Weekly Brief: BMW’s Latest Kowtow Chasing Chinese Driverless Cash

Commentary By Andrew Tolve

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22nd July 2019

There’s a lot of buzz about self-driving cars in the West.

Yet, with all the pilots underway on the autobahns of Germany to the sunny streets of Phoenix, Arizona, it’s easy to forget that the largest and arguably most advanced market for autonomous technology is in the East.

China’s government has been one of the most ardent and aggressive advocates for self-driving cars of any government in the world. It aims to deploy partially autonomous vehicles across the country starting in 2020. Fast forward a decade to 2030 and it wants one out of every 10 vehicles sold on native soil to be fully autonomous. When you’re talking about the largest car market in the world, those numbers start to quickly add up.

No wonder BMW came out last week with news that it has teamed up with Tencent, one of the largest tech companies in China, to accelerate the development of self-driving BMWs for the Chinese market. The two companies say they plan to work together on building the BMW Group China High Performance D³ platform, which will form the bedrock of all future BMW automated driving technologies in China. Tencent will soon break ground on a new computing center for BMW just outside of Beijing, where it will handle the cloud computing, big data, security and AI components of BMW’s platform. Tencent says the new tech center will be finished before the ball drops on 2020.

The deal is a no-brainer for BMW. Given the stringency of Chinese regulation, any foreign company that wants to play in the Chinese market needs to partner with a local Chinese company. That’s how it went back in the 1980s when China first started pushing for a local car market. It mandated that any foreign carmaker that wanted to sell in China first had to partner with a Chinese carmaker to build the cars. The resulting joint ventures were how the likes of SAIC found their footing and grew into the thriving carmakers they are today. China has the same thing in mind now with the autonomous revolution. Foreign companies may be leading the way on autonomous tech but the Chinese government has mandated that they can’t collect data in China, including granular data about local streets and traffic patterns, without first partnering with a Chinese company. For BMW, that company is Tencent.

Tencent isn’t a newcomer when it comes to self-driving tech either. It already has several self-driving pilots underway and, along with Baidu and Alibaba, fashions itself as the Waymo of China. Tencent’s mapping data will prove particularly useful to BMW as the carmaker starts to develop automated driving technologies and products that suit the complex local traffic conditions in Chinese cities. BMW has partnered with Tencent in the past, with a specific focus on how to keep autonomous driving safe and secure from hackers. This partnership will be broader and more robust.

Don’t forget that BMW launched its own ride-hailing service in China at the start of 2019 as part of its ReachNow platform. The service is only active in the Chinese city of Chengdu currently but BMW has designs on taking it national as a high-end alternative to the likes of Didi Chuxing. Granted, it has a long way to go to become a legitimate threat to Didi, a company that matched and ousted Uber from the Chinese market. Then again, integrating luxury robo-taxis into its fleet might give BMW a fighting chance.