The first step for self-driving car makers to make money isn’t an automated hub – Reuters

A WeRide robotic taxi with medical supplies heads to Liyuan District on June 4, 2021 in the southern Chinese city of Guangzhou.

Daily of Southern Metropolis | China Visual Group | Getty Images

BEIJING – While governments may be wary of self-driving cars, people want to buy technology and companies want to make money.

It is a market for a limited-edition self-driving technology that helps drivers perform tasks such as parking and changing lanes on the highway. Et McKinsey prédit que le marché d’une form de base de technologie de conduite autonome – connue sous le nom de “Niveau 2” dans un système de classification pour la conduite autonome – vaut 40 milliards de yuans (6 million de dollars) rien qu ‘In China.

“L2, the improved security value for users, and its business value is very clear,” Bill Bing, a partner at Hong Kong-based McKinsey, said Monday in Mandarin translated by CNBC. “Robotaxy is definitely a trend, but it isn’t. [yet] marketing result.

Robotaxi companies have made headway in recent months in China, with Baidu and Pony.ai being the first to get permission to charge fares in the Beijing suburbs area and other parts of the country. Locals are excited—Apollo Go, a Baidu robotics service, claims to do more than 2,000 flights a day.

But when it comes to revenue, robotaxi apps show that companies are still hugely subsidizing flights. At the moment, the money for self-driving technology is in software sales.

profitable technology

Investment analysts from Goldman Sachs and Nomura point to opportunities in the automotive software itself, from in-vehicle entertainment to autonomous driving systems.

Last week, Chinese self-driving technology startup WeRide announced that it had received a strategic investment from German engineering firm Bosch to produce its driver assistance software system.

The goal is to jointly develop the L2/L3 system for mass production and delivery next year, WeRide founder and CEO Tony Hahn told CNBC. L4 indicates fully autonomous driving capability under specified conditions.

“As a collaborator, of course we want to sell this [in] Lots of auto manufacturers in China so we can maximize our products [revenue and] profit,” he said, referring to the automakers. “We really believe that L2 and L3 systems can inspire people to drive cars. [more] without problem “.

In a separate statement, Bosch called the deal a “strategic partnership” and said its China business will provide sensors, computing platforms, algorithm applications and cloud services, while WeRide will provide the software. Neither company shared the amount of capital invested.

The deal is “very important,” said Tu Li, founder of Beijing-based consultancy Sino Auto Insights. “It’s not just venture capital that sees the potential of the global market and invests in this sector.”

He expects the next step in marketing will be to get more WeRide technology “on OEM partner products to launch more riders in China and try out paid services so they can adjust business models and better understand pricing dynamics and customer needs.”

WeRide is worth $4.4 billion, according to CB Insights, with backers including Nissan and Qiming Venture Partners. WeRide is operating robotics and automated buses in parts of the southern city of Guangzhou, where it is also testing autonomous street sweepers.

CEO Han declined to talk about specific valuation numbers. Instead of needing more money, he said, his main concern was how to reorganize the startup’s engineers.

“Because Bosch is in charge of the integration, we really should spend 120% of our time helping Bosch with the integration and adaptation work,” Hahn said. WeRide has yet to be announced.

Chinese stock market game

For publicly traded Chinese auto software companies, Goldman’s self-driving topic picks include ArcSoft and Desay SV.

Analysts said the outsourcing business model in China offers more opportunities for independent software vendors than in the United States, where software is developed in-house at companies like Tesla. Beijing also plans to have L3 vehicles in mass production by 2025.

“Automotive OEMs are investing heavily in automotive/digital software through 2025, and are targeting more than $20 billion in software revenue to be obtained by the end of the decade,” Goldman analysts wrote in mid-March.

They estimate that per car, the value of the internal software will increase from $202 per L0 car to $4,957 per L4 car in 2030. For comparison, the battery component costs at least $5,000 today. According to this calculation, the market for advanced driver assistance systems and self-driving software is expected to grow from $2.4 billion in 2021 to $70 billion in 2030, with China accounting for about a third, analysts predict.

In September, General Motors announced that it would invest $300 million in Chinese self-driving technology startup Momenta to develop autonomous driving for GM vehicles in the country.

“Customers in China are embracing electrification and advanced autonomous driving technology faster than anywhere else in the world,” Julian Plesset, executive vice president of GM and president of GM China, said in a statement.

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