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China Might Beat the U.S. in Driverless Cars

By Chris Neiger - Apr 10, 2016 at 11:30AM

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Think Google dominates the autonomous vehicle space? Think again.


Image source: Baidu.

What if I told you that there was an Internet search company that's been working on self-driving cars since 2013 and its vehicles have logged countless successful autonomous miles? This company uses luxury vehicles for its autonomous car testing, has teamed up with self-driving tech leaders like NVIDIA, and is working with the government to make self-driving automobiles a reality. 

You might make an educated guess that I'm talking about Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google. But you'd be wrong (sorry about that).

I'm referring instead to China-based Internet search giant Baidu (NASDAQ: BIDU). Baidu is working to bring self-driving public transportation to China by 2018 and the company is taking huge strides to make it happen. 

Baidu's autonomous vehicle has already driven in Beijing, merged into highway traffic all on its own, and successfully passed other vehicles.

Let's put that in perspective for a moment, because you many not know exactly how hard that is to do in Beijing. New York City welcomes about 2.7 million vehicles on its roads everyday, and it's one of the most congested cities in America. Now consider that Beijing has two times more vehicles than NYC.

But it's not the technical wizardry that might propel China's self-driving cars ahead of the U.S. -- its the lack of red tape.

China's surprisingly open approach to self-driving autos
According to a recent New York Times article, "Baidu already has the regulatory and infrastructure support of a number of local Chinese governments, which it will use to introduce small autonomous buses that will run set routes." 

And this differs just a bit from Alphabet's current situation in the U.S. Google and a handful of tech companies and automakers met with a Congressional committee last month to essentially plead with the U.S. government to set federal autonomous car standards. 

States still have a lot of control over autonomous vehicle testing in the U.S., and California made that very clear recently when the state said that a licensed driver has to be in the front seat of self-driving cars at all times. That was a punch in the gut to Google, which hoping that its self-driving autos will eventually pilot anyone and everyone around town, whether or not they have a license and even if they're legally blind. 

"We're gravely disappointed that California is already writing a ceiling on the potential for fully self-driving cars to help all of us who live here," Google said in a statement.

Meanwhile, China presses on. An article in The Guardian said last year that the Chinese government has the power to "rapidly mandate the kind of wholesale changes that would be required to unleash self-driving cars."

China might need this more
There are a few reasons why China might be acting faster than the U.S. on autonomous cars. First, consider the sheer amount of traffic in Chinese cities. Yes, the U.S. has traffic too, but China has become the largest light vehicle market in the world and it's had to curb auto sales in cities to both reduce traffic and pollution.  

In 2014, the country pledged to take 5 million cars off of its roads because they caused too much pollution. Autonomous public transportation will certainly help reduce the amount of cars in cities, and bring down pollution levels as well. 

And some are already predicting that China -- and not the U.S. -- will be the largest autonomous car market. Boston Consulting Group said China will be the largest self-driving market by 2035, taking up to 30% of sales that year.

And the winner is...
While Alphabet is making huge strides in autonomous cars, it appears that the Chinese government, and its need for cleaner air, will continue to push Baidu ahead.

The U.S. government is set to release more autonomous car guidelines later this year, which could open up Alphabet's prospects. But with the Chinese government already backing self-driving tech so heavily (and the U.S.' penchant for moving slowly on new regulations), it appears the international autonomous car race may already be won. 

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Stocks Mentioned

Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$2,329.46 (1.77%) $40.56
Baidu, Inc. Stock Quote
Baidu, Inc.
BIDU
$123.44 (4.79%) $5.64
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOG
$2,334.03 (1.66%) $38.18
NVIDIA Corporation Stock Quote
NVIDIA Corporation
NVDA
$181.77 (5.29%) $9.13

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