Elon Musk unveils robotaxi: Will Tesla face the same challenges as China? | world news

Musk’s robotaxi projects miles behind China

Despite these advances, Tesla lags behind in the robotaxi space, particularly in China, a crucial market for the American automaker. Chinese startups and tech companies are already testing self-driving fleets in cities like Guangzhou, Wuhan and Beijing, with support from local governments.

WeRide, a Guangzhou-based startup, launched in 2017 and has established commercial operations. Pony.ai, another autonomous vehicle startup backed by Toyota, has permits for commercial robotaxi services in major Chinese cities, including Shanghai and Shenzhen.

Major tech companies are also joining the race. Baidu’s Apollo Go service offers fully driverless rides in Wuhan, Beijing, Chongqing and Shenzhen, with backup drivers operating in other areas. Baidu reported nearly 900,000 trips in the second quarter of 2024, up 26% year-on-year.

These Chinese companies are also looking at international expansion. WeRide secured a permit to operate in the UAE in early 2023 and recently partnered with Uber to integrate its robotaxis into the Uber platform, with a launch planned for later this year. WeRide has also received permission to test a robobus in Singapore.

Baidu is in talks with overseas automakers and ride-sharing companies to expand its services internationally, with plans to enter markets such as Hong Kong, Singapore and the Middle East. Pony.ai is also considering expansion into Southeast Asia, Europe and the Middle East. The company has signed a memorandum of understanding with ComfortDelGro in Singapore, potentially paving the way for large-scale commercial operations.

Chinese startups are also testing their technologies in the US. WeRide received a permit in August to test vehicles in California, allowing passenger transportation, with or without a driver, for the next three years. However, these tests are limited to non-commercial use.

In China, Tesla is expected to receive preliminary approval to launch its fully self-driving service after Musk’s surprise visit to the country in April. State media have indicated that Tesla is exploring testing its self-driving software in Shanghai, with plans to launch in early 2025. Sales of Tesla’s China-made electric vehicles grew 19.2% in September compared to the same month last year, according to the China Passenger Car Association.

Profitability problem in robotaxis

While the robotaxi sector is expanding, profitability remains a concern. According to Haitong International Securities estimates, Baidu’s Apollo Go service loses nearly $11,000 a year per vehicle in Wuhan, although a less expensive model could generate a profit of $16,000 per vehicle each year. In comparison, traditional transport vehicles generate approximately $15,000 per year, which is split between the driver and the rig.

The rise of robotaxis has also challenged China’s workforce, which has grown from 4.4 million drivers two years ago to 7 million today. With the potential for job losses due to automation, discussions on social media have questioned whether driverless cars are eliminating jobs.

This change is also affecting driving schools in China. For example, Eastern Pioneer Driving School has cut its number of instructors by more than half since 2019, replacing them with remote control systems that allow instructors to assess student driving tasks such as parallel parking, through real-time digital feedback.

Will the US face similar challenges in the future? Only time will tell.

First post: October 11, 2024 | 12:48 p.m IST