The Volkswagen robotaxi that wants to rival Waymo and Tesla

Self-driving VW minivans, now in Germany, coming to U.S. next year via Uber deal

- Stephen Wilmot

The self-driving taxi carefully steered around the delivery vehicle that blocked its path—and straight into oncoming traffic.

"Not the best driving decision," sighed Christian Senger, head of autonomous vehicles at Volkswagen, which built the robotaxi.

The incident, during an otherwise smooth test drive last month, underlines how Europe—once the world leader in automotive engineering—is playing catch-up with the U.S. and China.

Alphabet's Waymo has run fully driverless taxis in the U.S. for almost five years without serious mishap and now operates more than 250,000 rides a week. Similar services are available in cities across China, run by local tech companies such as Baidu.

With no homegrown tech giants and more onerous regulations, Europe has largely stayed out of the autonomous-driving race. Now, it's hitting the gas, eager to hedge its bets on the future of the auto industry and foster innovation after years of sluggish growth.

Hamburg is the emerging epicenter of the region's robotaxi push. About 30 specially adapted versions of the Volkswagen ID.Buzz electric minivan drive themselves around the city's crowded streets, bearing the black-and-bronze livery of the company's ride-pooling service, Moia.

With the technology still in test mode, human backup drivers sit behind the wheel ready to take over if it misfires, and rides are only bookable by staff. Moia plans to start carrying regular Hamburgers in the coming months.