- Europe and the USA remain the geographies with the highest penetration of Autonomous driving but stricter road safety regulations and lack of standardization could still restrict fast deployment;
- China’s commitment to Intelligent & Connected Vehicles could fast track regulatory changes to give a head start to domestic brands, while the advanced digital infrastructure and the burgeoning mobility market hold the potential to boost adoption of robotaxis and roboshuttles (AMoD-Automated Mobility on Demand);
- Successful expansion of Chinese pioneers beyond China in both AMoD and Lv.3/4 in passenger cars will be crucial to claim a stronger position in the Autonomous Driving race
Europe is the leading geography in terms of ADAS deployment with Lv.2-Traffic Jam Assist feature penetration accounting for 35.8% of new car sales in 2020, followed by the USA with 16.8% respectively, according to Auto2x.
But the amendment of regulations for Lv.3-Conditional Automation has delayed the roadmaps of European and American players in Europe significantly threatening their competitive advantage. Mercedes-Benz started offering its Level 3-DRIVE PILOT in Germany in the beginning of 2023 after 3 years of delay, whereas, the feature will be offered in the U.S by the end of 2023.
3 reasons why China could emerge as the Top Autonomous Driving Mobility Hub
- Fast go-to-market for advancements in Automated Driving Technology: Chinese Carmakers leverage strategic ties with European OEMs and partnerships with domestic pioneers to close the technological gap for L2-4 and fast-track deployment. Domestic innovation and infrastructure in connectivity, internet services, and AI, is strong to support Autonomous Driving, and Vehicle-to-Vehicle & Infrastructure communication;
- Favourable Autonomous Driving Regulation: What’s more, they could benefit substantially from the flexible domestic regulatory framework which favors domestic brands to move swiftly to deployment
- Positive Consumer sentiment: China has a consumer base that has a high level of acceptance of innovative technologies. The country is also the world’s largest ride-hailing market which is working on robotaxis and autonomous deliveries
Therefore, Auto2x assesses that China will take global leadership of Lv.2-Driving sales in 2025 with 1.70 million cars, ahead of Europe and the USA.
1. Chinese carmakers have aggressive Automated Driving Roadmaps but deployment is concentrated on the domestic market
- BYD offers Lv.2 parking in China since 2012 and they launched Level 2 DiPilot in 2020
In April 2020, BYD officially launched its DiPilot ADAS which claims it optimizes ADAS to the driver’s input by means of notification and intervention under a system called DiTrainer. It also features: Lv.2-D Traffic Jam Assist and One-lane integrated Cruise; Lv.2-P: Remote Control Parking, L1-P Automated Parking Assist for the first time in the Han; Lv.1: AEB, ACC, LKA, and Lv.0: FCW and LDW.
In March 2020, sources claimed that BYD planned the launch of its BEV SUV Tang EV600 in Norway in 2021, marking the entry of its passenger cars to Europe through the country with the highest BEV penetration. Reports claim that some of the BEV Tang EV600’s ADAS will be Lv.2-P Remote Controlled Parking, L2-Driving which is not named, L1-Driving ACC, blind zone alert, file change alert, collision alert and automatic emergency braking. The expansion of ADAS features in Europe could be an important step for BYD to position itself better in the Autonomous Driving race.
China to take global leadership of L2-Driving sales in 2025 with 1.70 million cars fitted with Traffic Jam and Cruise Assist
We assess that China will follow behind Europe and the USA in terms of sales of L2-L4 Driving features until 2025, with the exception of L2-D, where China will claim leadership in 2025. This is because of two reasons. First, because today, many European and US carmakers lead the deployment of ADAS and innovate in Automated Driving technology.
Technology innovation in China, specifically through Baidu’s Apollo, could help bridge the gap. But as more brands in Europe and USA start shifting to L3-D especially towards the end of the first half of the next decade, causing L2-D sales to decrease, China’s L2-D sales will continue to grow which will allow them to surpass Europe and the USA in 2025.Auto2x
- NIO’s new eT7 marks a new level of competence in Autonomous Driving for Chinese carmakers
In January 2021, NIO unveiled their new eT7, a new electric car with entry level 70kWh battery priced at $69,200, which features an impressive ADAS & autonomous driving sensor suite. NIO also announced a subscription to their autonomous driving service which costs $107 a month.
