Robotaxis: China isn’t sharing this ride with anyone

In the United States and other Western developed countries, artificial intelligence has become an integral part of our digital lives, evident in the widespread use of AI-powered virtual assistants like ChatGPT or Grok and their paid-for versions, or software-embedded forms such as Copilot within Microsoft products.

In China, the same technology is transforming transportation. With its mass integrated market of more than 1.4 billion people, and a centralised governance structure under socialist state-directed market capitalism, the rapid commercialisation of AI is on display. In major cities such as Beijing and Wuhan, robotaxis now number in the hundreds, with the charge being led by Baidu’s Apollo Go. In the United States, the market is smaller, with a more decentralised city-by-city regulatory approval structure.

The size of China’s market has become a commercial advantage in innovation through market-based competition, combined with product liability risk mitigation enabled by the authoritarian legal system, and a strategic plan by China to be the global technology leader. In 2022, the Shenzhen Municipality, followed by other legal jurisdictions, established regulations that hold the owners and managers of operating companies responsible for any accidents rather than the vehicle manufacturers. Inversely, in the United States, Tesla has recently been ordered to pay US$243 million in damages for a fatal 2019 car crash involving a Model S being driven on Autopilot, opening a path for further litigation and future market risk.

China has an estimated six million active ride-sharing drivers and three million licenced taxis, with almost six per cent of those being self-driving robotaxis. The United States has far fewer, with approximately one million ride-sharing drivers and 400,000 licenced taxis. China’s leading robotaxi companies include Baidu Apollo Go, AutoX, Pony.ai, WeRide, and Didi Chuxing, are represented across at least 16 cities. In the United States, the market is dominated by Waymo, Cruise, Zoox, Tesla, and Uber across five cities.

For these markets, there is both potential and risk. Expanding demand for robotaxis is likely to lead to significant job displacement and capital loss in driven taxis – as occurred with the New York yellow taxi system when Uber and its peers arrived on the scene. Yet increased employment in remote monitoring and manufacturing may make the transition easier, especially in an ageing society such as China’s where older drivers will be shifting to retirement.

In China and developing economies such as Indonesia and Thailand, the acceptance rate of robotaxis is high. This correlates with those countries’ higher penetration of complementary technologies such as digital currencies, app-embedded payment systems, and social credit systems, which are readily accepted by users and investors.

In the United States, there is less enthusiasm. In June this year, protesters in Los Angeles set fire to a number of Waymo robotaxis, with some speculating that the vehicles represented the potential to conduct surveillance, not to mention the safety concerns of driverless vehicles for passengers and road users. Waymo temporarily suspended its operations.

China’s success in electric cars (70 per cent of global production) and now robotaxis will shape development outcomes and reap benefits far beyond its borders. It is no coincidence that 40 per cent of the Chinese Politburo’s new members since 2022 have a military-industrial background. This expertise, and China’s determination for supremacy in the global development market, means the commercialisation of AI will remain intrinsic to the country’s transformation. China’s mature AI market, carefully curated through Chinese Communist Party strategy, is enabling faster development of sectors such as AI-enabled transportation, replicating its success with electric cars.

The United States has already banned the sale of connected vehicles manufactured by Chinese companies – to take effect from 2027 – citing national security concerns, which also restricts Chinese robotaxi companies and their testing programs in America. This highlights the growing geopolitical and security implications of a global sector saturated in Chinese-manufactured cars fitted with Chinese software. In this regard, China has cornered the market, giving it a strategic advantage over the West. A suitable policy response, in the vein of the Trump administration’s “Winning the Race: America’s AI Action Plan”, may be to create a similarly competitive market strategy.