THIS MATERIAL IS A MARKETING COMMUNICATION.
The Race of China's Autonomous Vehicles
In this article, we will examine the advantages & weaknesses of the autonomous vehicle industry in China. We will also look at the strategy and progress of leading Chinese solution providers. It is important to note that behind every solution provider, there is an extensive list of software, semiconductor, hardware, and vehicle companies working together to support the autonomous driving solution. It is rare for companies to develop all technologies in-house in the autonomous driving industry.
Advantages of the Autonomous Vehicle Industry in China
- Policy - The government provides strong policy support and a framework to facilitate the development of the autonomous vehicle industry in China. The National Development and Reform Commission published a report on smart vehicles development strategy in February 2020, targeting mass production of L3 autonomous vehicles by 2025. The Ministry of Industry and Information Technology (MIIT) published standards and technical requirements for different levels of autonomous driving in March 2020.
- Infrastructure - China has the longest expressway network in the world, with 149,600km as of 2019, followed by the US with 95,932km. (Ministry of Transport of the PRC 2020, US Department of Transportation 2020) We believe in the initial stage, autonomous driving will be limited to specific areas and the extensive highway network in China provides a stable environment to roll out autonomous driving.
China is expected to have 5G network coverage in major cities by the end of 2020, with over 600,000 5G base stations. (Ministry of Industry and Information Technology of the PRC, 2020) 5G has low latency and high bandwidth, which is crucial for building the internet of vehicles network to improve the safety of autonomous driving. The government has also set a target to build infrastructure for vehicle communication in key highways by 2025.
- Funding - The venture capital/private equity market can provide strong support to leading companies in autonomous driving. According to (Qingke Research 2020), total private equity investment in autonomous driving was RMB 594Bn in 2019. Only nine companies got investments in autonomous driving in China in 2014, and that compared to 35 autonomous driving companies in 2018. We believe China has passed the bubble stage of investment in autonomous driving, and investors are now able to focus on the top quality companies.
Weaknesses of the Autonomous Vehicle Industry in China
China still relies on oversea suppliers for core semiconductor components in autonomous driving. Companies like Nvidia not only provide hardware like the Graphics Processing Unit (GPU) and in-vehicle AI computer, it also develops the training platforms and software development kits around it. The barrier is high in this area, and it takes a long time to develop reliable hardware and a mature development framework.
Key Autonomous Driving Full Stack Solution Providers in China
- Baidu - Apollo platform
There are two parts of Baidu's positioning in autonomous driving. First, the company aims to provide an open platform for autonomous driving companies, which include 1) Cloud service platform for training and housing data. 2) Software platform. 3) Hardware/vehicle platform. Second, Baidu also develops its full-stack autonomous driving solutions to launch services like robotaxi.
- AutoX - XCU, xFusion, xUrban, xMap, xCloud
AutoX uses an integrated approach to build full-stack technology for autonomous driving. The company also works with auto manufacturers to launch robotaxi and robotruck services.
Pony AI develops autonomous vehicle platforms. Toyota invested US$400m in the company earlier this year to accelerate product development. (Bloomberg 2020).
Tusimple focuses on the development of autonomous trucks. The company partners with Navistar, a US truck company, targeting to launch L4 autonomous truck by 2024.
- WeRide - WeRide Go
The company develops full autonomous driving solutions. WeRide test-launched its Roboaxi service (with safety driver) in Guangzhou in November 2019. WeRide Go has served 80,000 passengers with a total running distance of 2.6 million km.
Metrics to Gauge Progress of Autonomous Driving Development
The California Department of Motor Vehicles (DMV) publishes data on companies with permits to do autonomous driving testing in California. As most of the top Chinese autonomous vehicle companies also participate in this testing scheme, these data may offer some indication of the progress by different companies. A 'Disengagement' happens when the human safety driver interferes. In simple terms, companies with higher miles per disengagement and the higher total testing mileage should have a more reliable system. Baidu, AutoX, and Pony.ai are among the top five in terms of miles per disengagement. One thing to note is that Waymo which was ranked the second has over 13 times more testing mileage than Baidu, while AutoX also has limited testing mileage at 32,054 miles.
According to DMV, as of February 26, 2020, a total of 64 companies have the California autonomous driving test licenses, including full solution providers, component suppliers, technology companies, autonomous driving startups, etc. Among them, five companies are allowed to use autonomous vehicles to transport passengers, including Aurora, AutoX, Pony.ai, Waymo, and Zoox, two of which are Chinese companies. Waymo is the only company with a driverless road test license (no safety driver required).
36 companies conducted testing in 2019. The accumulated mileage of test vehicles of 36 companies that have achieved road testing in the automatic driving mode exceeded 2.88 million miles, an increase of 800,000 miles over the previous year. Six companies tested less than 100 miles in 2019, namely Valeo, Box Bot, Telenav, BMW, Tesla, and Ridecell. Two companies have their autopilot road test licenses revoked for failing to submit a "disengagement" report on time. These two companies are Roadstar.ai and Xmotors.ai of Xpeng Motors North America.
Disclaimer & Information for Investors
No distribution, solicitation or advice: This document is provided for information and illustrative purposes and is intended for your use only. It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service.
The views and information discussed or referred in this document are as of the date of publication. Certain of the statements contained in this document are statements of future expectations and other forward-looking statements. Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements. In addition, the opinions expressed may differ from those of other Mirae Asset Global Investments’ investment professionals.
Investment involves risk: Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. It may not be suitable for persons unfamiliar with the underlying securities or who are unwilling or unable to bear the risk of loss and ownership of such investment. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.
Sources: Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (“MAGI”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.
Products, services and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries and/or distributors of MAGI as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Information for EU investors pursuant to Regulation (EU) 2019/1156: This document is a marketing communication and is intended for Professional Investors only. A Prospectus is available for the Mirae Asset Global Discovery Fund (the “Company”) a société d'investissement à capital variable (SICAV) domiciled in Luxembourg structured as an umbrella with a number of sub-funds. Key Investor Information Documents (“KIIDs”) are available for each share class of each of the sub-funds of the Company.
The Company’s Prospectus and the KIIDs can be obtained from www.am.miraeasset.eu/fund-literature . The Prospectus is available in English, French, German, and Danish, while the KIIDs are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the “UCITS Directive”). Please refer to the Prospectus and the KIID before making any final investment decisions.
A summary of investor rights is available in English from www.am.miraeasset.eu/investor-rights-summary.
The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. FundRock Management Company can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.
Hong Kong: This document is intended for Hong Kong investors. Before making any investment decision to invest in the Fund, Investors should read the Fund’s Prospectus and the information for Hong Kong investors (of applicable) of the Fund for details and the risk factors. The individual and Mirae Asset Global Investments (Hong Kong) Limited may hold the individual securities mentioned. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Copyright 2021. All rights reserved. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Mirae Asset Global Investments (Hong Kong) Limited.