China: The Rising Star of the AV Industry
Wed, April 21, 2021

China: The Rising Star of the AV Industry

China is leveraging AI from waste segregation to traffic control, making it the perfect testing lab for tech companies / Photo by: Steve Jurvetson via Wikimedia Commons

 

China is leveraging AI from waste segregation to traffic control, making it the perfect testing lab for tech companies, reported Jane Zhang of the South China Morning Post, a Hong Kong English-language newspaper. Those companies are taking part in a global movement toward the autonomous vehicle industry, which is rapidly becoming the world’s first major AI revolution.

Therefore, it is possible that self-driving cars could propel China’s AV industry, stated Luca Pizzuto and colleagues of American management consulting firm McKinsey. Generally speaking, driverless taxis, automated cargo tracks, and other AVs will revolutionize the nature of on-road driving as well as the automotive and mobility industries.

 

China Is Poised to Dominate the AV Industry

The global AV market is projected to be valued at $65.3 billion by 2027, according to research firm Market Research Future.  At some point, AVs could take over China’s automotive market. In Pizzuto and colleagues’ survey, industry respondents indicated that passenger vehicles used for mobility services like “robo-taxis” will have a peak adoption rate of 62%, followed by private premium vehicles at 51%, and private mass-market cars at 38%. Mobility services will lead due to the expectation that AVs will help increase utilization (close to 24/7 operation) and reduce labor costs. This rationale is also applied to city buses (69% adoption) and commercial vehicles (67%).

AVs will likely shift from products (buying vehicles) to service (paying for transportation per mile). The “mobility-as-a-service” (MaaS) transformation signifies dramatic changes ahead for vehicle sales volumes, business models, as well as the skills and capabilities that companies will need. Pizzuto and colleagues believed that AVs—particularly Level 4 and above vehicles—will see mass deployment in 9 or 10 years.

No wonder why China has the potential to become the world’s largest market for AVs. Per the authors’ forecast, AVs could comprise as much as 66% of the passenger-kilometers traveled in 2040, which will have a market revenue of $1.1 trillion from mobility services and $0.9 trillion from AV sales by that year. That means AVs will account for more than 40% of new vehicle sales and 12% of the vehicle installed base in 2040.  

AVs Could Address Infrastructure Problems

China surpassed the US to become the world’s largest and most significant AV market in 2009. In 2018, China bought nearly 30 million light vehicles, which was almost 70% more than the US. This growth has overtaxed the country’s automotive-related infrastructure, causing traffic congestion and pollution to escalate.

On average, Beijingers spend an average of 1.3 hours each day commuting, which is more than three times as much as commuters in the US. Therefore, AVs can possibly offer a potential solution to traffic and transportation woes. Shared mobility can also help slash the number of vehicles on the road, allowing former drivers to work or relax en route. AVs could also minimize local vehicle emissions if the vehicles are powered by green electricity or hydrogen. 

 

Obstacles to AV Adoption

China has a complex traffic environment and, in the short term, AVs must adapt to road conditions and aggressive driving behavior, slowing down AV adoption. However, the technology solution in the country for autonomous driving will not be different from those in other states. 

Required computer platforms will likely conform as existing platforms offer enough “buffer” capacity to deal with more complex computing tasks to analyze objects on China’s roads. There will probably be no regional changes in sensor configuration as current setups can handle all critical directions in various driving use cases.

But China’s highly complicated signage, including its traffic lights and road signs, are not yet fully standardized. Hence, right-of-way issues due to the failure of Chinese drivers to adhere to road rules are one element of uncertainty with regard to training and programming AVs. Furthermore, optimizing AV decision algorithms can take more effort and training, which can increase the adoption timeline to roughly two to three years compared to that of the US. 

With that in mind, the first applications of AVs in constrained environments might start in the next five years, with mass adoption likely occurring only after 2027. This is because the AVs will need the technology to address most of the conditions of urban and suburban driving.

The core algorithm for operating AV is largely the same on a global basis. But operating such vehicles in China will require additional data and testing. For instance, developers need to gather and input local traffic data to address the issue of unique and fragmented road signage. Developers will also need to streamline motion planning through road testing, allowing the algorithm to learn to handle issues caused by the “relentless driving styles of some Chinese motorists.”  

China has a complex traffic environment and, in the short term, AVs must adapt to road conditions and aggressive driving behavior, slowing down AV adoption / Photo by: Roger Wo via Wikimedia Commons

 

A Promising Chinese AV Industry

The Chinese automotive market is increasingly adopting MaaS, with cars sold to provide mobility services representing 10% of the country’s total car sales. In that regard, MaaS entails a strong demand for mobility through AVs in the long run.

Local Chinese automakers, multinational companies, tech giants, and mobility businesses should be prepared to shoulder the risks involved even if the Chinese AV market offers huge opportunities to the aforementioned stakeholders. To seize these opportunities, players can choose to develop a differentiating service connection to end customers or control critical parts of AV technology.

If players identified which elements of the technology will hold long-term strategic value (as well as changes), they will be able to find the “high-value ‘soul’ of the autonomous-driving machine.”  

Local Chinese automakers, multinational companies, tech giants, and mobility businesses should be prepared to shoulder the risks involved even if the Chinese AV market offers huge opportunities to the aforementioned stakeholder / Photo by: Navigator84 via Wikimedia Commons

 

China’s Future Plans: Exploring the AV Industry

Under the “Made in China 2025,” China has made electric cars and AVs as one of their key industries, said Ross Douglas of the Urban Mobility Daily, a website dedicated to aiding professionals in understanding the international urban mobility landscape. China EV100 invited Douglas to attend the Global Future Mobility Forum in Deqing, located outside Hangzhou, noting that members of the central committee, ministers and mayors, academics, and tech and automotive firms also participated in the forum.

China sold more than 28 million cars in 2018 but Chinese firms are aiming for world dominance with EVs and vehicle automation. On December 9, 2019, the Ministry of Industry and Information Technology (MIIT) announced the draft plan for developing their new energy vehicles (NEV) industry from 2021-2035.

Some of the country’s ambitious plans include 30% penetration of Intelligent Connected Vehicle (ICV) of the Chinese market by 2025 with high-level autonomous driving to achieve commercial application and reach 25% NEV penetration of China’s total auto market in the same year.

The rest of the world will surely be keeping a close watch on AV developments in China.

China is said to become the largest AV market in the world. AVs will help address some of the country’s transportation issues such as traffic congestion and pollution. However, some Chinese drivers do not follow road rules— a major roadblock in the full adoption of AVs. Road signs are also not fully standardized in China. Despite these obstacles, China is ready to dominate the global AV market with its ambitious “Made in China 2025.”