China, arguably the world’s largest economy, now officially has its first trial site for self-driving buses. Last month, the Shenzhen Bus Group — the public bus operator of Shenzhen city — began testing four self-driving buses on a 1.2km loop.
It is not an insignificant collaboration as given Transport International’s size; its market capitalisation is about US$10.5 billion. In turn, China joins a race to apply self-driving technology in the public transportation context as major nations in this space forge ahead with their own trials.
For example, its neighbour Japan began testing driverless shuttle buses in rural areas last September, while Singapore plans to start driverless bus services in three townships by 2022. Stateside, a one-year pilot of a driverless shuttle in Las Vegas began last November.
Aggressive Chinese Investment
Notably, other Chinese companies are also rushing to pour money into self-driving technology. Internet search engine giant Baidu, for example, has reportedly been the most aggressive.
For perspective, Baidu’s market capitalisation of nearly US$85 billion dwarfs Transport International’s market value. Baidu has previously said that it spends about US$1.5 billion annually on self-driving research and development, which amounts to 15% of its revenue.
Last September, Baidu launched a 10 billion yuan (US$1.5 billion) Apollo fund to invest in over 100 self-driving projects over the next three years, putting pressure on its US rivals. It has over 90 partners under the project including Microsoft, Udacity and TomTom.
Earlier this week, Baidu set-up a similar fund for Southeast Asia called Apollo Southeast Asia in partnership with Singapore’s Asia Mobility Industries (AMI), which develops smart transportation technologies. The fund size is US$200 million.
The regional fund, which will back self-driving technology development and smart transportation development in Singapore, would be Baidu’s platform to commercialise its self-driving technology in the region.
By 2019, Baidu also aims to roll out semi-autonomous vehicles followed by fully autonomous cars by 2020.
Crucially, Baidu seems to lean towards public transportation. It partnered Chinese bus maker King Long United Automotive Industry in October, aiming to co-develop China’s first fully autonomous bus with initial production slated for July 2018.
Chinese start-ups in this space are even attracting funds from across the Pacific, such as NVIDIA GPU Ventures’ investment last year into JingChi, an outfit founded by former Baidu AV experts.
China: The Top-Down Approach
For the rest of the world, China’s investments into self-driving technology threatens to upend their strategies.
While both US, European and Chinese players may compete neck-to-neck in terms of resources and risk appetite, China has one distinct advantage— the Chinese government’s way of making policy decisions mean the nation will be able to formulate and implement regulations faster than other major countries.
That means it can set-up a driverless car market much sooner. For automotive players, technology being equal Chinese players will be able to take leading market position faster compared to their US and European rivals.
As an example, the South China Morning Post reported last month that 290 Chinese regions and cities have rolled out ‘smart city’ projects using artificial intelligence to manage all aspects of daily life.
From that figure, 93 of the projects focus on transportation and their infrastructure opens the door to AV technology integration further down the road.
Additionally, while players in the West has had a head start, Chinese giants are catching up. Didi Chuxing, which famously defeated Uber for control of the Chinese ride-sharing market in 2016, set-up a research facility in the Silicon Valley in early 2017 to look at AV technology.
Ahead of The Curve
China’s smart city projects and their conduciveness toward driverless urban mobility show that the nation is ahead of the curve amid the growing trend of public transportation-based pilots using proprietary self-driving technology.
The International Association of Public Transport (UITP) had previously pointed out that autonomous vehicles (AVs) would worsen congestion by promoting greater personal vehicle ownership due to the convenience and better safety.
That scenario may happen if AV technology development continues to be completely led by big firms such as Uber, Google and major global carmakers with commercial interests.
While many nations are responding to the growing realisation of that risk with public transportation-focused trials, China is already laying down the infrastructure for a driverless future via smart township planning.
It is a measure of China’s ability to reshape its industries at speed, like how it used its domestic auto market’s position as the world’s largest and most profitable vehicle market to fast-track what eventually could be the world’s biggest electric vehicle (EV) market.
In fact, it is already the world’s biggest EV manufacturer, according to the Financial Times. How the Chinese government may choose to step into the global AV race down the road will be closely watched as they are definite dark horses that could change the landscape at will.