Frost & Sullivan releases 'In-Depth Industry Research Report on China's Robotaxi Market for 2024'

In 2016, autonomous driving technology made significant progress, attracting the attention and investment of a large amount of capital. For example, General Motors acquired Cruise Automation for $1 billion, and Ford acquired Argo.ai for $1 billion. These high-valued acquisitions demonstrate the capital market's high recognition and enthusiasm for autonomous driving technology. The years 2016-2018 were a peak period for the establishment of autonomous driving companies. From August to September 2016, the total investment in autonomous driving startups increased from $308 million to $1.308 billion, a growth rate of over 324.7%. From October to November 2016, mainstream global autonomous driving investments entered a period of rapid growth, with the total transaction amount increasing from $11 billion to $58 billion, a growth rate of over 427.3%.

The distribution of autonomous driving companies in China is mainly concentrated in economically developed regions, with the number of companies in Beijing, Shanghai, Guangdong, Jiangsu, and Zhejiang accounting for 72.2%. These cities provide favorable technical and financial support, as well as a mature industrial chain and market environment, which helps to form a strong industry cluster effect for the autonomous driving industry, promoting technological research and development and commercial application progress.

In the past year, investments in the autonomous driving industry have covered multiple sub-sectors such as key technology services, scenario solutions, and core components, with a relatively even distribution of trading volumes across these areas. As of July 2024, companies with cumulative autonomous driving investments exceeding 500 million yuan accounted for 16.06%. With continuous technological progress and market expansion, the autonomous driving industry has attracted more investment, and large-scale capital investments often concentrate on companies with strong market potential and technical capabilities.

Robotaxi is a shared mobility service controlled by an autonomous driving system, typically referring to driverless taxis. It utilizes advanced autonomous driving technologies (such as Level 4 autonomous driving) to autonomously navigate without human drivers by perceiving the surrounding environment, making decisions, and executing operations. This service aims to replace traditional taxi services, providing more efficient, safe, and convenient travel options. The Robotaxi's remote cloud-based driving assistance system is a solution based on 5G communication technology, designed to provide remote assistance and control for driverless vehicles. The system achieves real-time data transmission and operational control between the cloud and the vehicle through a high-bandwidth, low-latency 5G network.

When a driverless vehicle encounters unsolvable problems, such as temporary road changes or traffic control, cloud security personnel can initiate remote assistance and take over the vehicle to help handle complex scenarios. After the remote driver drives the vehicle to a safe area, they transfer control back to the vehicle end. The end-to-end latency of the entire process is shorter than the reaction time of human drivers, and the switch between vehicle and remote control is completely smooth and seamless. In the remote cockpit, fleet-level real-time monitoring can be achieved through multi-screen monitoring configuration, as well as features such as risk warnings and dynamic scheduling. Currently, autonomous driving technology mainly relies on vehicle-end autonomous driving systems for autonomous driving on conventional urban roads, and only uses remote cloud driving assistance in extreme scenarios. Therefore, it is possible to achieve efficient operation services where one remote driver controls multiple vehicles.

Based on the investigation of various parties into the scenarios where accidents occur and related factors, it can be seen that in human-driven scenarios, the vast majority of accident causes are related to people. For example, a survey report released by the NHTSA mentioned that about 94% of accidents recorded were caused by drivers, including misidentification, decision-making errors, operational mistakes, and other situations. According to accident statistics from the Hong Kong Transport Department, young drivers may have a slightly higher accident probability due to less proficiency in driving operations and lack of experience, with 51.3 accidents occurring per 1,000 licensed drivers. Autonomous driving and its integration into taxi products can effectively avoid a large portion of accidents caused by drivers, thereby reducing accident casualties.

On one hand, autonomous driving can eliminate dangerous behaviors such as fatigue driving, drunk driving, and violation of traffic rules that occur during human driving; on the other hand, autonomous driving can pre-empt risks through the integration of multiple sensors and vehicle-road coordination technology, effectively reducing the incidence of accidents. Overall, autonomous vehicles possess the ability to self-learn and continuously upgrade, and based on a rich variety of travel scenarios, they can truly address the rigid needs, pain points, and high-frequency issues encountered in travel.

