The driverless car squeeze

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A little over a decade ago, Uber $UBER drivers were the ones circling the block while taxi medallion holders watched their livelihoods evaporate. Now a familiar scene is playing out again, except this time there is no one behind the wheel of the vehicle doing the disrupting.

Waymo, Alphabet $GOOGL's autonomous driving unit, currently provides roughly 400,000 paid rides per week across half a dozen American cities, with the company expecting to surpass one million weekly rides by the end of 2026. It quadrupled its trip volume in 2025 alone. 

After raising $16 billion at a $126 billion valuation earlier this year, Waymo is preparing to roll into Nashville, Washington, Detroit, Las Vegas, San Diego, and Denver, with testing underway in several more markets. The company plans to be operating or testing in 20 cities by year's end, including its first international expansion.

For millions of gig drivers who rely on Uber and Lyft $LYFT for their income, those numbers land differently than they do in a venture capital pitch deck. The workforce is already feeling the squeeze, according to Gridwise Analytics, which tracks rideshare driver earnings, in its 2026 Autonomous Vehicles Impact Report.

In the five metro areas where robotaxis currently operate that Gridwise analyzed, drivers completed 5.3% fewer trips per hour in the fourth quarter of 2025 compared with the same period a year earlier. Nationwide, that figure was only 2.6%. Driver utilization, the share of online time spent actually ferrying passengers, dropped 2.5% in those same cities with AVs versus 2.1% nationally.

Gridwise is careful to note that it cannot directly attribute these shifts to robotaxis. Local supply and demand, platform pricing algorithms, and seasonal variation all play a role. 

But the pattern is consistent. In every city where autonomous vehicles are picking up passengers, human drivers are completing fewer rides per hour and spending more of their shift waiting.

The meter is running

The parallel to the taxi industry's collapse is imperfect but instructive. When Uber arrived in American cities in the early 2010s, it did not immediately replace taxis. It expanded the overall market for on-demand rides while slowly eroding the economics that made taxi driving viable. 

Medallion values cratered not because every rider switched overnight but because the floor kept dropping. Drivers who had borrowed against their medallions found themselves underwater.

Rideshare drivers don't hold medallions, but they do hold car loans and insurance policies. Per-trip gross pay actually rose in most cities with AVs in late 2025, according to Gridwise, though whether that reflects higher rider fares, more generous platform payouts, or a shift in ride mix isn't clear from the available data. 

But hourly base pay fell year over year in Austin, Los Angeles, and San Francisco. Drivers are earning a bit more per ride but completing fewer of them, which means working longer to take home the same pay.

S&P Global $SPGI projects that AVs will account for roughly 10% of all U.S. rideshare trips by 2030 and parity with human-operated rideshare around 2041. Robotaxis are projected to come in more than 60% cheaper than a human-driven single ride, well under the $3.25 median per-mile cost that human drivers currently deliver at. 

That price gap is the gravitational force that will pull riders toward the driverless option, just as Uber's lower fares once pulled them away from cabs.

No tip, no driver, no problem

The transition will not be seamless. Waymo's vehicles have drawn scrutiny from federal regulators investigating incidents near schools in Santa Monica and Austin. Researchers recently demonstrated that the vision systems powering autonomous vehicles can be tricked by manipulated road signs, a vulnerability that underscores how early this technology still is. 

And in Los Angeles last summer, protestors torched a row of Waymo vehicles during demonstrations against ICE raids, turning the driverless cars into symbols of tech-industry overreach.

There is also a quieter redistribution at work. Uber and Lyft, for all their faults, circulate money through local communities. A driver in Phoenix pays rent in Phoenix, eats at restaurants in Phoenix, gets her car serviced in Phoenix. 

A Waymo vehicle does none of those things. Its fares flow to Alphabet's headquarters in Mountain View, with more limited maintenance and fleet operations jobs in the communities it operates in. Cities that welcome robotaxis may find themselves hosting a transit service that extracts rider spending without returning much of it to the local economy.

And Waymo is no longer alone. Tesla $TSLA, Amazon $AMZN’s Zoox, May Mobility, and Avride are all carrying paid passengers in U.S. cities, with other companies preparing to launch robotaxies in 2026. 

For the millions of drivers who depend on rideshare income, the competitive landscape looks less like one company's moonshot and more like the early days of rideshare itself, when a second and third entrant signaled that the disruption was structural, not a fluke.