China’s autonomous driving firms struggle to turn a profit
From big tech firms to start-ups, the mainland’s autonomous driving system developers are struggling to make noticeable gains in turning their vision of a future full of self-driving cars into steady profits.
Banma Network Technologies, an intelligent vehicle start-up that develops technology for autonomous driving systems, this week replaced CEO Zhang Chunhui, who had served in the position for four years. It is seen as part of efforts by Banma’s backer, e-commerce giant Alibaba Group Holding, to revamp the unit and step up commercialisation.
Alibaba, which also owns the Post, did not immediately respond to a request for comment.
Artificial intelligence and internet search giant Baidu, which launched its Apollo opensource autonomous driving platform in 2017, has also hit roadblocks in its self-driving technology project. Despite receiving massive internal investments for research and development, the unit has yet to turn a profit.
While Baidu expects its Apollo Go robotaxi service to be available in 100 mainland cities by the end of this decade, so far it has only secured approval to cover select areas in four major ones for the commercial operation of fully driverless taxis.
The four cities include Beijing and Chongqing, where the company has been charging passenger fees for its robotaxi service since 2021 and 2022, respectively.
Smaller domestic autonomous driving companies are also struggling to monetise.
iMotion, which went public in Hong Kong last December, reported a loss of more than 1 billion yuan (HK$1.08 billion) from 2020 to 2023. Momenta has been adjusting its strategy to become less academic and more commercial-oriented, while Pony. ai is speeding up efforts to commercialise by focusing on robotaxis and robotrucks, according to reports by tech media outlet 36Kr.
“For the industry, the bottleneck lies in both technological maturity and commercial application,” said Zhang Xinyuan, a researcher at Co-Found.
“The current products have made great progress in Level 2 and Level 4 technologies, but there are still many challenges in real applications, such as … how to deal with complex and unpredictable traffic environments.”
Level 2 systems are defined as those that can steer and accelerate by themselves, while still requiring a human driver to take control in case of emergency. Level 4 systems can drive autonomously under specific conditions.
The slow emergence of fully autonomous vehicles contrasts with the mainland’s booming electric-vehicle sector.
Last year, sales of electric cars in the country jumped by 37 per cent, with deliveries of both pure battery-powered vehicles and plug-in hybrids hitting 8.9 million units.
Investors are scaling down their autonomous driving investments amid slow growth in the sector and a weak macroeconomic environment.
Last year, the industry saw a drop in both the number of fundraising deals and their total value, raising just over 20 billion yuan in around 140 funding rounds, down from 30 billion yuan in some 153 rounds in 2022, according to data from the Lowspeed Automated Driving Industry Alliance.
The autonomous driving industry is also facing profitability and regulatory issues in other parts of the world.
Autonomous truck firm TuSimple, once considered a star in the sector, earlier this year announced its delisting from the Nasdaq, citing changes in the capital markets for “pre-commercialised companies” and increased volatility in its share price.
That followed a decision by Alphabet’s Waymo autonomous driving project to slow its autonomous truck development, and the delisting of Embark Technology, an early proponent of self-driving truck software in the United States, from the Nasdaq after it ran out of capital to pursue commercial production.