China is making major investments in autonomous vehicles (AVs) and is planning extensive development in all aspects of this emerging segment of the auto industry — technology, startups, testing, regulation and deployment.
This will be a two-part article on China’s AV strategy, current status, use-cases and overview of key AV companies. Information of the leading AV companies will primarily be in the second column.
It is useful to understand how big China has become in the auto industry, which is summarized in the table below with comparisons to the United States. Most of the information came from the online version of the CIA World Factbook, which is a great data resource for all of the world’s countries.
As far as population is concerned, China is over four times larger than USA, but China’s growth rate is lower than USA. China’s lead in labor force is even greater at over 5X larger than the United States. A few economic indicators are also included such as gross domestic product (GDP) and each country’s exports and imports.
The automotive industry in China continued to expand after it became the largest country market in auto sales volume in 2009; China surpassed 28 million vehicles sold in 2017. Auto sales in China declined in the subsequent two years; the total was 24.7 million in 2019. U.S. auto sales, meanwhile, have topped 17 million in the last five years, though the numbers declined slightly in 2019 to 17.1 million. Autos in-use (or auto parc, a synonymous phrase more commonly used in Europe) continues to grow in the U.S. and reached 284 million at year-end 2019.
China topped 234 million autos in-use in 2019 and is growing faster than U.S. and is likely to surpass U.S. by 2024. On a per capita basis, U.S. is far ahead of China and it is unlikely that China will ever catch up. USA has 854 autos in use per 1,000 people while China has 168 per 1,000 people.
The auto sales and parc data are from IHS Markit and includes light vehicles.
The physical size is similar for both countries at 9.6 million square kilometers for China and over 9.8 million square km for USA. The two countries have similar amounts of paved roads at around 4.3 million kilometers.
China has surpassed the U.S. in express roads due to heavy investments in the last decade. The United States leads in unpaved roads at more than three times as many miles as China.
I also included data on mobile phone subscribers and internet user and China leads in both categories.
Both countries have more mobile phone subscribers than population. China’s internet user data is from CNNIC.com, which have been doing two extensive surveys of internet users per year since the late 1990s.
The vast majority of China’s internet use is now from smartphones.
China AV strategy
China is making a strong effort to be a leader in AV technology development, testing and deployment. A major reason is that China believes it will have a large impact on its own auto industry and increase its auto export potential as AV technology develops into a major part of the automotive industry.
China is counting on becoming a leader in intellectual property (IP) for battery electric vehicles (BEVs), autonomous vehicles (AVs) and their underlying technologies. China’s position in existing combustion engine and related technologies are weak. As a result, China needed joint ventures with European, American, Japanese and Korean auto manufacturers to get its auto industry rolling in the last two decades.
China is betting that AV technology will be a major factor in gaining better control of its automotive industry — along with BEVs. China issued its strategy for autonomous vehicles in February 2020. Eleven Chinese governmental departments jointly issued its “Strategy for Innovation and Development of Intelligent Vehicles.” This is an update of a draft that was released in January 2018. Intelligent vehicles are used interchangeably with autonomous vehicles.
The document is a proposal of how China plans to develop AVs over the next 30 years. It is available from the National Development and Reform Commission (NDRC) website. The link to the Chinese version is here.
The next section summarizes my perspectives on the impact of this China AV plan. I have used an article from China Law Insight to summarize China’ AV strategy.
The China AV strategy is a blueprint on how China will accelerate development of AV technology over the next 30 years. With 11 central Chinese governmental departments involved in creating this document it shows that China believes AV will be disruptive across many industries. This level of cross department involvement show there is agreement that AVs will impact essential industrial sectors such as automotive, electronics, software, chips, mapping, transportation, telecommunications and other segments.
Dealing with the coming AV disruption will require coordination between China’s governmental departments. China’s AV strategy focus on multiple technology issues, but also includes regulation, standards and the need for disrupting existing transportation segments.
Understanding the need and encouraging disruption is an unexpected assessment from government organizations and bodes well for the evolution and deployment of China’s AV strategy.
China AV strategy elements
China’s AV strategy document covers technologies, infrastructure, cybersecurity, regulation and international cooperation.
Open technology systems: China’s AV strategy encourages the creation of open systems to gain rapid innovation. The Baidu Apollo AV platform is a good example of the advantages of this approach as it creates a large ecosystem for many companies and give rise to rapid innovation.
Many other technologies are included such as AV system architecture, AV and AI chips, AV software, software platforms (including operating systems), high-definition maps and accurate location technologies. The need for AV testing growth was also included.
AV infrastructure: China is planning to rely on several technologies as infrastructure for AVs. High definition maps are already used by all AV companies including China. However, China has more restriction on maps and only a few Chinese companies have the necessary permits for developing HD maps. China is also emphasizing its commitment to deploy 5G communication quickly as part of its AV infrastructure. China is a leader in deploying 5G, but it will still take more than five years to match current 4G coverage.
China is also planning to leverage C-V2X capabilities in all AV use-cases. This is a good strategy and will eventually make AV safety better and easier to achieve. The drawback of C-V2X is that its value depends on a large installed base of C-V2X vehicles — preferably all vehicles on the road. But C-V2X deployment will be slower than 5G as there are over 230M vehicles without C-V2X currently. Hence it is likely 2035 or later until a large majority of vehicles on the road have C-V2X. However, smartphones are replaced much quicker than cars, which means that V2P (vehicle-to-pedestrian) communication will be useful in the 2030 time frame. Understanding pedestrian activities is among the hardest AV problems and C-V2X is expected to be a very helpful technology.
Comprehensive cybersecurity: It is notable that that cybersecurity was listed as a separate item in the China AV strategy. This means that China understands its importance and the difficulties of deploying cybersecurity hardware and software. There are two significant automotive cybersecurity standards emerging, ISO 21434 and UN WP.29. China is expected to use or leverage these cybersecurity standards.
International cooperation: The China AV strategy document encourages domestic and international companies to cooperate on AV technology development in China. It also supports commercialization by international companies of AVs in China. AV strategy also requires adoption of standards, certification and accreditation of AV use-cases across regions.
Update laws & standards: China’s AV strategy emphasizes the importance of updating laws and standards for AVs. The AV software driver is a priority. Other important areas are liability and legal issues, cybersecurity, ethical issues and data management rules. The obligations and responsibilities of stakeholders also need laws and regulation. There is a need to revise and improve China’s Road Traffic Law and surveying and mapping laws for AVs. Except for the AV road testing regulations, Chinese laws have not been adapted for AVs.
China AV timeline
The AV strategy report has limited information on the AV timeline. However, the report includes several goals for 2025, which include the following:
- Large scale production of conditional AVs or L3 AVs (SAE level). This includes L3 autopilots that are emerging from multiple OEMs
- L4 commercial AVs deployment for specific environment. This includes robotaxis, autonomous trucks and goods AVs. The next column will discuss current status in China for these AV use-cases.
- Complete Chinese standards for AVs, covering technological innovation, infrastructure, legislation, supervision and network safety.
I would expect that much of the China AV infrastructure will grow strongly between 2025 and 2030 including automotive 5G and C-V2X.
China is a leader in most aspects of AV technology development and AV testing including all the leading use-case. The Covid pandemic has impacted China, but at a much lower rate than in the U.S. and other regions. China is poised to be the biggest AV competitor for the U.S.The AV strategy document has been well received in China in 2020. Startup companies in the AV and related segments have seen increased VC investments. AV testing has increased significantly in the last six months in China and will be discussed in the next column.
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