Waymo is doubling down on autonomous ride-hailing. The Alphabet-owned company announced plans this week to build a large new manufacturing facility in Mesa, Arizona, that will allow it to add more than 2,000 self-driving vehicles to its fleet.

The 239,000-square-foot site will be developed in partnership with Canadian auto parts giant Magna International and will serve as a key hub for retrofitting Jaguar I-Pace electric SUVs with Waymo’s sixth-generation autonomous driving technology.

Once operational, the plant will support Waymo’s planned 2026 expansion into three new metro areas: Atlanta, Miami, and Washington, D.C. The company’s Waymo One ride-hailing service currently operates in Phoenix, San Francisco, Los Angeles, and Austin, Texas.

The facility’s modular design will also allow Waymo to integrate its technology into future vehicle platforms, starting with the Zeekr RT later this year. Over time, the company plans to introduce automated assembly lines and other efficiency upgrades to scale up production volumes.

“When running at full capacity, the plant will be capable of building tens of thousands of fully autonomous Waymo vehicles each year,” the company wrote in a blog post. “Now is the time to scale our technology further to support existing and future deployments,” said Chris Bonelli, Waymo’s product communications manager.

A Vote of Confidence in a Shaky Sector

Industry analysts see the move as a strong show of commitment at a time when other autonomous vehicle (AV) players are retreating.

“Waymo’s announcement is a significant milestone for the AV industry,” said Kathleen Rizk, senior director of user experience benchmarking at J.D. Power. “It demonstrates their unwavering dedication to advancing this technology, even as competitors pull back due to regulatory and technical hurdles.”

Edward Sanchez, senior analyst at TechInsights, echoed that sentiment. “This solidifies Waymo’s leadership in U.S. autonomous ride-hailing and highlights its growth ambitions,” he said.

Seth Goldstein, an equity strategist at Morningstar, added that dedicated manufacturing capacity is good news not just for Waymo but for the broader AV ecosystem. “It’s a positive step that could help accelerate AV adoption industry-wide,” he said.

Still, some experts warn that Waymo’s progress shouldn’t be seen as a proxy for the rest of the sector. “This shows Waymo is confident in both the safety and public acceptance of its system,” said Sam Abuelsamid, vice president at Detroit-based advisory firm Telemetry. “But it doesn’t necessarily mean others are close to achieving the same.”

Rivals Remain Far Behind

While Amazon-backed Zoox is likely next in line to scale up—offering purpose-built robotaxis in cities like San Francisco, Seattle, and Las Vegas—others are further behind. Tesla, for example, is expected to test a supervised service in Austin, but analysts say it’s still operating at Level 2 autonomy, meaning a human must remain ready to take control at any time.

Waymo, by contrast, is seen as the North American leader in automated driving systems (ADS). “They’ve also done the behind-the-scenes work—building relationships with local authorities, integrating with first responders, and securing curb access,” Abuelsamid said.

The company claims to be the only AV service currently operating at scale, reportedly providing more than 250,000 rides per week. “Its model is highly scalable, and upcoming Hyundai/Zeekr vehicles are helping reduce costs,” said Morningstar tech analyst Malik Ahmed Khan.

Safety Still a Hurdle for Public Adoption

Despite this progress, consumer skepticism remains a barrier to broader AV adoption. J.D. Power’s 2024 U.S. Robotaxi Experience Study found that 83% of consumers want to see detailed safety statistics before riding in a self-driving vehicle.

“There’s a clear demand for federal and state regulations to support this emerging industry,” Rizk said. “And safety concerns—along with fears about hacking and data privacy—are top of mind for potential users.”

Waymo’s early success in consumer trust, aided by Alphabet’s deep pockets, gives it an edge. “Word of mouth and safety perceptions are critical, and Waymo seems to be gaining ground on both fronts,” Khan noted.

A Long Road to the Mainstream

Waymo’s Arizona expansion is a forward-looking bet, but analysts caution that widespread robotaxi use is still years away.

“Deployment varies significantly by region,” said TechInsights’ Sanchez. “In the U.S., it’s largely up to state regulators. China’s centralized model allows for faster nationwide rollout, and the EU is still figuring out cross-border AV approvals.”

Morningstar projects that AVs could account for half of all ride-hailing trips in the U.S. and Canada by 2035. But near-term growth will be city-by-city, mirroring the early days of Uber and Lyft.

While hardware costs are falling, operational costs remain high, and even Waymo hasn’t reached profitability. “Utilization is another issue—demand is lopsided throughout the day,” Abuelsamid said. “To make the business model work, companies will need to find other uses for their fleets, like package delivery or public transit shuttles, during off-peak hours.”