While robotaxi companies face challenges in the U.S., the fleet in China continues to expand.

On the same day that General Motors announced it would stop funding its robotaxi company Cruise, Pony.ai, one of the leading operators of autonomous vehicles in China, revealed expansion plans. The company will increase its robotaxi fleet from approximately 250 to a minimum of 1,000 vehicles by 2025, thanks to a partnership with GAC Aion, a division of one of the largest automotive manufacturers in the country. With a larger number of vehicles, Pony.ai aims to expand its service areas in the largest cities, known as first-tier cities: Beijing, Guangzhou, Shanghai, and Shenzhen. Currently, Pony's fleet averages 15 trips per vehicle per day, translating to over 26,000 trips per week.

This development is another example of how access to affordable electric vehicles, combined with a flexible regulatory environment and other governmental incentives, is driving China’s aggressive strategy regarding autonomous vehicles. Baidu, another major operator of autonomous vehicles in China, has also shared its efforts to reduce the cost per vehicle to around $30,000, in addition to maintaining a partnership with Geely for the production of driverless cars.

Meanwhile, in the United States, collaborations between automakers and autonomous vehicle operators have weakened. In addition to GM's decision to distance itself from Cruise, Ford also shut down its robotaxi project Argo AI, which it had been funding alongside Volkswagen. Both companies have indicated that they plan to redirect their efforts toward driver-assist technology for personal-use vehicles.

China's growing dominance in the field of autonomous vehicles has raised concerns in the U.S. Earlier this year, the Biden administration proposed new regulations to block the "sale or import" of software for connected vehicles from China, arguing that it represents an "acute" threat to national security. This followed the imposition of new tariffs on Chinese imports, including 100% on electric vehicles and increases on key batteries and minerals. Donald Trump, the elected president, has promised even harsher tariffs, which could slow the development of driverless vehicles in the country.

For its part, Waymo, the leading robotaxi company, has announced that it will use a Chinese electric vehicle as its next model to cut costs, given the large amounts of expenses it has accumulated over the years. However, access to affordable electric vehicles could be crucial for the success of robotaxis.

Despite the expansion plans of Pony.ai and other Chinese companies, public markets have not shown much enthusiasm for them. Pony.ai’s initial public offering on Nasdaq valued the company at $5.25 billion, a 40% drop from the $8.5 billion it reached two years ago. No autonomous vehicle operator in the world is currently profitable, as fleets remain small and companies are cautious in their expansion, in addition to the technology still being costly compared to the revenue generated.

Pony.ai and others hope that the Chinese government will soon allow their vehicles to expand into suburban areas. Meanwhile, Trump's transition team is considering creating a federal framework for autonomous cars, which could facilitate broader distribution of vehicles that do not require traditional controls like steering wheels and pedals.

However, the threat of China advancing more rapidly than the U.S. in the development of robotaxis has not motivated Congress to break the deadlock on autonomous vehicle legislation, which has seen no progress for more than six years. Differences range from the increasing number of autonomous vehicles on the road to concerns about liability, as well as objections from cities facing problems with the proliferation of autonomous vehicles. For example, San Francisco officials have raised complaints about blocked buses and emergency vehicles, and local residents have protested against new regulations that allow robotaxis to operate with greater freedom.

These concerns are likely to remain a point of friction, while China has already outpaced the U.S. in the implementation of robotaxis. The question is how far they can advance in the future.