Japan is running short of taxi drivers just as cars are learning to drive without them. Alphabet's autonomous driving unit Waymo, Japanese taxi app operator GO, and taxi company Nihon Kotsu intend to launch Japan's first fully autonomous commercial taxi service in Tokyo next year, starting with a small fleet before expanding to about 100 cars.

For companies like Toyota Group, which sold 11.3mn vehicles last year, that may seem like a rounding error. But if these first robotaxis prove autonomous fleets can operate commercially in Japan, they would create an entirely new source of recurring vehicle demand for local automakers. Japan has spent years laying groundwork through trials and regulatory changes.

For Waymo, Tokyo is its first planned commercial market outside the US. Waymo says it now provides over 500,000 fully autonomous trips a week across 15 US cities. Successfully transferring that model to Tokyo, with its left-hand traffic and different regulations, would prove Waymo's technology can work beyond the US. Nissan, Wayve and Uber have also announced plans for a Tokyo robotaxi pilot using Nissan EVs equipped with Wayve's AI Driver.

Japan has a structural reason for robotaxis to grow. In Okinawa, taxi drivers nearly halved between 2009 to 2021. While other countries debate displacing drivers, Japan has reason to race ahead.