The Rise of Robotaxis in China

By Sarah Wu and Ethan Wang

WUHAN (Reuters) – Liu Yi is among China’s 7 million ride-hailing drivers. A 36-year-old Wuhan resident, he started driving part-time this year when construction work slowed due to a nationwide glut of unsold apartments.

Now, he predicts another crisis as he stands next to his car watching neighbors order driverless taxis.

“Everyone will go hungry,” he said of Wuhan drivers competing against robotaxis from Apollo Go, a subsidiary of technology giant Baidu (NASDAQ:BIDU).

China’s Ministry of Industry and Information Technology declined to comment.

Ride-hailing and taxi drivers are among the first workers globally to face the threat of job loss from artificial intelligence as thousands of robotaxis hit Chinese streets, economists and industry experts say.

Self-driving technology remains experimental, but China has moved aggressively to green-light trials compared with the U.S., which is quick to launch investigations and suspend approvals after accidents.

At least 19 Chinese cities are running robotaxi and robobus tests. Seven cities have approved tests without human-driver monitors by at least five industry leaders: Apollo Go, Pony.ai, WeRide, AutoX, and SAIC Motor.

Apollo Go announced in May it plans to deploy 1,000 robotaxis in Wuhan by year-end. They also forecast operations in 100 cities by 2030.

Pony.ai, backed by Japan’s Toyota Motor (NYSE:TM), operates 300 robotaxis and plans 1,000 more by 2026. Their vice president mentioned that robotaxis could take five years to become sustainably profitable, after which they will expand “exponentially.”

WeRide is known for its autonomous taxis, vans, buses, and street sweepers. AutoX, backed by e-commerce leader Alibaba (NYSE:BABA), operates in cities including Beijing and Shanghai. Meanwhile, SAIC has been operating robotaxis since the end of 2021.

“We’ve seen an acceleration in China. There’s certainly now a rapid pace of permits being issued,” noted Boston Consulting Group managing director Augustin Wegscheider. “The U.S. has been a lot more gradual.”

The only U.S. firm operating uncrewed robotaxis that collect fares is Alphabet (NASDAQ:GOOGL)’s Waymo, which has around 700 cars in San Francisco, Los Angeles, Phoenix, and Austin. However, not all are in service at the same time.

Cruise, backed by General Motors (NYSE:GM), restarted testing in April after one of its vehicles hit a pedestrian last year. They claim to operate in three cities, with safety being their core mission.

“There’s a clear contrast between the U.S. and China,” said former Waymo CEO John Krafcik, as U.S. robotaxi developers face far more scrutiny and higher hurdles.

While robotaxis are also a subject of safety concerns in China, their fleets proliferate as authorities approve testing to support economic goals. Last year, President Xi Jinping called for “new productive forces,” setting off regional competition.

Beijing announced testing in limited areas in June, and Guangzhou said this month it would open roads citywide to self-driving trials.

Some Chinese firms have sought to test autonomous cars in the U.S., but the White House is set to ban vehicles with China-developed systems.

Boston Consulting’s Wegscheider likened China’s push for autonomous vehicles to their support for electric vehicles, stating, “Once they commit, they move pretty fast.”

‘Stupid Radishes’

China has 7 million registered ride-hailing drivers compared to 4.4 million two years ago, as official data indicates. With ride-hailing providing last-resort jobs during economic slowdown, the effects of robotaxis could prompt the government to slow down, economists suggest.

In July, discussions around job loss from robotaxis soared on social media, with hashtags like, “Are driverless cars stealing taxi drivers’ livelihoods?”

In Wuhan, Liu and other ride-hailing drivers have dubbed Apollo Go vehicles “stupid radishes”—a pun based on the brand’s name in local dialect—claiming they cause traffic jams.

Liu is also worried about the impending introduction of Tesla (NASDAQ:TSLA)’s “Full Self-Driving” system—which still requires human drivers—and the automaker’s robotaxi goals.

“I’m afraid that after the radishes come,” he said, “Tesla will come.”

Wuhan driver Wang Guoqiang, 63, sees a threat to workers who can afford disruption the least.

“Ride-hailing is work for the lowest class,” he commented, watching an Apollo Go vehicle park in front of his taxi. “If you kill off this industry, what is left for them to do?”

Baidu declined to comment on the drivers’ concerns. When asked about the service’s profitability, Baidu referenced past comments from their general manager, Chen Zhuo, who stated the firm would become “the world’s first commercially profitable” autonomous-driving platform.

According to Haitong International Securities, Apollo Go loses almost $11,000 annually per car in Wuhan. A more affordable model could enable nearly $16,000 annual profit per vehicle, while a ride-hailing car earns about $15,000 total for the driver and platform.

‘Already at the Forefront’

Automating jobs could benefit China in the long run due to a shrinking population, state economists.

“In the short run, there must be a balance in speed between creating new jobs and destroying old jobs,” stated Tang Yao, associate professor of applied economics at Peking University. “We do not necessarily need to push at the fastest speed, as we are already at the forefront.”

Eastern Pioneer Driving School has reduced its number of instructors by more than half since 2019 to about 900. Instead, they have teachers at a Beijing control center remotely monitoring students in 610 cars equipped with computer instruction tools.

Computers grade students based on every wheel turn and brake tap, while virtual reality simulators train them on navigating winding roads. Massive screens provide real-time analysis of driver tasks, such as a student’s 82% parallel-parking pass rate.

According to Zhang Yang, the school’s intelligent-training director, the machines perform well. “The efficiency, pass rate, and safety awareness have significantly improved.”