China's Race in Autonomous Vehicle Technology

Sitting in his office in Guangzhou, He Xiaopeng, the CEO of XPeng, feels optimistic about the future of autonomous vehicles. He believes that the technology is nearing a breakthrough, similar to the surge in popularity seen with generative artificial intelligence, like ChatGPT. He anticipates a significant development in this area later this year, emphasizing that China's advancements in self-driving technology are among the fastest in the world. Unlike American consumers, who do not yet view this technology as essential, he argues that tech-savvy Chinese buyers already integrate it into their expectations for electric vehicles.

During a test drive in an XPeng P7+ sedan, the capabilities of the vehicle became clear. While the car successfully navigated traffic, avoiding obstacles and performing a U-turn without driver intervention, there were moments when human control was necessary. He points out that perfecting these systems to require minimal human input in busy urban environments is crucial for gaining consumer acceptance.

With a focus on both electric vehicles (EVs) and autonomous vehicles (AVs), XPeng and other Chinese manufacturers aim to improve these technologies significantly while keeping them affordable. The fierce competition in China's auto market has pushed companies to innovate rapidly, leading them to develop EVs that are both better and cheaper than those offered by international competitors. Currently, the battle over dominance in the AV sector entails two main avenues: robotaxis and advanced driver-assistance systems (ADAS). Both types are classified based on levels of automation, ranging from level zero (no automation) to level five (fully automated).

The Robotaxi Race

China leads the world in robotaxi operations, with a fleet capable of being hailed through mobile apps, categorized as level four automation. These robotaxis can operate independently but within designated areas. Research indicates that over 2,300 of these vehicles are now in service in China, with Baidu at the forefront, running driverless fleets across 11 cities. In contrast, Waymo, the only American company operating a fare-collecting robotaxi service, has a fleet of around 700 vehicles in select cities.

Despite their lower production costs, analysts caution that robotaxis remain too expensive for widespread adoption, with operational profitability still years away. Companies like General Motors have already abandoned their costly robotaxi projects to refocus on mass-market vehicles equipped with ADAS.

ADAS offers various forms of assistance to drivers rather than total replacement and is poised for widespread implementation. Many in the industry are attentively awaiting China's regulatory advancements toward higher automation levels. Currently, vehicles equipped with level two autonomy can manage steering, acceleration, and braking, yet still require driver supervision. A successful transition to level three automation would allow drivers to engage in other activities while the vehicle manages specific driving tasks.

China's Regulatory Advantage

China's push for quick progress is exemplified through supportive regulations and approval processes for AV testing. In 2020, the Chinese government aimed for mass production of level three vehicles promptly. Recently, several car manufacturers received permissions to test their systems on public roads, while local governments have provided regulatory flexibility and financial incentives for innovation.

Whereas countries like Germany have set regulations for level three automation, progress in America is hampered by concerns regarding safety and liability. Companies such as Mercedes-Benz have received the green light to manufacture such vehicles, yet they are still few in number. In contrast, many Chinese carmakers are promoting their systems as close to achieving level three status, propelling a competitive edge in the market.

The anticipated transition to level three automation raises important questions about safety. The experiences of companies like Xiaomi, which recently issued a recall related to failed self-parking features, indicate the complexities of introducing higher levels of autonomy. As vehicles with advanced self-driving technology become more common, questions about liability in case of accidents will also need addressing, potentially shifting the burden to manufacturers.

While facing a decelerating economy, China aims to progress technologically while also managing job implications linked to automation. Moreover, international tensions, such as proposed bans on Chinese automotive technologies due to national security concerns, pose additional hurdles for Chinese manufacturers entering Western markets.

He Xiaopeng is determined to demonstrate that self-driving technology can be as beneficial as platforms like ChatGPT, but with heightened risks involved. The race is on—not just to create smarter cars, but to secure a leading position in the future of transportation.

China, EVs, autonomous