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Where the billions spent on driverless cars by US and China is heading

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An Apollo Robotaxi runs at Shougang Park as Baidu launches China’s first driverless taxi service in the town on May 2, 2021 in Beijing, China.

He Luqi | Qianlong.com | Visual China Group | Getty Images

For years, Alphabet’s Waymo and others leaders have promised autonomous vehicles are only across the bend. But that future has not arrived yet. Why not?

“In a single word, it’s complexity,” said James Peng, CEO and co-founder of Pony.ai, an autonomous vehicle company. “Each time there may be a technical breakthrough, there are challenges. We’ve the AI, the fast computer chips, the sensors. It’s all solvable by fitting all of the pieces together easily. 99.9% just isn’t adequate to perfect the technology.”

Despite guarantees of life-saving, climate-change fighting, and cost-efficient driving, the truth is that “the autonomous vehicle nirvana is 10 years out,” said Michael Dunne, CEO of autotech consultancy ZoZoGo. “While it isn’t unattainable to get there, even essentially the most advanced technologies are usually not there yet and used mainly in confined areas where things are predictable. We’re far, distant from universal acceptance.”

Not only that, but “the business model is an even bigger challenge than the technology,” he said.  

Self-driving vehicles without steering wheels or brake pedals have been slow to scale and are viewed by many as a novelty. Additional road tests are needed to work out tech glitches. Regulations to allow driverless vehicles are still evolving by city, state, and country. High price tags hovering above $100,000 for an AV-equipped auto are a drawback to individual purchases for many buyers. Commercialization continues to be underway. Safety concerns remain, particularly after a fatal crash in March 2018 involving one in every of Uber’s vehicles in Tempe, Arizona and multiple incidents involving Teslas being operated in self-driving mode. 

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Still, market leaders are betting big on smarter transit technology and are testing its viability, logging hundreds of road miles to coach self-driving algorithms and AI sensors to drive higher than humans in every kind of weather and unpredictable circumstances. Tech giants, automakers, and start-ups including GM’s Cruise, Waymo, Baidu, and others have invested billions of dollars and years of R&D on this emerging market poised to succeed in 12% of latest automobile registrations globally by 2030. Meanwhile, Tesla continues its work on its semi-autonomous autopilot and self-driving systems.

Promising future for robotaxis, robo-deliverys

Now after a decade and a few bumpy starts, it’s robotaxis, robot-driven deliveries, and autonomous trucks which might be emerging as essentially the most promising money-makers out there.

“Ride-hailing is a lousy business model with unhappy human drivers and concrete mobility problems. The subsequent great point may very well be fleets of robotaxis,” said Erik Gordon, a professor on the University of Michigan where he focuses on entrepreneurship and technology. He envisions urban streets without accidents, honking, traffic jams, and dedicated lanes for self-driving vehicles.

On this next phase of passengers and road testing, the technical complexities are growing with unpredictable traffic patterns and weather aspects corresponding to fog and rain, plus lingering social awareness and acceptance issues.

“It is going to still require a big period of time for autonomous driving to be commercialized on a big scale,” said Dong Wei, vp and chief safety operation officer of Baidu Intelligent Driving Business Group in Beijing.

Paid passenger fares in fully driverless robotaxis may very well be the following step toward the business development of this transformative market.

Pony.ai, which ranked No. 10 on the 2022 CNBC Disruptor 50 list, together with Baidu in Beijing, have led the industry in launching fare-charging robotaxis for the general public in China. The 2 firms began charging fares last November in Beijing for his or her robotaxi services, which have a security driver monitoring the ride. Moreover, Pony.ai is starting a paid taxi service this May featuring 100 AVs as traditional taxis inside the Nansha district of Guangzhou. Each even have been testing AVs and robotaxis within the U.S., although Pony.ai’s driverless tests were suspended in California after a vehicle hit a lane divider and street sign up Fremont.

China is targeting smart transportation as a national growth strategy and has designated several sections of major cities for testing. “For those who are in search of the right place to check autonomous driving, it is tough to beat China for its ambition,” said Dunne. 

While the Chinese and U.S. markets are developing closely in parallel, given heightened U.S.-China tech innovation competition and restrictions on cross-border investment, one plausible scenario is “two global ecosystems, one which is China-led and one which is U.S.-led with their respective systems and governments,” Dunne said. “China doesn’t want U.S. firms vacuuming up data and China testing within the U.S. faces the identical issue. Chinese AV firms are likely to keep up R&D within the U.S. but deploy in China for China.”

Within the U.S., industry leaders Waymo and Cruise expect to soon launch their very own paid driverless robotaxis in San Francisco after several months of testing rides with employees. Moreover, Waymo plans to expand its fee-charging driverless rides to downtown Phoenix after pilots in late 2018 for paying customers in suburban Chandler.

Argo AI begins driverless operations in Miami and Austin.

