Baidu’s robotaxi growth could be clipped by human rivals

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Well, this is one way to drive new tech growth. China’s answer to Google is betting big on robotaxis in China to revitalise its business.

So far, that is working. Baidu has a head start on Tesla and the faster than expected take-up of its robotaxi Apollo Go has boosted shares in the search engine and artificial intelligence group. But Baidu’s progress faces risks at home.

Baidu is leading the autonomous driving market in China. Its robotaxis are already in operation: its biggest presence is in the city of Wuhan where there is a fleet of 300 of the cars. Users can hail an unmanned, fully self-driving car for local taxi services. The 24-hour operations started this year.

This business is just what Baidu needs. Its revenue grew at its slowest pace in more than a year in the March quarter up just 1 per cent, despite its lead in AI in the country. Monetising that technology will take time, while its ad revenue has long been cut into from competition from rivals such as TikTok owner ByteDance. Hong Kong-listed shares of Baidu are down more than 30 per cent in the past year

Hopes it may have finally found a viable source of new growth was enough to boost the battered stock as much as 13 per cent on Wednesday.

Line chart of Share price, Hong Kong dollar showing Baidu has slumped on growth concerns

It will not be long, however, before Baidu starts to face stiff competition in this sector. In addition to local rivals, AutoX and WeRide, Tesla is reported to have been granted approval to test its advanced driver-assistance system in Shanghai, with its robotaxi expected to be unveiled next month

So far, Baidu’s head start in mass production of robotaxis is giving it an edge. It had already partnered with Nvidia to develop autonomous cars and robotaxis in 2016 and launched Apollo, its open-source platform for autonomous driving, a year later. Those years of development and trial and error mean that it has managed to slash the cost of producing robotaxis: making its latest generation models costs less than half that of its previous version.

But there is a flipside to Apollo’s unexpected popularity: an equally strong reaction from local taxi drivers. Robotaxis are typically cheaper than traditional taxis. Taxi drivers have been petitioning for Apollo to be limited. Social tensions in China have already been rising over the past year due to high levels of youth unemployment: the rate for those aged between 16 and 24 was at 14.2 per cent in May. Even as rivals pile in, that pushback looks a serious potential threat to this nascent sector’s growth.

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