Investing.com – China’s robotaxi market is a rapidly evolving sector, with leading tech companies vying for dominance through technological innovation and strategic city launches.
The robotaxi market is primarily based on LIDAR-based devices and advanced neural network technology, which supports fully autonomous driving at Level 4 (L4).
Key players in the market include Baidu’s Apollo, PonyAI, WeRide, AutoX, and Didi, each at different stages of technological development and market access.
Baidu (NASDAQ:) is ahead of the competition, with more than 1,000 robotaxi vehicles operating in Wuhan, far outpacing rivals like PonyAI and WeRide.
These companies use a range of technologies including LIDAR sensors, cameras, and other advanced perception tools to navigate through complex urban environments.
However, there is a difference in remote control versus remote assistance that solves special cases, analysts at Bernstein said in a note dated Tuesday.
For example, Baidu addresses these scenarios with remote control capabilities, while WeRide emphasizes leveraging its neural networks to manage such challenges autonomously.
The economics of robotaxi operations depend on several important factors, including vehicle costs, R&D spending, and fleet size.
L4 self-driving cars are much more expensive than regular cars because of their advanced sensors.
For example, Baidu’s latest model of taxi, the RT6, has reduced the cost of a single vehicle to 205,000 yuan, compared to 500,000 yuan for previous models. This cost reduction is key to making robotaxi operations more economically viable.
However, achieving business-level breakeven requires significant scale. “This would require 35,000 vehicles to operate, which is not feasible in just one city – and would require a very high share of passenger services in four of the top tier cities,” Bernstein analysts said.
This scale is necessary to offset the high fixed costs associated with R&D and city expansion efforts. Furthermore, the fully loaded business model requires these autonomous vehicles to capture a 25% market share in the transportation industry across these cities.
Baidu’s strategy involves a gradual rollout across major Chinese cities, starting with Wuhan and expanding to other first-tier cities such as Guangzhou, Shenzhen, Beijing and Shanghai by 2026. According to Bernstein’s forecast, Baidu’s robo-taxis business is not expected to be profitable until at least 2029, with full profitability expected around 2031.
This timeline takes into account ongoing investment in research and development and city expansion costs, which are expected to decline as the technology matures and operations expand.
Despite the optimistic long-term outlook, the success of robotaxi services in China depends largely on regulatory support and public acceptance.
While cities like Wuhan have been more lenient, allowing widespread robotaxi operations, other first-tier cities have imposed stricter rules, slowing the pace of expansion.
In addition, the potential displacement of traditional taxi drivers and the associated social issues pose significant challenges to widespread adoption.
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