This 1 Underrated Factor Could Drive the Big Winner in the Robotaxi Race

One company seems to be building a big lead in the U.S. market for robotaxis, and it might not be for a reason that most investors know about. Waymo, a subsidiary of Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), uses LiDAR technology, along with cameras and radar, to build its autonomous capabilities, while its competitor Tesla (NASDAQ: TSLA) primarily uses computer vision with digital cameras.

Waymo uses LiDAR -- Tesla does not

LiDAR (light detection and ranging) uses laser beams and digital sensors to measure movement and exact distances in real life, in real time. It helps autonomous cars build a dynamic 3D model of the world around it -- watching out for traffic, roadblocks, pedestrians, and more.

LiDAR is more costly than a camera-only approach to autonomous driving. Bloomberg Intelligence says that Waymo's per-vehicle costs might be two or three times higher than Tesla's robotaxis. But proponents of LiDAR say it's a more detail-oriented, capable way of building self-driving cars that can drive safely and respond to fast-changing conditions on the road.

Auto industry experts generally support LiDAR as superior to conventional radar or cameras alone. Research from Oliver Wyman in 2023 said that because of "safety reasons, LiDAR is likely to become the dominant solution for passenger cars." In June 2025, Ford Chief Executive Officer Jim Farley expressed support for Waymo's approach and said, "LiDAR is mission critical."

The new Waymo Driver could be a big upgrade

Waymo recently announced the launch of the sixth generation of Waymo Driver, its autonomous driving technology. The new Waymo Driver includes a newly enhanced vision system with a 17-megapixel imager. The company claims this is "a generation ahead of other automotive cameras" in dynamic range, low-light sensitivity, and resolution.

Image source: Waymo.

The company also says its new Waymo Driver includes upgraded LiDAR, which benefits from "significant cost reductions" that the auto industry has developed during the past five years. LiDAR is used to help Waymo vehicles align what the car's cameras see with accurate measurements of distance. The company says its latest upgrades help the vehicles see better in rain and snow.

Success in the robotaxi race might be measured not only by how many cars are on the road but also by which approach to autonomy gets built into the cars. Waymo's LiDAR digital sensor technology could make it the winner in the robotaxi race. This tech is more costly and complex than a cameras-only approach. But it might prove to be safer and more accurate and give Waymo a more sustainable competitive advantage in self-driving cars.

Waymo is not a separate publicly traded company, and it's too soon to say how big a difference it makes in Alphabet's share price. But Alphabet's stock has outperformed the tech-heavy Nasdaq-100 index and Tesla stock during the past year. If Waymo wins the robotaxi race, its choice of LiDAR tech might be a big reason.

Ben Gran has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Tesla. The Motley Fool has a disclosure policy.