NIO’s Autonomous Driving (NAD) in the description is designed for driver assistance purposes only and cannot fully replace driver’s control or handle all possible traffic, weather, and road conditions. The driver must maintain attention as necessary and interfere or take over the control promptly based on the surrounding environment. NAD should be used with caution in complex traffic, bad weather, or special road conditions.NIO
2. Favourable regulatory framework could boost the Autonomous Driving Roadmaps of key Chinese Carmakers but further clarity is needed to support development plans of OEMs
Over the past few years, China has changed its policy towards Autonomous Driving from completely prohibiting testing on public roads to allowing specific tests following local testing regulations in major cities such as Beijing, Shanghai, Shenzhen and Chongqing. Today, L4-5 Automated driving is not permitted and all automated vehicles must be equipped with a black box to determine liability in case of an accident.
In Jan’21, China’s Ministry of Transport announced a policy document which promotes smart road infrastructure and cooperative systems, such as Vehicle-to-Vehicle or Vehicle-to-Infrastructure communications, for the commercialization of higher levels of autonomous driving by 2025.
The Chinese ICV standard system aims to develop a preliminary ICV standards system to support ADAS and Lv.3 by 2020 and a comprehensive system to support L4-5 by 2025. In Feb’20, China unveiled its blueprint to develop its own standards for AV by 2025.
We assess that China will follow the UN R79 amendments and the new Automated Lane Keeping Assist Systems which allows Lv.3-Conditional Automation circa 2021 but we are concerned over the following issues which need to be resolved to provide clarity to manufacturers of Automated Driving Systems.
- We believe that China will follow the R79 amendments and the new Automated Lane Keeping Assist Systems but it will probably seek to introduce additional requirements in the domestic market to give an edge to Chinese manufacturers. The restrictive framework of data collection for foreign players adversely affects their deployment roadmaps in China therefore an equal playing field is required;
- Also, China has multiple ministries which are responsible for the supervision of AD and there needs to be greater clarity regarding who regulates what and who oversees regulation and compliance;
- Research & planning on ICVs: Overall plan of ICV in China: MIIT; Industrial development strategy: CAAM; Technical development roadmap: SAE China; System planning: NTCAS;
- Applicability: Laws, rules, and regulations relating to automobile and other relevant industries; together with Compulsory national standard applying for automobile
- Further government action needed to develop higher quality highway infrastructure for autonomous vehicles which might give an edge to China comparing to Europe and the US which lead AD technology.
3. China’s burgeoning MaaS hub promotes autonomous mobility
China is the leading ride-hailing hub with an estimated 360 million registered users and more than 210 online car-hailing companies operating in the country, according to China’s Ministry of Transport.
Mobility companies, such as Uber and Didi are racing to deliver robotaxis which could allow them to offer a significantly lower cost service and gain market share. For Uber the cost of the driver is 70-80% of net revenue, substituting with Lv.4 could decrease operational cost and allow the company to become profitable as well as offering lower-cost service, even free in some cases, and subsidize from partners (e.g. Deliveroo).
During the pandemic, a number of mobility players in China accelerated their plans for autonomous deliveries to support hospitals, food delivery and other use cases. COVID-19 has impact consumer adoption towards autonomous deliveries which will be crucial for the adoption of autonomous driving in passenger cars.
The commercialization of robotaxis in China came one step closer recently with Baidu receiving the first license to test robotaxis without safety back-up drivers in Beijing, China. The company will test five of its self-driving Apollo vehicles which are retrofitted Lincoln MKZs and Chrysler Pacificas.
The adoption of robotaxis will play a crucial role in acceptance of self-driving cars. Safe operation can make or brake AMoD business models as demonstrated by the turmoil that AMoD faced after the first self-driving fatality caused an Uber test vehicle back in 2018.
China retains the lead of top start-up innovation hub by funding
Early-stage Chinese Start-ups secured $6.7 Billion in 2021, $5.3 Billion in 2022 and $0.9 Billion in Q1 2023Auto2x analysis
China leads Automotive Start-up funding with $12.9 Billion secured across 120 rounds between Q1 2021 and Q1 2023.
- Electrification accounted for 57% of the 2-year total with $7.4 Billion peaking in 2022 ($4.5B). GAC, Zeekr and Voyah led the way.
- Mobility Business Models accounted for 24% peaking in 2021 with $2.9 Billion, with T3 Mobile Travel Services raising $1.2 Billion in 2021.
- Autonomous Driving secured $2.3B in the 2-year period, from $1.6B in 2021 to $0.6B in 2022 and $0.1B in Q1 2023. Inceptio Technology’s Series B led funding with $0.5B, followed by Deeproute and Didi Woya.
Chinese carmakers are very active in the development of New Energy Vehicle offerings and new mobility business models. China is driven by its ambition to transform from a production-based economy to an innovative economy and allocate a vast amount of private-venture capital. New Energy Vehicles are crucial to this plan. NEVs include Battery Electric Cars, Plug-in-Hybrids and Fuel-Cell vehicles.