Chinese automakers are rapidly adopting electric vehicles, shocking automotive brands around the world. The battlefield is now moving towards self-driving cars, and many experts believe China is once again claiming its early benefits.
The fight sees US groups such as Google’s autonomous driving projects Tesla and Waymo against China’s largest EV group, BYD, and Robotaxis from Pony.ai, Baidu and Weride.
Autonomous driving for several years was considered BYD’s Achilles heels, but the group, backed by Warren Buffett, shook the automotive industry in January.
Tu Le, founder of Sino Auto Insights Consultancy, says BYD, who appears to be moving to pole positions in races to develop advanced driving assistance systems by challenging Tesla as the crown of the world’s largest EV manufacturer. These are technologies such as automatic emergency braking, adaptive cruise control, driver attention and potential collision monitoring, and are considered pioneering the entire autonomous vehicle.
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“When you ask me, ‘Who’s the winner?’, you have to go back to ‘number of cars for sale’,” Le says. “And if it’s a numbers game – you need to show how much data is being collected, how much data is being fed into the algorithm, so that clearly indicates that BYD wins because it’s standard on all vehicles.”
As the fledgling autonomous industry grows, businesses are competing for hundreds of billions of dollars in potential new revenues as logistics and transport fleets employ vehicles that are expected to be safer, cheaper and more efficient.
This month, Goldman Sachs analysts project that the value of China’s Robotakshi market alone will skyrocket to $47 billion by 2035 from $54 million in 2025. It says this will be driven by reducing hardware and algorithm costs. This estimates the unit cost of a vehicle that will fall from $44,000 today to $32,000 by 2035 intelligent driving.
And, coupled with the end of the industry producing internal combustion engines, driverless cars are also opening the door to hardware and software companies.
Developed by Toyota and Pony 4x Robotaxi, April 2025 Shanghai International Auto Show ©Costfoto/Nurphoto via Getty Images
Among the top candidates is Beijing-based Baidu, China’s rival to Google and its biggest Robotaxi operator. In January, the company said that Apollogo vehicles increased their cumulative rides to over 9 million in the fourth quarter of last year by 36% year-on-year.
Another important challenger is the emergence of Huawei, based in China’s high-tech manufacturing hub, in Shenzhen, China, has blew excitement. The world’s largest communications group has no plans to build cars, but despite being targeted by US sanctions, it may be poised to control the large band of the supply chain for autonomous driving.
“Huawei has a clear advantage,” says Le. “They are about to be completely vertical: building chips, building software, building infotainment, building data in the cloud.”
However, regulatory uncertainty could prove constraints in both China and the US, with Shihao Fu, a technology analyst at IDTechex, a UK-based technology research group. L2 technology allows for “handoff, eye-catching” driving, while the L3 enables “handoff, eye-off” but usually only under predefined conditions. From these technologies, there is a huge leap left to fully driverless cars on all roads.
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Authorities are being asked to answer difficult questions that hinder the development of the industry, including excessive safety and responsibility, so that more vehicles with autonomous driving capabilities can hit China’s roads. Their answer can define the pace at which new technologies become available, as China is trying to stay ahead of the US.
“The number one concern is definitely safety. You need to prove the technology. It’s not negotiable,” says Raymond Tsang, automotive technology expert at Bane in Shanghai. “The second (concern) is insurance and liability. When something bad happens, who is responsible? The insurance company, or the manufacturer or owner, needs to sort it out.”
Meanwhile, in the US, Tesla will launch a driverless ride hale service in Austin, Texas by June, and will begin production of a fleet of self-driving cars next year. However, regulatory questions have also emerged in the US as to whether Elon Musk’s so-called “cybercab” would be allowed to drive on American roads without pedals or steering wheels.
Another uncertainty stems from the trade war between the US and China, threatening to further separate the world’s largest economy. In this context, Christoph Weber, who heads the Chinese business of Swiss engineering software group Autoform, says German Volkswagen appears to be suitable to stay in the battle for autonomous driving.
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VW has been caught off guard by China’s progress in recent years, and its share of the world’s largest automotive market has been hit. But it rethinks its global strategy. Now, VW appears to be essentially “two companies” with one in China and one in the US, an independent high-tech platform, supply chain and research and development team.
“This division in geopolitics and technology between the US and China is happening, and they have a very clean answer,” he says. “Some people may not like this answer, as it basically means they have to double their investments and resources.
