China plans to grab the wheel in driverless cars

CHINESE car maker Baic has an ambitious plan for beating Apple and Google in the autonomous car business: take the driver out of the test drive.

Baic Group will be the first company to let customers ride in driverless cars that are manoeuvring around each other, says Rong Hui, the executive overseeing the effort. This year, Baic will run as many as 10 electric cars on a course with features including traffic lights and faux landmarks such as housing and a hospital.

Baic aims to showcase its autonomous vehicle know-how and give Chinese consumers a glimpse into the future of automotive technology.

The company is seeking its place in a crowded niche that includes the world’s biggest car makers and technology companies such as Baidu.

One of every 10 vehicles sold worldwide by 2030 may be fully self-driving, and China is pushing its car makers to develop that expertise to stimulate economic growth and maintain relevance against US and European rivals.

"Autonomous driving will be the top investment area over the next five to 10 years," says Xu Yingbo, chief analyst with Citic Securities in Beijing. "Driverless driving is the ultimate goal that car makers are striving for."

Last week’s Consumer Electronics Show in Las Vegas featured presentations by Ford, Volkswagen and Kia Motors. Ford announced a tripling of its driverless fleet to 30 vehicles for testing in three US states.

Ford is teaming up with Google to build driverless cars, and Apple has assembled a team of several hundred to begin work on a vehicle.

Baidu CEO Robin Li demonstrated a driverless car system to Chinese President Xi Jinping last month after the company completed its first road test in Beijing.

To keep pace, Baic is seeking outside investors to help fund its autonomous-driving projects, says Mr Rong, assistant president of Baic Motor, the Hong Kong-listed unit. Discussions are being held with venture capital firms, internet companies and technology companies. Autonomous driving is a top research priority during the next five years.

"There are a lot of investors who want to join us," Mr Rong says, declining to identify them.

"We are on track to become the first car maker that tests multiple self-driving cars at the same time."

Baic is building the 20,000m course outside the Beijing Auto Show, which starts in April. Customers will schedule hands-free test drives through a mobile application being developed by Baic. To make the experience more realistic, some human-piloted vehicles will be in the mix. "We aim to demonstrate to the public what the traffic environment will look like in the future," Mr Rong says.

He declines to comment on how much the company is spending on the effort or which cars will be available for testing.

Baic is owned by the Beijing municipal government and makes cars with venture partners Hyundai and Daimler. It is China’s fifth-largest car maker.

Chinese Premier Li Keqiang is pushing a national plan to use the internet to modernise the economy. That means integrating cloud computing, artificial intelligence and internet-connected devices into traditional industries such as manufacturing.

SAIC Motor and Chongqing Changan Automobile, Ford’s Chinese partner, are also developing driverless cars. Chinese companies want to ensure they have a share of a global market that is expected to have revenue of $6.7-trillion in 2030, according to a McKinsey study.

That should also boost the country’s software and semiconductor industries, with software expected to contribute as much as 20% to a car’s value, compared with 5% now.

"State-owned enterprises like Baic are not necessarily pursuing R&D (research and development) investment with an immediate economic return," says Janet Lewis, an analyst at Macquarie Group. "It’s often for the purpose of showcasing Chinese ability or leadership."

In China, companies developing driverless cars need to work with local governments to allow those vehicles on the road. Baic is in discussions with more than 10 municipal authorities and it expects to start tests in at least three cities this year, Mr Rong says.

The company is also in talks with authorities in several Asian countries, with plans for an overseas road test this year. Mr Rong declines to name the locations.

He says 2016 "is a vital year for autonomous-car development. We have the confidence to do this because we are ready."