The world’s largest market for autonomous vehicles (AVs) will be in China by 2030. This is mainly due to strong government support, a large and growing domestic market, a supportive regulatory environment, and a strong technology sector.
AV development is one of the top priorities of the Chinese government due to heavy investment in the sector. In 2017, a roadmap for AV development was released by the government, calling for 20% of all new vehicles sold to have Level 4 (L4) capabilities by 2030. L4 AVs are operating without human intervention in most scenarios.
In 2021, a set of guidelines will be released by the government for the operation of robots in designated zones. The government is also working on the development of smart city infrastructure with essential needs for the safety and efficient operation of AVs.
The AV market in China is expected to grow rapidly in the coming years. According to a McKinsey & Company report, the Chinese AV market will reach about $1.1 trillion by 2040. The growth is also driven by several factors, including the rising middle class, increasing urbanization, and growing demand for transportation services.
AV development and deployment are also supported by the Chinese regulatory environment, with the government releasing a draft law in 2021 on intelligent connected vehicles, providing a legal framework for the operation of AVs. The law is expected to be passed in 2023.
Well-known Chinese companies such as Baidu, Huawei, and Alibaba are investing heavily in AV development with the resources and expertise needed for developing AVs to be more competitive with those of global leaders such as Waymo and Cruise.
However, it is not without its challenges, such as the high cost of AVs, a lack of consumer awareness and acceptance of AVs, and technical challenges such as developing AVs that operate safely in complex traffic conditions. The reason is due to the high cost of sensors, lidar, and other hardware components.
Chinese consumers are also not familiar with AV technology and are hesitant to ride in self-driving cars.
Nevertheless, China is quite positive about its outlook for AVs and it needs to be seen whether it becomes the first country to launch such a technically advanced vehicle in their country.
According to a McKinsey & Company report, AVs will account for 66% of the passenger kilometers traveled in China by 2040. It also shows the possibility of generating market revenue of $1.1 trillion from mobility services and $0.9 trillion from sales of autonomous vehicles by the year.