Why Are Investors Still Pouring Billions Into Self-Driving Cars?

The self-driving car industry just received another major vote of confidence from investors. Automotive software supplier Applied Intuition announced it had raised $600 million, valuing the company at a staggering $15 billion. The funding, co-led by giants like BlackRock and Kleiner Perkins, signals a powerful belief in the future of autonomous technology. Yet this optimism clashes with a decade of missed deadlines, high-profile failures, and growing public skepticism. The robotaxi revolution that was supposed to be here by now has repeatedly stalled. So why are investors still betting so heavily on a driverless future?

What happened to the robotaxi revolution?

Just a few years ago, the industry was buzzing with predictions that fully autonomous cars were just around the corner. In 2015, Ford’s then-CEO predicted they would be on the road in five years. A year later, Elon Musk suggested a fully autonomous Tesla would drive coast-to-coast by the end of 2017. Those deadlines, and many others, came and went. S&P Global Mobility now predicts a true, drive-anywhere Level 5 autonomous car will be a "distant goal".

The road has been littered with costly failures. In 2022, Ford and Volkswagen pulled the plug on their self-driving venture Argo AI, with Ford writing down its $2.7 billion investment. General Motors has also faced significant turmoil with its Cruise subsidiary. After one of its robotaxis dragged a pedestrian in San Francisco in late 2023, GM halted Cruise’s service, dismissed top executives, and, according to CEO Mary Barra, decided to “realign our autonomous driving strategy” after burning through more than $10 billion on the division. Even tech titan Apple, after sinking billions into its own car project, shut it down in February 2025.

So where is the smart money going?

Despite the setbacks, hundreds of billions have been invested, and the money continues to flow toward two distinct paths. The first is the highly visible race to build and operate commercial robotaxi fleets. Alphabet’s Waymo is the clear leader here. By May 2025, the company announced it had surpassed 10 million fully driverless trips, doubling its lifetime total in just five months and delivering over 250,000 paid rides per week across cities like Phoenix, San Francisco, and Los Angeles. However, this progress is expensive; Waymo is part of Alphabet’s “Other Bets” division, which has lost more than $30 billion since 2016.

Tesla is pursuing a more aggressive, software-focused path, with CEO Elon Musk planning to launch a robotaxi service in Austin. In an interview with Bloomberg, Wedbush analyst Dan Ives said Tesla's autonomous vision could be worth a “trillion dollars to the story.”

In China, the government’s robust support has created a hotbed of innovation. Baidu’s Apollo Go robotaxi service provided 1.1 million rides in the fourth quarter of 2024 alone and aims to deploy 1,000 cars in the city of Wuhan.

The second, less visible path is investing in the “picks and shovels”—the essential software and hardware that underpin the entire industry. This is where the $15 billion valuation for Applied Intuition fits. The company doesn’t operate its own cars but provides critical software for developing and testing autonomous systems to automakers like Volkswagen and Toyota. Similarly, Chinese tech giant Huawei has emerged as a key supplier of autonomous driving systems and components, aiming to dominate the supply chain without building its own cars.

Is the technology actually getting safer?

The ultimate promise of autonomous vehicles is safety. With nearly 1.2 million people dying in road crashes globally each year, the potential is enormous. A peer-reviewed study from Waymo published in May 2025 offered compelling evidence, finding its vehicles had an 85% lower rate of crashes involving serious injury compared to human drivers over 56.7 million miles.

However, high-profile accidents continue to shape public perception and attract regulatory scrutiny. The U.S. National Highway Traffic Safety Administration (NHTSA) has dozens of open investigations into crashes involving ADAS, with a majority involving Tesla. A fatal crash in China in March 2025 involving a Xiaomi SU7 in assisted driving mode prompted the government to warn automakers against “exaggerated or false advertising” and shift the industry’s focus from performance to safety.

As Walter Isaacson noted, the public has a different standard for machines. “A person getting killed by a robotaxi is going to be a lot more news than a hundred different accidents in a week [caused by humans]," Isaacson said during a CNBC interview. This perception gap remains a major challenge.

What are the biggest hurdles remaining?

Beyond perfecting the technology, the industry faces significant regulatory and social barriers. The UK, for example, recently pushed back its timeline for approving fully self-driving vehicles to 2027, citing the need to address complex legal and ethical questions. The U.S. has a patchwork of state-level rules, creating a complicated operating environment. In contrast, China’s centralized government has streamlined regulations, issuing commercial licenses and establishing thousands of kilometers of test roads.

Public trust is another major hurdle. A 2024 YouGov poll found that 37% of British people would feel “very unsafe” in a driverless car. In June 2025, protesters gathered in Austin, Texas, to oppose the planned launch of Tesla’s robotaxi service, citing safety concerns.

The final barrier is the sheer cost. Goldman Sachs analysts forecast that China's robotaxi market alone could be worth $47 billion by 2035, but getting there requires immense capital. While some, like BYD, are trying to democratize the technology by including advanced driver-assistance systems (ADAS) on cars priced below $10,000, the cost of developing true autonomy remains astronomical.

Is this becoming a new US-China tech race?

Looming over the entire industry is the intensifying technological rivalry between the U.S. and China. China’s strategy of strong government backing, massive data collection, and a collaborative ecosystem has allowed it to accelerate development. The government has approved at least 19 cities for robotaxi testing and aims for 70% of new cars to have Level 2 or 3 automation by 2025.

Meanwhile, the U.S. government is increasingly wary of China's progress and the potential for technology transfer. The case of TuSimple, a self-driving truck startup, laid bare these concerns. The company was found to have shared sensitive data with Chinese partners, prompting U.S. officials to re-evaluate how it polices companies with Chinese ties. In a major win for a U.S. company, however, Chinese authorities recently drafted rules that could pave the way for Tesla to export data gathered in China—a key step for training its global autonomous driving models. For investors, the race for self-driving supremacy isn't just about which company builds the best car; it's about which nation will define the future of mobility.

Reference Shelf

Applied Intuition valued at $15 billion for autonomous vehicle tech (Reuters)

Why AI Investors Should Worry About the Self-Driving Car Crash (Bloomberg)

The life-or-death case for self-driving cars (VOX)