This is a preview of Periscope—a weekly report by KrASIA, delving into some of China’s industries and markets. We discuss a different space each week and include highlights of relevant top stories. If you would like to read the report in full and gain access to our library, please click here.
He Bofei, then co-founder of DeepGlint, reportedly said that 2015 was the year that autonomous driving had truly made its mark. According to him, renowned automakers such as Mercedes-Benz, BMW, and Nissan had released their development plans for autonomous vehicles alongside claims that their self-driving cars would be out on the streets by 2020.
He Bofei has since left DeepGlint, and the company has been going through a tumultuous time. His predictions have not come true either, with self-driving cars far from roaming the streets. Nevertheless, progress has been made by the industry.
Global financing of the autonomous driving industry has exceeded USD 7 billion as of H1 2020. Chinese autonomous driving companies raised over USD 3.6 billion, accounting for half of the global industry’s total financing.
Onwards to the American market
A quick glance through the list of issued test-driving licenses published on the California Department of Transportation (DMV)’s website reveals a sizeable number of Chinese companies. The DMV issues two types of licenses: test-driving with a driver and driverless scenarios.
The former category includes the likes of Baidu America, Didi America, Changan Automobile and Pony.ai. The latter list is shorter — of the five companies (Waymo, Zoox, Nuro, Cruise, and AutoX) in this list, only AutoX is Chinese.
“When we first invested in autonomous driving in 2015, there was a dispute in the team over whether or not we should go for it, but over the past few years, this has become an obvious route to take,” said Chen Yu, managing director of Yunqi Partners. For the many Chinese self-driving companies that have established offices in the US, Chen Yu believes that the most important thing for them to do is attract and retain local talent.
Demand in US trucking market holds promise for Chinese companies
Aside from autonomous driving cars, the market for unmanned trucks in the US is also promising. According to Wired, about 70% of goods in the US are transported by trucks. However, it is estimated that there will be a shortfall of around 175,000 truck drivers by 2024. At the same time, there is huge space for optimizing drivers’ working hours as well as minimizing accidents and casualties, through automation. In 2017, the American Trucking Association introduced policies on autonomous trucking and called on the federal government to introduce regulation in the industry.
At the end of 2019, Zhijia Technology’s unmanned trucks carried 18 tons of butter from the east and west coast of the US, completing the world’s first unmanned truck fresh food trial operation. Zhijia Technology is a typical Chinese-American hybrid company — established in Silicon Valley with R&D and operations centers in Beijing and Suzhou.
Public Transport and Robot-buses
In the public transport sector, self-driving buses, with relatively fixed routes, have a quicker path to commercialisation.
In particular, Robot-buses are a key breakthrough for autonomous driving in Europe, having gained tremendous support from FABULOS (Future Automated Bus Urban Level Operation Systems); jointly set-up by Estonia, Finland, Greece, the Netherlands, Norway, and Portugal to explore the potential of unmanned minibuses in cities. The project is also funded by the European Union’s Horizon 2020 programme, that provides eligible startups with funding for research.
The cost of a Robot-buses is not cheap. According to Qingzhou Zhihang’s co-founder and COO, Wang Kun, the cost of each car is over RMB 1 million (~USD 152,000). Qingzhou Zhihang’s unmanned bus line is currently the longest Robot-buses experience in China.
“Autonomous buses are a use case that is more attainable than autonomous taxis, but the Robot-buses still has higher requirements for intelligent networking and vehicle-road coordination, and is part of the urban traffic microcirculation system,” says Wang.
Uncertainty persists amidst optimism
Autonomous driving has ignited significant discourse because of the high uncertainty that persists amidst optimism, safety concerns, and uncertainty over the industry’s longevity and future. According to Pitchbook, startups in the autonomous driving industry burn an average of USD 1.6 million a month. Wenyuan Zhixing’s CEO, Han Xu, has also shared in a previous interview that the company is burning money at a rate of about USD 300 million over 3 years and USD 500 million over 5 years.