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July 25, 2018 3:00 PM, EDT
Chinese Startups Floor the Pedal in Driverless Car Race
self driving car in china Baidu Inc.'s autonomous car at the company's headquarters in Beijing. Wang Jing, the executive in charge of Baidu's autonomous driving efforts, is on a mission: To push China to the forefront of the coming driverless-car era. (Qilai Shen/Bloomberg News)

A group of Chinese startups is accelerating efforts to get autonomous vehicles onto roads in the world’s biggest auto market, a country its American peers from Alphabet Inc.’s Waymo to General Motors Co.’s Cruise may find tough to crack.

Roadstar.ai is testing electric self-driving cars in the southern metropolis of Shenzhen and hopes to get 1,500 of them into the business districts of major cities by 2020. Sequoia Capital-backed Pony.ai plans to deploy a fleet of at least 20 self-driving vehicles for public ride-hailing services in Guangzhou as soon as next year, co-founder James Peng said in a recent interview. And Daimler-backed Momenta just inked a contract with the government of eastern Suzhou to deploy a self-driving fleet in the city within the year and open the service to citizens “at a suitable time.”

They join the likes of Baidu Inc. and NIO in taking advantage of local governments’ eagerness to open their city streets to testing as they vie to become a nexus for developing future mobility. They are making up for lost time and a deficit of crucial data but have two advantages: a central government keen on seeing 30 million autonomous vehicles on roads within a decade and a massive base of 300 million-plus drivers.

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“It remains difficult for foreign self-driving companies to gain a foothold in the Chinese market,” Roadstar.ai, co-founder and CEO Tong Xianqiao said in a WeChat message in response to Bloomberg’s queries. “In contrast, Chinese companies have a natural advantage domestically.”

Waymo and Cruise are among the leaders in a global race to launch the world’s first driving business without human pilots.

But their absence in China has spurred local entrepreneurs to develop their own solutions, turning the country into the world’s largest testing track.

Roadstar.ai is developing a Level 4 self-driving solution — with little human intervention — that it says will handle China’s infamous urban jungle, where drivers and pedestrians alike are known to flout traffic laws. It aims to produce 200 cars equipped with its self-developed sensor kits and algorithms next year, in collaboration with carmakers. By 2020, it plans to own a fleet of 1,500 self-driving electric cars to offer ride-hailing in the core districts of first-tier cities.

Two-year-old Pony.ai, which is working with manufacturers including Guangzhou Automobile Group Co., plans to deploy self-driving cars within a 30-square-kilometer area of the southern city of Guangzhou. It expects to fully commercialize the technology within three to five years in controlled settings such as ports or industrial parks.

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“Autonomous vehicles present a tremendous opportunity,” Peng, the co-founder. “The next step for us is to scale from prototype to a product fleet.”

Beijing-based startup Momenta, which raised $46 million last July from NIO Capital, Sequoia Capital China and Hillhouse Capital, is hoping its tie-up with Suzhou’s government will propagate its software, which senses roads and maps out routes.

Beijing considers self-driving technology critical to elevating the nation’s standing as part of its Made in China 2025 blueprint. And investors have taken their cues from that resolve: Pony.ai just announced it had raised an additional $102 million from investors including ClearVue Partners and Eight Roads, an arm of Fidelity International. Roadstar.ai said it raised $128 million in May.

China got into self-driving late and its players remain short on data and talent, Gu Junli, the Xpeng Motors vice president who oversees its 100-employee autonomous-driving operation in California, was quoted as saying by the People’s Daily this month. It is imperative to build algorithms specifically for local regulations and traffic scenarios, a more challenging task than for spacious and lighter traffic in the United States, Tong said.

“I believe only Chinese people can offer the self-driving solutions to China,” Gu was cited as saying.