On June 4, 2021, a WeRide robot taxi carrying medical supplies is heading to Liwan District in the southern Chinese city of Guangzhou.
Southern Metropolis Daily | Visual Chinese group | Getty Images
BEIJING. While governments may be wary of self-driving cars, people want to buy the technology and companies want to make a profit.
It’s a market for a limited version of autonomous driving technology that helps drivers with tasks like parking and changing lanes on the highway. And McKinsey predicts that the market for the core autonomous driving technology, known as “Tier 2” in the autonomous driving classification system, is worth 40 billion yuan ($6 million) in China alone.
“L2 adds security value to users, its commercial value is clear,” Bill Peng, partner at McKinsey in Hong Kong, said Monday in Chinese translated by CNBC. “Robotaxi is definitely a trend, but not [yet] have the result of commercialization.
Robotaxis businesses have made great strides in China over the past few months, with Baidu and Pony.ai being the first to be allowed to collect tolls in the suburban area of Beijing and other parts of the country. The locals are enthusiastic – the Baidu Apollo Go robot taxi service claims to make roughly more than 2,000 rides a day.
But when it comes to revenues, robot taxi apps show companies are still heavily subsidizing rides. At the moment, the money for unmanned technology comes from the sale of software.
Investment analysts at Goldman Sachs and Nomura point to the possibilities of automotive software itself, from in-car entertainment to autonomous driving systems.
Last week, Chinese self-driving technology startup WeRide said it had received a strategic investment from German engineering firm Bosch to build an automated driving software system.
The goal is to jointly develop an L2/L3 system for mass production and delivery next year, Tony Khan, founder and CEO of WeRide, told CNBC. L4 denotes the possibility of full autonomous driving under certain circumstances.
“As an employee, we certainly want this to be sold. [in] how many car OEMs in China so that we can maximize our [revenue and] profit,” he said, referring to car manufacturers. “We truly believe that L2 and L3 systems can make people drive. [more] safely”.
In a separate release, Bosch called the deal a “strategic partnership” and said its China business would supply sensors, computing platforms, algorithmic applications and cloud services, with WeRide providing the software. Neither company reported how much capital was invested.
The deal is “very important,” said Tu Le, founder of Beijing-based consulting firm Sino Auto Insights. “It’s not just venture capital that sees the potential of the market as a whole and invests in it.”
He expects the next step towards commercialization will be to introduce more WeRide technology into OEM partner products to run more pilot projects in China and experiment with paid services so they can customize business models and understand pricing dynamics and customer needs. better.”
WeRide is valued at $4.4 billion, backed by companies such as Nissan and Qiming Venture Partners, according to CB Insights. WeRide operates robot taxis and robot buses in parts of the southern city of Guangzhou, where it is also testing self-driving sweepers.
CEO Khan declined to talk about specific figures for the assessment. He said that instead of needing additional funds, his main concern was how to reorganize the startup’s engineers.
“Because Bosch is in charge of the integration, we really have to spend 120% of our time helping Bosch with the integration and customization work,” Khan said. WeRide has not yet been made public.
For publicly traded Chinese automotive software companies, Goldman selected themed autonomous driving solutions, including ArcSoft and Desay SV.
The outsourcing business model in China gives independent software vendors more options than in the United States, where software is developed in-house at companies like Tesla, analysts say. Beijing also plans to start mass production of L3 vehicles by 2025.
“Automotive OEMs are investing heavily in automotive software/digitization through 2025, aiming to generate $20 billion in software revenue by the end of the decade,” Goldman analysts wrote in mid-March.
They estimate that per-vehicle software cost will rise from $202 for L0 vehicles to $4,957 for L4 vehicles in 2030. By comparison, a battery component costs at least $5,000 today. According to these calculations, the market for advanced driver assistance systems and autonomous driving software will grow from $2.4 billion in 2021 to $70 billion in 2030, with China accounting for about a third, according to analysts.
In September, General Motors announced that invest $300 million in Chinese self-driving car startup Momenta develop autonomous driving for GM vehicles in the country.
“Customers in China are embracing electrification and advanced autonomous driving technology faster than anywhere else in the world,” said Julian Blissett, executive vice president of General Motors and president of GM China.