The Case for Autonomous Private Vehicles and the Software Market

 

IDTechEx, along with many other industry experts, are expecting robotaxis to become a common sight in major cities over the next twenty years. The business case for robotaxis, although not without its obstacles, is compelling. In many regions, aging populations will reduce the working population. Robotaxis can theoretically drive over a hundred people a day, massively reducing the number of vehicles on the road. In congested cities like New York, London, Kyoto, or Kolkata, where it takes over 30 minutes to drive 10km, robotaxis can significantly reduce travel times. Secondarily, in line with the transition to electrification, robotaxis could improve local air quality. Finally, and perhaps most importantly, robotaxis are safer than the average human driver, and will only get better as the technology improves.

 

However, in the meantime, there will still be billions of privately owned vehicles on the roads. IDTechEx assesses that no singular company has actually proven their technology and business case on a significant scale yet, although the leaders Waymo and Baidu Apollo continue to expand at rapid rates. Expansion into new cities requires regulation, new training data, HD mapping, and vehicle connectivity infrastructure, making it no easy task drop a robotaxi anywhere in the world at the moment, and expect it to drive and thrive.

 

 

In IDTechEx's report, "Autonomous Driving Software and AI in Automotive 2026-2046: Technologies, Markets, Players", the software-derived revenue from autonomous driving and advanced driver assistance systems (ADAS) is assessed alongside robotaxis, with market size segmented by region and SAE (Society of Automotive Engineers) level.

 

 

 

 

According to IDTechEx's analysis, anything from SAE level 0 to level 2, or even the sometimes labelled level 2+ systems (e.g., Tesla FSD, Ford Blue Cruise), would be considered ADAS, as opposed to autonomous driving, since the liability is still on the driver at all times when driving. The software-related revenue from these systems is lower due to the lower system demands and the continued responsibility of the human operator. All major OEMs have some form of ADAS and related hardware and software. Even by 2036, IDTechEx expects approximately 70% of software-related revenue to be ADAS-related in the private vehicle market.

 

 

 

Level 3 introduces partial automation in certain scenarios, such as clear weather conditions on certain highways. The jump from level 2 to level 3 is a big one for OEMs to make, and is still very rare on today's roads. Mercedes was the first one to deploy SAE level 3 in private vehicles. However, its Drive Pilot System is still limited to certain roads, speeds, and conditions in Germany, California, and Nevada. Things are also moving fast in China, where the government and OEMs have been active in promoting higher levels of automation. As of November 2025, SAE level 3 vehicles can be expected to be commercially deployed in Beijing in 2026, with the government supporting the development of autonomous driving frameworks and pilot projects in the meantime. ZF and Horizon Robotics have also recently announced a collaboration to bring SAE level 3 technology to China by next year. The software value of a level 3 system is significantly higher than previous levels, due to the higher level of convenience, safety, and liability transferring from the driver to the manufacturer in some situations.

 

SAE level 4 is the minimum level expected of a robotaxi. In the case where there is no onboard supervisor, the vehicle is expected to operate autonomously and respond appropriately should conditions worsen to a level that the sensors, software, and onboard compute are unable to proceed safely. In private vehicles, this is still a few years away, with IDTechEx predicting tangible market activity in the private car market after 2030. Recent news of the SAE level 4 private vehicle by Tensor (formerly AutoX) has led to some speculation that we could see something before this. However, with the limited details available, it would not be surprising to see delays in the company's timeline to deploy by the second half of 2026. The sensor suite, compute performance, and software requirements make level 4 vehicles extremely expensive (the retrofitted Jaguar I-PACE used by Waymo is often estimated to exceed US$100,000 in cost), making this a niche option to begin with.

 

 

 

However, according to IDTechEx's analysis, the software of a private SAE level 4 vehicle is approximately 30 times that of a level 2 vehicle after accounting for hardware costs, meaning that by 2046, autonomous driving (SAE level 3 upwards) will dominate over ADAS-related software, taking over 90% share of the private vehicle market. This is dependent on technology (both hardware and software) to decrease to an acceptable mass market price, and work in all regions. Despite claims of mapless autonomous driving solutions and the developments in end-to-end AI, extensive investment and effort are required to just increase the operational driving domain of robotaxis. For private vehicles that may go on long road trips, the technology will need to be reliable across multiple domains, as well as be able to communicate with other vehicles, buildings, and traffic.

 

 

 

 

 

To conclude, robotaxis will scale up rapidly. However, the addressable market of transportation is huge, and private vehicles will have a massive part to play, even with the transition to Mobility as a Service (MaaS). Progress will vary between different cities and rural regions, and the global autonomous driving and ADAS software market for private vehicles will grow into a US$130 billion market by 2046. IDTechEx's report, "Autonomous Driving Software and AI in Automotive 2026-2046: Technologies, Markets, Players", has more information on the technology and markets unlocking this.

 

For more information on this report, including downloadable sample pages, please visit www.IDTechEx.com/ADSandAI, for the full portfolio of autonomous driving research available from IDTechEx, see www.IDTechEx.com/research/Autonomy.