Courtesy: Argo AI

Ford and VW-backed Argo-AI have begun operating autonomous test vehicles with out a human safety driver in Miami and Austin, Texas, moving around employees. Argo has been testing its self-driving technology on streets in eight cities across the U.S. and Europe, with a few of its vehicles, with a human safety driver, getting used by passengers in Miami Beach, Florida, through Lyft’s ride-sharing network. Lyft has a roughly 2.5% stake in the corporate.

Amazon-acquired start-up Zoox is custom testing its cube-like robotaxis within the Bay Area, Seattle, and Las Vegas, without initially charging for rides.

Billions bet by U.S. and Asian auto, tech giants

Chasing the chance, equity funding in AV tech firms eclipsed $12 billion in 2021, up greater than 50% from 2020, in accordance with CB Insights. The U.S. funding is dominated by Waymo, which topped out at $5.5 billion including from Alphabet, and by Cruise, which is backed with $10 billion from GM, Honda, and other investors, with a $5 billion line of credit from GM Financial. Pony.ai, co-founded by former Baidu AV lead developer Peng in 2016, is financed with $1.1 billion, including a $400 million investment from Toyota.

Start-ups within the AV space have piggybacked on major automakers and ride-hailing services, as an illustration, Motional, formed in 2021 through a three way partnership with Hyundai and pilots with Lyft.  Uber sold its self-driving unit, the Advanced Technologies Group, to Aurora Innovation, after Uber’s co-founder and former CEO Travis Kalanick had touted self-driving as a priority. Aurora, invested in by Amazon, Hyundai, and enterprise firms Sequoia Capital and Greylock, is working on launching a business robotic truck system by late 2023, followed by a robotaxi project.

Several other market segments are being carved out as differentiators by firms developing business robotaxis. Considered one of the more advanced because it seeks to diversify from its search and promoting core, Baidu is supplying its Apollo Go AV “brains” to robo-buses and other transit means in China while providing Apollo self-driving solutions to automakers. The monthly pricing of Apollo Go over five years is comparable to the labor cost of a ride-hailing driver in major cities in China, a Baidu spokesperson said. The corporate can also be selling intelligent transportation solutions with projects in 34 Chinese cities, for improving traffic conditions, road safety, and air quality. Baidu has further teamed up with Geely (Chinese owners of Volvo) to fund its intelligent electric vehicle business JIDU and mass-produce a robocar for launch in 2023.

Production of robo-vehicles is dear but pursued as one other technique to commercialize the market. Cruise has partnered with GM and Honda to mass-produce the Origin, an all-electric self-driving, shared vehicle due out inside just a few years from GM’s Factory Zero assembly plant in Detroit. Amazon-owned Zoox has built dozens of custom-built, electric, autonomous robotaxis at its plant in Fremont, rolling out step by step. Waymo is expanding its current ride-hail fleet of I-Pacers and Chrysler Pacifica hybrids made in Detroit and collaborating with Chinese automaker Geely to equip its all-electric, purpose-built AVs for U.S. roads in the approaching years. Pony.ai recently unveiled its sixth-generation autonomous driving system, expecting to equip a seven-seat Toyota Sienna model and start road testing in China this 12 months with robotaxis following in 2023.  

Robot-powered delivery services are also emerging as a viable path toward business scale and profitability. Cruise has partnered with Walmart within the Phoenix area to deliver groceries, and plans to expand the service nationally, said Gil West, Cruise chief operating officer. Nuro, a Silicon Valley robotics start-up in autonomous delivery, is test driving a bot service to Walmart and Kroger customers in several cities, and recently added 7-Eleven customers in Mountain View. Uber began pilots this month of food deliveries by sidewalk robots and self-driving cars in Los Angeles.

For Zoox, supplying Amazon with last-mile deliveries from its shuttles is a possible scenario. “We’ve not rule this out as a use case,” said Jesse Levinson, Zoox CTO and co-founder. “Our business model is charging people money to take a ride. The largest cost of a ride-sharing vehicle is the motive force. We will amortize the fee of the vehicle by these fares over five years.”

It could seem counterintuitive, however the AV long-haul trucking space is moving perhaps the fastest on this evolving market. Jim Scheinman, founding managing partner at Maven Ventures and an early investor in Cruise, noted that Embark Truck and other AV trucking firms will help the trillion-dollar market in some ways. “Not only by keeping our freight costs substantially lower which can proceed to be so necessary in a world of continued supply chain issues and inflation, but in addition in helping the long haul trucking labor shortages in addition to being so rather more environmentally friendly,” Scheinman said. “Massive wins for everybody and the planet,” he added.

One newcomer is Pittsburgh-based Locomation, a hybrid semi-autonomous technology for two-truck convoys, with a driver within the lead vehicle monitoring the ride while one other is off-duty within the follower truck, taking a rest. “With trucking in demand for freight and a driver shortage, this helps to unravel a pain point,” said Cetin Mericli, a co-founder of Locomation, which has been testing with three national trucking customers. “This method can double the efficiency of the drivers, keep the trucks running more often, and speed up deliveries,” he said. “In a really 2020 fashion, our inaugural autonomous delivery was a trailer filled with TP.”

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