The emergence of Robotaxi can help realize the implementation of the 'car sharing' concept. By adopting electric technology, it reduces dependence on traditional fuel and pollution emissions. At the same time, it can help improve the utilization efficiency of automotive resources, reduce the social car ownership, and significantly lower automobile exhaust emissions.

In the United States, air pollution caused by gas-powered passenger vehicles results in more than 9,700 deaths each year. With the widespread adoption of autonomous electric vehicles, low emissions associated with electric and autonomous vehicles can save more lives in the United States and around the world in the future. By 2050, the use of autonomous electric vehicles can reduce greenhouse gas emissions by up to 34% of total transportation emissions, significantly improving air quality.

As a shared mobility option, Robotaxi can replace some of the demand for private cars, helping more consumers complete their daily travel. Moreover, compared to traditional taxis/ride-hailing services, Robotaxi can optimize routes through algorithms, reduce idling, improve overall road traffic efficiency, and better collaborate with urban transportation management systems.

According to the survey results conducted by Wenyuan Zhihang on the popularization impact of autonomous driving technology among passengers on its Robotaxi platform, among Robotaxi passengers with one or more private cars, 46% of the respondents said they may reduce their private car ownership in the future. Among passengers without private cars, 43% said they may not purchase a private car in the future. In the medium and long term, the ownership of a single Robotaxi will replace about three private car market units. The popularization of autonomous driving and Robotaxis can effectively influence consumers' car purchase decisions, reduce social car ownership, and thereby alleviate traffic congestion pressure.

Compared with the autonomous driving-related policies in China and the United States, the United States started earlier in its autonomous driving policy development, with a relatively relaxed policy environment that encourages innovation; whereas China's development strategy in the field of autonomous driving places more emphasis on safety, stability, and gradual progress.

SAE has developed a widely recognized grading standard for autonomous vehicles based on the degree of vehicle autonomy and human intervention. According to this standard, autonomous driving technology is divided into six levels, ranging from Level 0 (no automation) to Level 5 (complete automation). With technological progress, autonomous vehicles are gradually developing from lower levels of automation towards higher ones, which can not only improve road safety but also provide drivers with more convenience and freedom. However, the realization of each level requires overcoming challenges in technology, regulations, ethics, and other aspects.

Currently, autonomous driving is in the stage of transitioning from Level 2 to Level 3. The rapid growth of Level 2 has driven an overall increase in the penetration rate of autonomous driving; autonomous driving above Level 4 is still limited to open operations in certain areas and is expected to end the pilot and testing phase after 2026 and begin commercialization.

Benefiting from the strong support of the state for the autonomous driving industry in terms of policy promotion, pilot demonstrations, and technology research and development, China's autonomous driving penetration rate leads the global average. In 2023, the penetration rate of L2-L3 autonomous driving in China has exceeded 40%, while the global level remains at around 31%.

With the continuous expansion of the shared mobility market, more and more users choose to travel through platform-based and convenient online car-hailing services, leading to a continuous growth in the scale of this sector. The demand for online car-hailing has risen sharply, accompanied by a rapid increase in the number of registered drivers. As of December 2023, the user base of online car-hailing in China reached 528 million people, an increase of 90.57 million compared to December 2022, with a growth rate of 20.7%. Moreover, the issuance of online car-hailing driver's licenses increased by more than 4 million in the three years from 2020 to 2023. Correspondingly, the number of tour taxis was impacted, as there was no significant increase in the number of tour taxis in China from 2019 to 2023. This phenomenon not only indicates an increasing market demand for flexible travel modes but also creates new opportunities for the intelligent transformation of the travel industry.

Against this backdrop, Robotaxi, as a representative of future travel modes, is receiving widespread attention. Compared to traditional online car-hailing services, Robotaxi has a higher degree of automation, which can significantly reduce reliance on human labor and effectively improve vehicle utilization and safety. The application of Robotaxi is expected to provide users with more economical, safe, and environmentally friendly travel options through these technological advantages, gradually replacing traditional online car-hailing services. Therefore, as the number of online car-hailing services and registered drivers continues to increase, the replacement space for Robotaxi products appears particularly broad. It can not only meet existing market demands but also bring disruptive changes to the entire shared mobility sector, further driving the transportation industry towards intelligence and automation.

