Baidu\u2019s robotaxi division, Apollo Go<\/a>, just rolled out its latest robotaxi across multiple cities in China, and if stakeholders in the US aren\u2019t nervous yet, they should be.<\/p>\n<\/div>\n The RT6 is the sixth generation of Apollo Go\u2019s driverless vehicle, which made its official debut in May 2024. It\u2019s a purpose-built, Level 4 autonomous vehicle, meaning it\u2019s built without the need for a human driver. And here\u2019s the thing that should make US competitors nervous: adopting a battery-swapping solution, the price for one individual RT6 is \u201cunder $30,000,\u201d Baidu CEO Robin Li said in an earnings call<\/a>.<\/p>\n<\/div>\n \u201cAll the strengths just mentioned above are driving us forward, paving the way to validate our business model,\u201d Li added. <\/p>\n<\/div>\n Adopting a battery-swapping solution, the price for one individual RT6 is \u201cunder $30,000\u201d<\/p>\n<\/div>\n<\/div>\n With Alphabet\u2019s Waymo operating in multiple cities in the US and Baidu deploying hundreds of vehicles in China, the world is now getting its first taste of an autonomous future. These vehicles are geofenced, meaning they can only operate in a select geographic area. And sure, they occasionally get confused or block traffic. But they\u2019re real, and they\u2019re growing in number. <\/p>\n<\/div>\n But it\u2019s Baidu\u2019s achievements in cost-effectiveness that should have Waymo and other robotaxi operators a little uncomfortable. Because while the technology is growing more mature, the economics of a robotaxi business are still very much unproven. <\/p>\n<\/div>\n We still don\u2019t know the net effect of Baidu\u2019s cost improvements. But bringing down the upfront cost of each individual vehicle to below $30,000 will go a long way toward improving the company\u2019s unit economics, in which each vehicle brings in more money than it costs. There are still a lot of outstanding costs to consider, such as hardware depreciation and fleet maintenance, but from what Baidu is signaling, things are on the right track. <\/p>\n<\/div>\n From the looks of it, the company is passing those savings along to its customers. Base fares start as low as 4 yuan (around 55 cents), compared with 18 yuan (around $2.48) for a taxi driven by a human, according to state media outlet\u00a0Global Times<\/em><\/a>. Apollo Go said it has provided\u00a0988,000 rides\u00a0across all of China in Q3 2024 \u2014 a year-over-year growth of\u00a020 percent. And cumulative public rides reached\u00a08 million in October.<\/p>\n<\/div>\n Photo by Smith Collection \/ Gado \/ Getty Images<\/cite><\/p>\n<\/div>\n<\/div>\n With Waymo, we just don\u2019t know. The company has spoken publicly about its efforts to reduce the costs of each vehicle by using fewer sensors<\/a>. But its latest vehicle, Geely\u2019s Zeekr, is likely going to be waylaid by tariffs<\/a> on imports from China. A recent analysis from JMP<\/a> found the company\u2019s business in San Francisco to be profitable, while also estimating capital expenditures for the vehicle and sensor suite to be north of $150,000 per unit. <\/p>\n<\/div>\n Lowering costs is going to be increasingly important for robotaxi companies as they look to expand to new cities. Alphabet doesn\u2019t break out Waymo\u2019s costs in its earnings report, but its \u201cOther Bets\u201d unit, which includes the robotaxi company, brought in $388 million in revenue in the third quarter of 2024<\/a>, up from $297 million a year ago. But the unit\u2019s losses held flat at $1.12 billion compared to $1.94 billion in the year-earlier period. Alphabet recently led a $5.6 billion\u00a0funding round<\/a> for Waymo to help it cover costs as it eyes its next phase of growth. <\/p>\n<\/div>\n