China's growing "robotaxi" fleet sparks concerns, wonder on streets

The Chinese tech giant, Baidu (BIDU) has a fleet of 500 driverless taxis already in the city of Wuhan, and the company has announced that it would want to expand that to 1000 fully driverless robotaxis by the end of this year. Chinese passengers can now travel in a driverless taxi for as little as 50 cents. This low-cost convenience is part of a broader effort to popularize self-driving cars—commonly known as robotaxis—in, in this bustling city of over 11 million residents. Wuhan is setting the ground to become the world's first driverless city, even though the project is still in its pilot stage.

One of the key attractions of these driverless taxi is its affordability. Base fares start at just 4 yuan (around 55 cents), significantly undercutting the 18 yuan ($2.48) fare for a human-driven taxi, as reported by state media outlet Global Times. Launched in 2022, the service has gained momentum throughout the year, and Baidu plans to double its fleet to 1,000 cars by the end of 2024. In comparison, Wuhan currently has approximately 17,000 traditional taxis, as noted by the city's transport bureau.

China's gradual economic recovery from the pandemic

The rapid adoption of driverless taxis, however, is causing concern among China's gig economy workers, who have already been affected by stagnant wages due to economic challenges such as the lingering impacts of strict COVID-19 restrictions and a real estate downturn.

Given the most recent real estate crisis that the country is facing is another major blow to the countries already crippling economy. This is making workers scared that with the proliferation of the new driverless taxi, could it make the job market even more competitive then it already is?

On Monday, China’s National Bureau of Statistics reported that the country’s GDP grew by just 4.7% from April to June, falling short of the 5.1% growth anticipated by analysts.

There were also many safety concerns that were raised with the driverless cars. Not only was it met with numerous accidents, but there were also reports that these driverless taxis failed to respond correctly to traffic signals.

Concerns Over Job Losses and Market Disruption

The public has not been silent about the downsides of this technological shift. Last week, criticism of Apollo Go’s aggressive pricing strategies became the second most discussed topic on Weibo, with over 75 million people weighing in on the issue. One user warned, “Disrupting the market is the least of their worries. They will steal your rice bowl,” highlighting fears over job displacement. Another user lamented, “Driving schools, road inspectors, and taxis are all going to shut down.”

A source within Apollo Go told CNN that initial discounts and subsidies from local governments are common when launching new services to attract users. The current "extremely low" prices may be a temporary promotional tactic.

Driverless taxis are still in the early stages of deployment worldwide, with operations mostly in China and the United States. The United Arab Emirates is also exploring trials with companies from around the globe. In the U.S., companies like Waymo, a subsidiary of Alphabet (GOOG), and Cruise, a GM (GM) subsidiary, are actively developing autonomous ride-sharing services, although both have faced recent setbacks.

For instance, Cruise’s license to test fully autonomous vehicles in California was suspended in October 2023 after multiple collisions, including a severe incident that resulted in injuries. The company is currently under investigation by the Department of Justice. Similarly, Waymo recently had to issue a recall after two of its vehicles collided with the same tow truck within minutes of each other.

These incidents have raised concerns about the safety and reliability of driverless cars in the U.S. However, Tesla (TSLA) CEO Elon Musk remains optimistic, with plans to unveil a Tesla robotaxi in the near future.

China's Ambitions in the Autonomous Vehicle Market

Already the world’s largest automotive market, China is poised to become a leader in autonomous vehicles as well. A 2023 report by consulting firm McKinsey estimates that the sector could generate between $300 billion to $400 billion in revenue by 2035, driven partly by Beijing’s support for pilot programs.

Several Chinese cities, including Wuhan and Shenzhen, have granted commercial licenses for companies to test driverless services, and investments from automakers and ride-hailing platforms are pouring into automated fleets.

Just last week, authorities in Shanghai’s Pudong New Area issued licenses to driverless car operators, including Apollo Go and AutoX, which is backed by Alibaba. California-based Pony.ai, supported by Toyota and Saudi Arabian investors, also received approval to test driverless cars in Shanghai.

In June, Beijing officials indicated they were gathering public feedback on regulations for autonomous vehicles used for buses, taxis, and car rentals. Earlier this month, Beijing’s Municipal Bureau of Economy and Information Technology released draft guidelines requiring autonomous vehicles to have onboard drivers or safety officers or to be controllable remotely. It emphasized that any traffic violations should be handled in accordance with local laws.

In Shenzhen, Apollo Go received a license in February to operate a trial in the Bao’an district, allowing the company to charge for rides. More such trials are anticipated across the country as China continues to forge ahead in the race to dominate the autonomous vehicle market