From the perspective of input costs, the cost of Robotaxi can be divided into the cost of single-vehicle products, maintenance costs, safety redundancy costs, and platform operation costs. Currently, with the investment in single-vehicle products reduced to around 300,000 yuan, the cost has been significantly compressed within five years. However, to achieve large-scale mass production, it is still necessary to continue to reduce the cost of high-precision sensors and artificial intelligence algorithms. The maintenance costs of Robotaxi include multiple aspects such as repair and maintenance, parts replacement, insurance fees, and energy replenishment costs, as well as the labor cost of offline ground staff maintenance personnel. Currently, the annual investment in single vehicles is about 50,000 yuan, and it is difficult to see a significant reduction in the future. The cost of safety redundancy varies due to differences in cities and models. Specifically, the labor cost of security guards also differs in different cities, and companies will implement different safety redundancy strategies when operating in different regions. For example, Pony.ai currently implements a ratio of about 1:4 between security guards and vehicles, while RoboRover's corresponding ratio in Hubei Province is about 1:3. Overall, the safety redundancy cost per vehicle ranges from 30,000 to 100,000 yuan. Platform operation costs mainly include software upgrades and interface optimizations at the platform end, currently about 30,000 yuan per vehicle per year.

However, considering the annual revenue of Robotaxi, the current industry data is about 60,000 yuan per year, which is insufficient to support maintenance, redundancy, and operational costs. The cost of single-unit product is also far from being affordable. Robotaxi needs to continuously expand its service coverage and increase revenue to achieve profitability.

China has a population of about 1.4 billion, and its transportation industry is facing increasing challenges in meeting the growing demand for safe, efficient, and sustainable passenger travel. As the world's largest shared mobility market and a country with high population density, China has good conditions to leverage the advantages of autonomous taxis (robotaxi) in future travel solutions.

With substantial investments in research and development and a constantly changing regulatory environment, China is expected to start large-scale commercial deployment of autonomous taxis as early as 2026, including both fully driverless and autonomous taxis operated with safety drivers.

With the continuous improvement of production capacity and its unparalleled advantages in cost, affordability, and efficiency, the deployment scale of autonomous taxis is expected to expand rapidly around 2030. According to Frost & Sullivan, by 2035, autonomous taxis will account for a significant proportion of China's shared passenger vehicle fleet, establishing China as the world's largest autonomous taxi service market, accounting for more than half of the global market share.

Among all cities in China, first-tier cities (including Beijing, Shanghai, Guangzhou, and Shenzhen) were the primary areas for the initial development of autonomous taxis. It is estimated that by 2030, the number of autonomous taxis in these first-tier cities will reach 280,000 units, and by 2035, it will further increase to 1.38 million units. Subsequently, the application of autonomous taxis will expand to include second-tier cities in 31 cities. The number of autonomous taxis in second-tier cities is expected to reach 730,000 units by 2030, and further increase to 2.77 million units by 2035.

In overseas markets, the number of autonomous taxis is expected to reach 170,000 by 2030 and further increase to 930,000 by 2035. According to Frost & Sullivan's forecast, the market size of autonomous taxi services in China is expected to reach $39 billion by 2030 and $1794 billion by 2035. With the development of autonomous taxi services, the number of traditional taxis and ride-hailing cars will gradually decrease.

From the perspective of the development stages of autonomous taxis in global countries: Currently, China and the United States occupy the first tier and have taken the lead in entering formal commercial operations without a driver's seat safety officer. The leading advantages of China and the US in the Robotaxi industry are quite evident, mainly due to their active investment and rapid development in policy support, technology research and development, market application, etc. The second tier consists mainly of some European and Asian countries. Germany, France, and South Korea, as traditional automotive powers, also provide strong support for autonomous driving and have passed relevant legislation. Major automakers in other countries are also actively researching and developing autonomous driving technology. The UAE, as a developing country, is very active in promoting smart cities and future transportation. The Dubai government plans to transform 25% of its traffic into driverless vehicles by 2030, thus strongly supporting the introduction and testing of autonomous driving technology. With the popularization of technology and cost reduction, as well as the demand for smart cities and future transportation in global countries, more and more countries will join the third tier and begin attempts at Robotaxi.