Robotaxis/Baidu: driverless cars are the future in China

China’s search engine giant Baidu is racing ahead. On Thursday it unveiled a new autonomous vehicle that it claims can drive just as well as a skilled human with more than 20 years of experience. Its $37,000 price is about half that of the previous model.

The new car will supposedly need no human intervention. It has autonomous Level 4 capabilities — two levels more advanced than the technology in widespread use. It will become available on Baidu’s ride-hailing service next year.

Robotaxi rides could cut the cost of taking a taxi in half, the company says. That low price point means the vehicles and fares are unlikely to become significant profit drivers. Nonetheless, Baidu is getting a valuable head-start.

The technology in use demands huge amounts of data to refine algorithms. The more passengers and miles robotaxis notch up, the more advanced the software will be. Official support — Beijing plans to have Level 3 vehicles in mass production by 2025 — will help.

Growing investment in China’s autonomous driving sector by foreign investors, including German engineering company Bosch and Japanese automaker Nissan, reflect potential in the market and its advanced state compared with other countries.

The first companies to develop fully autonomous driving software systems are betting on the idea that they will be able to sell the systems around the world. The artificial intelligence and cloud computing needed is expected to more than double the size of the automotive software market to more than $40bn in the next five years.

For Baidu, securing a lead is crucial. Growth in its largest source of revenue — online marketing — slowed for a two straight quarters last year. Operating margins of 8 per cent last year are nearly half those of two years ago. But even as first-quarter group operating income fell, its intelligent driving and cloud businesses grew 45 per cent compared with the previous year.

Sustained growth in that unit would help shares, which are down a fifth in the past year, to stage a convincing rebound.