China has passed a major mile marker on the road to commercializing self-driving technology. On Thursday, Beijing granted internet giant Baidu the country’s first license to operate fully autonomous taxi services.
Apollo Go, Baidu’s autonomous ride-hailing platform, began accepting fares the same day. Its fleet of ten autonomous vehicles serves a 60 square kilometer area of the capital, and the company plans to add 30 more driverless taxis in the future.
“This regulatory approval marks a significant milestone for China’s autonomous ride-hailing industry, indicating a regulatory openness to taking a further step toward a fully driverless mobility future,” Baidu said in a press release on Thursday.
The permit does not allow Baidu to charge for its newly-approved fully driverless rides, but the company says this is not a problem.
“Apollo Go is not currently targeting profitability,” Wei Dong, vice president and chief security operations officer at Baidu’s Intelligent Driving Group, told Nikkei Asia. “Instead, the goal is to allow more people to experience and accept this mobility option. When users get used to autonomous driving, the user base will gradually grow and lay the foundation for a good business.”
Wei added, “China is late to autonomous vehicle regulations, but it is moving fast.”
In another first this week, Guangzhou-based autonomous vehicle startup Pony.ai received a taxi license to operate 100 robotaxis in Guangzhou’s Nansha district, provided the cars have a safety driver on board.
The company plans to eventually start charging for rides and gradually expand its service to other areas of Guangzhou. The fare will be the same as that of a cab in Guangzhou, Mo Luyi, Pony.ai’s vice president, told Nikkei Asia.
Self-driving taxis have attracted billions in investment and the attention of some of the world’s biggest tech titans, including Google, Baidu, GM, and Alibaba.
The commercialization of self-driving technology is among the many fronts in the tech battle between the U.S. and China. Each country is keen to gain an edge not only in autonomous cars themselves but also in the artificial intelligence, sensor, and mapping technologies that make them possible.
While China is trying to catch up on regulations, the U.S. two years ago leaped into the driverless future by issuing its first commercial operation permit, to Waymo’s fully autonomous robotaxi.
But regulatory approval does not necessarily translate to a smooth ride, as Nikkei Asia reporter Yifan Yu found on a recent reporting trip to Arizona.
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Waymo, owned by Google parent Alphabet, has been offering paid robotoxi rides in areas of Phoenix, the state capital, since October 2020. The reporter’s 14-mile ride, however, ended up taking about three times as long as it would have in a private car, in part due to issues getting to the pick-up site. The fare, meanwhile, was somewhere between what Uber and Lyft, two human-driven ride hailers, would have charged.
“We offer our community of riders a consistent and reliable autonomous ride experience that, we believe, is reasonably priced based on the demand and service we offer,” a Waymo spokesperson told Nikkei Asia when questioned about the price.
A bigger issue involved the pickup site. The Waymo app gave instructions to walk to a nearby parking lot where a robotaxi was supposed to be waiting. The location, however, was on the opposite side of a four-lane, two-way street with no crosswalk.
Asked about the situation later, a Waymo spokesperson said it appeared to be “an error in this specific scenario with some of the Google Maps data we rely on.”
The drive itself was mostly smooth, and the robodriver scrupulously obeyed all traffic laws. The only downsides were the occasional sudden stops and accelerations common to many self-driving cars.
Waymo declined to disclose the revenue it has generated since rolling out robotaxis in Phoenix, but said it plans to bring the service to the San Francisco Bay Area, where the company is headquartered. Waymo already offers free driverless taxi rides to users who have signed up to test the service and to Waymo employees in the area.
In February, the California Public Utilities Commission gave the first licenses to Waymo and Cruise, the autonomous driving company backed by General Motors, allowing the companies to charge passengers for self-driving car rides with safety drivers. The state has not yet granted any permits to companies operating commercial robotaxis without backup drivers.
A year and a half since its Phoenix debut, Waymo remains the only company in the U.S. to provide fully autonomous taxis on a commercial basis.
Commercializing robotaxis at scale has been slow-going in the U.S., as each state has its own autonomous vehicle regulations.
Meanwhile, one of the greatest headwinds in China is the authorities’ caution toward deploying self-driving technology. Even acquiring a test permit for autonomous vehicles is complicated, according to a former official who was in charge of the traffic unit of a local government.
The official, who asked not to be named, said autonomous vehicles in China need to pass a test by a government-designated third party before being granted a trial license. The test is divided into strict phases that the vehicles must pass in order.
By comparison, California, whose regulatory framework is seen as the gold standard for testing autonomous vehicles in the U.S., requires no third-party tests for companies to apply for a trial license with the state’s Department of Motor Vehicles.
But there is good news for Chinese players: Public sentiment toward autonomous vehicles—a key factor in the large-scale commercialization of robotaxis—is markedly more favorable in China than in the U.S.
In a recent study by the Pew Research Center, a think tank, nearly half of U.S. adults believe widespread use of driverless cars would be bad for society. According to a report by J.D. Power, the Chinese consumer confidence index for autonomous vehicles reached 50 points on a 100-point scale, much higher than the 36 points of confidence among American consumers.
Beijing’s push to promote the autonomous vehicle sector as part of its national strategy is also expected to provide tailwinds for robotaxi operators.
“China wants to outperform other nations in autonomous intelligence,” said Cui Dongshu, secretary-general of the China Passenger Car Association. “Thus, the government is encouraging the development of the autonomous driving sector and launching a number of pilot zones. Furthermore, new infrastructure associated with this industry might help boost economic growth.”
According to the 14th Five-Year Plan, China’s national economic and social development vision, the commercial application of high-level autonomous driving in designated areas will happen in 2025. Industry experts anticipate that relevant rules and regulations allowing commercial driverless taxi operations will also be introduced by that year.
“What this signifies is that after 2025, more cities will have policy flexibility to allow and scale autonomous driving,” a Baidu spokesperson told Nikkei Asia. “Once national standards roll out in 2025, the industry’s supply chain will be standardized, significantly reducing supply chain costs between 2025 and 2028.”
“We believe the commercialization of robotaxis will reach its peak between 2028 and 2030.”
The U.S., meanwhile, lacks a national vision for self-driving technology, leaving individual states and companies like Waymo to chart their own path forward.
Cruise reportedly urged the Biden administration to back regulations that expedite driverless car deployment on U.S. roads, as the country is lagging behind China, which has a “top-down, centrally directed approach,” according to a letter from last May written by Dan Ammann, Cruise’s CEO at the time. The letter was published by Reuters.
Some U.S. lawmakers have proposed bills to boost the autonomous vehicle industry. “Every day we don’t get something done and delay,” Ohio congressman Bob Latta said in March, “we’re falling behind someplace else and the rest of the world.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.