Trump and Tesla will turbocharge self-driving race

Pony AI

23/12/2024 08:15

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Katrina Hamlin
       HONG KONG, Dec 23 (Reuters Breakingviews) - In 2025, a
competition to master assisted and autonomous driving will begin
in earnest. Carmakers like Tesla  TSLA.O  are chasing a market
that McKinsey reckons could be worth $400 billion by 2035. But
the benefits may prove elusive.
    Cars that don’t require hands on the wheel are arriving. The
industry grades capabilities on Levels 0 to 5, ranging from no
support to vehicles handling any scenario without a human pilot.
Alphabet’s  GOOGL.O  Waymo, Pony AI  PONY.O  and Baidu  9888.HK 
already operate Level 4 rentable cars, dubbed robotaxis, which
can operate without drivers in test zones. Only 5.5% of cars
sold in 2024 include simpler Level 2+ assistance like cruise
control and automated lane changes, estimates Canalys.
    Incoming U.S. President Donald Trump may be a catalyst. He
wants to shrink regulations on artificial intelligence
development, the Washington Post reported, and appointed Tesla
CEO and Cybercab creator Elon Musk to reduce bureaucracy. Even
small steps like expanding pilots would allow carmakers to
gather data and commercialise advances sooner.
    For what happens next, look to China, where at least 19
companies are trialling fully autonomous vehicles. Goldman Sachs
reckons the People’s Republic could see 90% of sales boast Level
3 or above by 2040, versus 65% in the United States. If Trump
accelerates adoption, U.S. highways will look more Chinese.
Countries in Europe and elsewhere will face pressure to follow
suit.
    Progress brings risks. Carmakers use both incentives and
features to lure customers. In China, autonomous technology has
become a deflationary weapon in a price war. A Bernstein survey
showed around half of consumers there now expect self-driving
gizmos at no extra cost when buying electric cars. Citi research
suggests that, in 2025, models below 200,000 yuan (about
$28,000) will include those features, and they’ll be key in
purchase decisions.
    That means the $400 billion prize will be hard to grasp, as
autonomous tech increases costs without necessarily enabling
higher prices. Yet products without these features will be less
competitive, forcing laggards to pay to catch up. BYD
 002594.SZ , whose founder once dismissed the concept, has
pledged $14 billion towards developing self-driving rides.
Toyota earmarked 1.7 trillion yen ($11.3 billion) for software
and more earlier this year. Buying innovation is an option:
Volkswagen  VOWG_p.DE  invested $700 million in China’s Xpeng
 9868.HK  to access expertise. Other pioneers that could prove
attractive partners include Li Auto  2015.HK  or smartphone
maker Xiaomi  1810.HK . In 2025, carmakers will work hard to
stay in the autonomous driving race.
    Follow @KatrinaHamlin on X
    
    This is a Reuters Breakingviews prediction for 2025. To read
more of our predictions, click here.

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Graphic: Partially automated driving will soon be the norm    https://reut.rs/4iix2aX
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 (Editing by Neil Unmack and Oliver Taslic)
 ((For previous columns by the author, Reuters customers can
click on  HAMLIN/ 
katrina.hamlin@thomsonreuters.com; Reuters Messaging:
katrina.hamlin.thomsonreuters.com@reuters.net))