The Race of China’s Autonomous Vehicles
13th October 2020
THIS MATERIAL IS A MARKETING COMMUNICATION.
THIS MATERIAL IS A MARKETING COMMUNICATION.
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.
The mentioned companies are strictly for educational and fund marketing purposes only. For more information on our product offering, please refer to our website.
This document is intended for Hong Kong investors only. This material is neither an offer to sell nor solicitation to buy a security to any person in any jurisdiction where such solicitation, offer, purchase or sale would be unlawful under the laws of that jurisdiction. Investment involves risk.
The information in this material is based on sources we believe to be reliable but we do not guarantee the accuracy of completeness of the information provided. This material has not been reviewed by SFC and shall only be circulated in countries where it is permitted.
This material is intended solely for your private use and shall not be reproduced or recirculated either in whole or in part, without the written permission of Mirae Asset Global Investments. This document has been prepared for presentation, illustration and discussion purposes only and is not legally binding. Whilst compiled from sources Mirae Asset Global Investments believes to be accurate, no representation, warranty, assurance or implication to the accuracy, completeness or adequacy from defect of any kind is made. The division, group, subsidiary or affiliate of Mirae Asset Global Investments which produced this document shall not be liable to the recipient or controlling shareholders of the recipient resulting from its use. The views and information discussed or referred in this report are as of the date of publication, are subject to change and may not reflect the current views of the writer(s). The views expressed represent an assessment of market conditions at a specific point in time, are to be treated as opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. In addition, the opinions expressed are those of the writer(s) and may differ from those of other Mirae Asset Global Investments’ investment professionals.
The provision of this document shall not be deemed as constituting any offer, acceptance, or promise of any further contract or amendment to any contract which may exist between the parties. The issuer of this article is Mirae Asset Global Investments (HK) Limited (“we”) which we may or our managed funds may hold the mentioned securities. It should not be distributed to any other party except with the written consent of Mirae Asset Global Investments. Nothing herein contained shall be construed as granting the recipient whether directly or indirectly or by implication, any license or right, under any copy right or intellectual property rights to use the information herein. This document may include reference data from third-party sources and Mirae Asset Global Investments has not conducted any audit, validation, or verification of such data. Mirae Asset Global Investments accepts no liability for any loss or damage of any kind resulting out of the unauthorized use of this document. Investment involves risk. Past performance figures are not indicative of future performance. Forward-looking statements are not guarantees of performance. The information presented is not intended to provide specific investment advice. Please carefully read through the offering documents and seek independent professional advice before you make any investment decision. Products, services, and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries, and/or distributors of Mirae Asset Global Investments 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.
Hong Kong: This material is prepared by Mirae Asset Global Investments (HK) Limited (Mirae HK). Mirae HK is regulated by the SFC (CE reference: ALK083).
Australia: The information contained on this document is provided by Mirae Asset Global Investments (HK) Limited (“MAGIHK”), which is exempt from the requirement to hold an Australian financial services license under the Corporations Act 2001 (Cth) (Corporations Act) pursuant to ASIC Class Order 03/1103 (Class Order) in respect of the financial services it provides to wholesale clients (as defined in the Corporations Act) in Australia. MAGIHK is regulated by the Securities and Futures Commission of Hong Kong under Hong Kong laws, which differ from Australian laws. Pursuant to the Class Order, this document and any information regarding MAGIHK and its products is strictly provided to and intended for Australian wholesale clients only. By accessing this document and any information or content contained in it, you represent that you are a ‘wholesale client’ under the Corporations Act. This document is strictly for information purposes only and does not constitute a representation that any investment strategy is suitable or appropriate for an investor’s individual circumstances. Further, this document should not be regarded by investors as a substitute for independent professional advice or the exercise of their own judgement. The contents of this document is prepared and maintained by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Australian Investments & Securities Commission. No part of this publication may be reproduced in any form, or referred to in any other publication, without express written permission of MAGI HK. Copyright 2020. All rights reserved.