, they command demand, brand strength, and network effects, possessing the strongest bargaining power.
- **Consumers**: The ultimate arbiters of price elasticity, their acceptance will dictate the speed of market expansion.
- **Technology enablers (such as Baidu, WeRide)**: They provide hardware and software for autonomous driving but face fierce competition among 3-5 major suppliers, leading to commoditization of products.
- **Financiers (financial institutions)**: They provide funding for expensive RoboTaxi fleets, with their returns influenced by risk-free rates and risk premiums.
The report anticipates that the majority of cost savings will be aimed at reducing fares to enhance customer penetration and frequency of rides. “Mobility operators are expected to pass on most of the savings to consumers to boost penetration rates.”
- **Consumer surplus**: Of the savings that could represent approximately half of GTV, most is expected to be utilized for lowering fares to activate penetration and ride frequency. - **Mobility operators**: Capture value via scale in transaction volume (higher GTV), better utilization, and incremental monetization (advertising, subscriptions, priority matching). The report predicts that even with initially conservative unit profit margins, absolute profits for operators will grow. - **Technology enablers**: Expected to secure about 5% of steady-state GTV share; this may increase if tied to fleet operations or proprietary edge hardware. - **Financiers**: Based on current rates, achieving a 9% internal return rate reflects economic benefits equivalent to about 25% of GTV; this share is likely to narrow as financing costs decline and asset turnover improves.
Additionally, the report suggests that operators' advantage arises from their command over demand, branding, and the “flywheel effect” driven by high utilization. In contrast, technology and capital inputs lean towards commoditization, with many qualified suppliers competing on price, reliability, and safety metrics.
DiDi's "Flywheel": Competing for a 2 Trillion GTV Market Amid the cost savings introduced by RoboTaxi, DiDi stands at a crossroads that will determine its long-term growth trajectory. JPMorgan outlines two distinctly different paths for DiDi's development.
The first path prioritizes profitability, retaining most savings within the company. In this scenario, the report estimates that DiDi's GTV profit margin could significantly improve, but the market would only achieve approximately 9% annual compound growth, with China’s GTV projected to reach about 773.7 billion yuan by 2035.
However, the report leans towards the second option: transferring most cost savings to consumers to stimulate explosive GTV growth through lower mobility costs. The report likens this strategy to developments in the telecommunications sector, where decreases in data charges sparked a surge in internet usage. Similarly, reduced on-demand mobility costs may tremendously boost ride-hailing demand.
If this strategy is adopted, the shared mobility market's annual compound growth rate may reach 20%. This could create a powerful “flywheel effect”: falling prices drive increased demand, improving vehicle matching efficiency and utilization, which in turn supports a denser supply network and structurally lowers service costs. Under this scenario, DiDi's GTV in China could reach approximately 2.03 trillion yuan by 2035, with significant growth in total volume leading to considerable absolute profits, even if individual unit profit margins are lower.
Technology and Capital: The Supporting Characters While operators take center stage, technology enablers and financiers are equally vital parts of the supply chain, sharing in the economic bonanza brought about by RoboTaxi, albeit with a relatively limited share.
For technology enablers, the report predicts they will secure about 5% of GTV shares in a steady state. The competitive landscape in China’s autonomous driving technology sector is fierce, with 3-5 main suppliers (such as Baidu, Pony.ai, WeRide, etc.) expected to contest on cost and reliability.
The report indicates that, due to limited economic benefits from being pure tech suppliers, most tech companies are expected to pursue vertical integration into the roles of operators for a larger share. An example of this strategy is Baidu’s “Luobo Kuaipao” business.
As for financiers, given that RoboTaxi is a capital-intensive business, most operators will rely on third-party financing leases or asset securitization. The report estimates, based on China's current interest rate environment, that to achieve approximately a 9% internal return rate (IRR), financiers may require a share equivalent to about 25% of GTV. This proportion is expected to shrink as financing costs decrease and asset turnover improves.
Risks and Variabilities: A Bumpy Road to the Future Despite a promising outlook, the journey toward the mass commercialization of RoboTaxi is fraught with challenges. The JPMorgan report identifies several key risks and uncertainties that will directly influence the pace and overall landscape of industry development.
Firstly, there is the regulatory pace. The speed with which service areas expand is the single largest variable influencing vehicle utilization and investment returns. The advancement of commercialization policies in various cities will be crucial in determining whether RoboTaxi can scale quickly.
Secondly, there are cost curves and safety issues. Keeping the manufacturing cost of RoboTaxi vehicles below 250,000 yuan is crucial for achieving substantial total ownership costs. Moreover, any setbacks regarding safety could hinder the widespread adoption of the technology.
Lastly, competitive behavior may reshape the mobility market's competitive landscape as technology suppliers engage in vertical integration. The potential consolidation or collaboration among operators (illustrated by the partnership between Waymo and Uber in the report) will be closely monitored, as it could alter the balance of bargaining power in the future. ~~~~~~~~~~~~~~~~~~~~~~~~ This insightful content is derived from the Wind Trading Platform. For more in-depth interpretations, real-time insights, and frontline research, please join the [Wind Trading Platform ▪ Annual Membership].
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