A WeRide robotaxi with health supplies heads to Liwan district on June 4, 2021, within the southern Chinese city of Guangzhou.
Southern Metropolis Day by day | Visual China Group | Getty Images
BEIJING — While governments could also be wary of driverless cars, people wish to buy the technology, and firms wish to money in.
It is a marketplace for a limited version of self-driving tech that assists drivers with tasks like parking and switching lanes on a highway. And McKinsey predicts the marketplace for a basic type of self-driving tech — often known as “Level 2” in a classification system for autonomous driving — is value 40 billion yuan ($6 billion) in China alone.
“L2, improving the security value for users, its business value could be very clear,” Bill Peng, Hong Kong-based partner at McKinsey, said Monday in Mandarin translated by CNBC. “Robotaxis definitely is a direction, nevertheless it doesn’t [yet] have a commercialization result.”
Robotaxi businesses have made strides within the last several months in China, with Baidu and Pony.ai the primary to get approval to charge fares in a suburban district of Beijing and other parts of the country. Locals are enthusiastic — Baidu’s robotaxi service Apollo Go claims to clock roughly greater than 2,000 rides a day.
But relating to revenue, robotaxi apps show the businesses are still heavily subsidizing rides. For now, the cash for self-driving tech is in software sales.
Investment analysts from Goldman Sachs and Nomura point to opportunities in auto software itself, from in-car entertainment to self-driving systems.
Last week, Chinese self-driving tech start-up WeRide said it received a strategic investment from German engineering company Bosch to supply an assisted driving software system.
The goal is to jointly develop an L2/L3 system for mass production and delivery next yr, Tony Han, WeRide founder and CEO, told CNBC. L4 designates fully self-driving capability under specific circumstances.
“As a collaborator, we after all want this sold [in] as many automobile OEMs in China so we will maximize our [revenue and] profit,” he said, referring to auto manufacturers. “We truly imagine L2 and L3 systems could make people drive cars [more] safely.”
In a separate release, Bosch called the deal a “strategic partnership” and said its China business would offer sensors, computing platforms, algorithm applications and cloud services, while WeRide provides the software. Neither company shared how much capital was invested.
The deal “could be very significant,” said Tu Le, founding father of Beijing-based advisory firm Sino Auto Insights. “This is not only a VC that sees potential in the general market and invests within the sector.”
He expects the following step for commercialization would involve getting more of WeRide’s technology “bolted on the partner OEM’s products with the intention to get more pilots launched in China and experimenting with paid services in order that they’ll tweak business models and understand the pricing dynamics and customer needs higher.”
WeRide has a valuation of $4.4 billion, in response to CB Insights, with backers akin to Nissan and Qiming Enterprise Partners. WeRide operates robotaxis and robobuses in parts of the southern city of Guangzhou, where it is also testing self-driving street sweepers.
CEO Han declined to talk about specific valuation figures. He said that reasonably than needing more funds, his major concern was tips on how to reorganize the start-up’s engineers.
“Because Bosch is in control of integration, now we have to essentially spend 120% of our time to assist Bosch with the mixing and adaptation work,” Han said. WeRide has yet to go public.
For publicly listed Chinese auto software corporations, Goldman’s thematic picks for autonomous driving include ArcSoft and Desay SV.
An outsourcing business model in China gives independent software vendors more opportunities than in the USA, where software is developed in-house at corporations like Tesla, the analysts said. Beijing also plans to have L3 vehicles in mass production by 2025.
“Auto OEMs are investing significantly in automobile software/digitalization to 2025, targeting US$20bn+ of obtainable software revenue by decade-end,” the Goldman analysts wrote in mid-March.
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They estimate that for each automobile, the worth of software inside will rise from $202 each for L0 cars to $4,957 for L4 cars in 2030. For comparison, the battery component costs at the very least $5,000 today. By that calculation, the marketplace for advanced driver assistance systems and autonomous driving software is about to surge from $2.4 billion in 2021 to $70 billion in 2030 — with China accounting for a few third, the analysts predict.
In September, General Motors announced it could invest $300 million in Chinese self-driving tech start-up Momenta to develop autonomous driving for GM vehicles within the country.
“Customers in China are embracing electrification and advanced self-driving technology faster than anywhere else on the earth,” Julian Blissett, executive vice chairman of General Motors and president of GM China, said in a release.
Correction: This story has been updated to correct the currency conversion figure for the estimated size of the self-driving tech market.