Weekly Brief: Baidu Sets Off Robo-Taxi Race in China

The race to roll out robo-taxis in the US makes for great theater.

Waymo is on the doorstep. General Motors’ Cruise is nipping at its heels. Uber just announced last week that it’s ready to get back in on the action after a six-month absence following a pedestrian death in Tempe, Arizona. The company has applied to start testing its robo-taxis in Pittsburgh. Then there’s Lyft and Aptiv and maybe Apple and a number of others who are eager to get in on the market.

From China’s perspective, however, all of this activity amounts to a bunch of companies scrapping after crumbs. China’s ride-hailing industry is worth more than every other ride-hailing market in the world combined. Its value currently sits at $30Bn. The US is worth $12Bn by comparison and China’s ride-hailing industry is on pace to more than double by 2020.

That’s why Baidu’s partnership spree for its self-driving platform Apollo was so significant last week. On Tuesday the Chinese search giant announced a partnership with Changsa, the capital of China’s Hunan province, to start applying self-driving solutions to the city’s streets. On Wednesday Baidu announced a two-year partnership with Ford to test self-driving cars in Beijing starting this year. On Thursday Baidu revealed that it’s partnering with Volvo to develop Level 4 autonomous vehicles that they plan to mass produce for the Chinese market and on Friday Baidu tacked on the fact that it’s working with Chinese automaker FAW Group to manufacture autonomous passenger cars.

To sum up, these plans make it clear that the so-called Google of China has taken another page out of Alphabet’s book and is ready to become the Waymo of Asia. Baidu doesn’t have nearly the miles logged or software refinement that Waymo can lay claim to today but, if it manages to make inroads on the Chinese market, a couple years down the line it may end up the far more significant company by scale and market share in the robo-taxi world.

Of course, as is the case for Waymo in the US, this won’t be easy for Baidu in China. Didi Chuxing currently controls about 90% of the ride-hailing market in China. Remember when Uber tried to go toe-to-toe with the Chinese ride-hailing giant and ultimately bowed out and bought into Didi instead? That should give you a sense of just how formidable Didi is as a player and it’s currently working on an all-electric robo-taxi with a Chinese company called CHJ Auto. AutoNavi, which is owned by Alibaba, is also making inroads in this space.

With up to 40% of demand for taxis from Chinese passengers unmet, there’s plenty of room for growth and market share for all of these companies. Let the theater commence.

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