Roadblocks Along China’s Route to Autonomous Vehicles

August 2, 2017

By Patrick Lozada

China has set ambitious goals for the development and use of autonomous vehicles (AVs), but related policies could limit foreign company participation and prevent China from meeting its targets.

By 2020, more than half of new cars produced in China should have autonomous or assisted driving technology, according to government plans. By 2025, 80 percent of new cars should have autonomous capabilities, and 15 percent should be highly autonomous vehicles that largely drive themselves.

To maneuver around China’s policies, foreign companies can cooperate with domestic ones, proactively engage with the standards setting process, and understand the evolving limits of cybersecurity laws and regulations. Such workarounds limit the ability of foreign companies to bring cutting-edge global approaches to China’s market. Ultimately, removing market access barriers will be key to foreign companies tapping the potential for growth and AV technology adoption in the world’s largest car market.

Regulatory issues

Although there are regulatory barriers to the testing and deployment of AVs in most markets, China’s regulations create unique barriers that favor the development of domestic manufacturers and technologies. These include:

  • Restrictions on mapping data China classifies mapping data as a state secret and restricts its use by foreign companies. In USCBC’s 2016 IT benchmarking report, companies operating in the aviation and auto sectors noted that due to a combination of written and unwritten rules, GPS and terrain data is not allowed to leave China, creating complications for mapping functions. In the past, this has prevented companies from offering full functionality for services that rely on GPS tracking and real-time monitoring. For AVs, access to mapping data is essential.
  • Promotion of a domestic GPS replacement China has significantly increased its efforts to develop its Beidou Global Navigation Satellite System (GNSS) to replace the GPS systems currently used in vehicles in China, and widely used around the world. From May to December 2016, the central government released 20 policies mandating or promoting the use of Beidou in different industries. During the same time, 16 provinces announced similar plans. Beidou is a comparatively untested system, has a smaller coverage area, and by some estimates is less accurate than GPS globally. This is likely to slow the development of accurate and reliable AV systems. More worryingly though, Chinese companies have had early access to the policies as they have been developed, including technical specifications and designs, giving them more time to bring their systems into line with the government’s plans than their foreign competitors. In addition, China’s government has established certification hurdles that appear to disproportionately target non-Chinese vendors, and US companies have been prevented from taking part in relevant GNSS standards committees, leaving domestic firms in the driver’s seat of new navigation standards as they are developed.
  • Cybersecurity Law and data localization restrictions  China’s Cybersecurity Law regulates data transfers by businesses that are identified as Critical Information Infrastructure (CII). Given the nature of the information that autonomous vehicles will involve and the potential number of users, data created by automobiles are likely to be considered CII. If that designation is made, automobile manufacturers and their service providers will face a range of restrictions and compliance burdens including requirements to store data in China, hire specialized data security personnel, replace networking equipment, and ensure compliance with the numerous regulations related to CII.
  • Conflicting standards AVs constantly communicate with surrounding infrastructure and vehicles. In the United States, automobiles use Dedicated Short Range Communications (DSRC) standards for intervehicle communication. China is seeking to leapfrog DSRC and use a 5G standard for this type of communication—a standard that has not yet been fully tested for this purpose. While this may offer some advantages in the long run to companies investing in these new technologies, reliance on still-to-be developed technology will create an inevitable delay for the short- and medium-term goals that China has set for autonomous driving technology.
    China is also planning new, country-specific standards that would limit the ability of foreign companies to use existing, globally-proven technologies in China. In June, MIIT released draft Guidelines on Constructing the National Internet Connected Vehicle (ICV) Industry Standards that included plans to support the creation of 100 national standards for ICVs by 2025. This could force companies to redesign aspects of their vehicles to meet the demands of the Chinese market and further isolate China’s AV ecosystem.
  • Push for a “secure and controllable” supply chain The Automotive Industry Mid- to Long-Term Development Plan called for a completely “secure and controllable” supply chain, specifically citing chipsets, sensors, new materials, and informatization. Demands to procure “secure and controllable” products have been interpreted by many to exclude foreign products. A few foreign companies have been able to participate in TC260 committees, the standards body formulating secure and controllable standards, but that access is not consistent. Many of the standards developed by TC260 have resulted in requirements that effectively excluded foreign products from the market.

 

Road tests on an uncertain course

While some areas, such as Anting on the outskirts in Shanghai, have begun to test autonomous technology, the central government has been more cautious in its plans for rolling AVs out nationwide. In July 2016, a Ministry of Industry and Information Technology (MIIT) spokesperson announced a moratorium on testing, allowing only limited testing in designated and controlled zones. Companies report that enforcement has not been evenly applied, and some domestic companies have violated laws and conducted unsanctioned road tests. Tech giant Baidu is under investigation for violating traffic laws when its CEO livestreamed an AV test drive in Beijing to the company’s annual artificial intelligence conference.

By contrast, the United States allows road tests of AVs in 18 states, and autonomous taxis are already being tested for customers in some cities such as Pittsburgh. There is no national ban, and legislation is being worked on in the US Congress that may set parameters for regulations.

Autonomous vehicle partnerships

Joint ventures with Chinese companies are one of the main ways technology companies, telecoms, and automotive OEMs can overcome market entry barriers. Some partnerships are geared at bridging the barrier between the traditional automotive and self-driving elements of the car, while others are targeted at developing the standards and software that are the foundation of autonomous vehicle technology.

Chinese Company

Foreign Company

Details

Baidu

BMW

In late 2015, Baidu partnered with German car maker BMW to produce an AV  to put to market within three years. The venture tested several BMW 3 Series Gran Turismos north of Beijing, but was cancelled after two years due to disagreements on the direction of research, according to BMW China’s CEO Olaf Kastner.

Huawei

Vodafone

Vodafone and Huawei partnered to develop a new system of V2X technology known as Cellular V2X (C-V2X), which assists with communications between AVs .

Mobvoi

Volkswagen

Volkswagen in 2017 set up a joint venture with Beijing-based tech company Mobvoi to create AVs. Volkswagen invested $180 billion to assist in the creation of artificial intelligence and voice recognition for vehicles, which the companies hope will lead to better autonomous vehicles.

LeEco

Aston Martin and Faraday Future

Aston Martin and Faraday Future entered a joint venture with Chinese car manufacturer LeEco to develop a production variant of Aston Martin’s Rapid E concept vehicle.

SAIC

General Motors

The SAIC-GM joint venture that began in 1997 announced intentions to produce an AV by 2025, coinciding with approval by the California government to test AVs in California.

Baidu

Microsoft

In July of 2017, Microsoft and Baidu announced a partnership where Microsoft would offer cloud infrastructure to Baidu for its Apollo AV operating system. The hope is that this partnership allows Baidu to expand Apollo’s reach in regions outside of China.

China Mobile

AT&T

AT&T and China Mobile announced a partnership on the Internet of Things to help AVs interact with each other and improve existing vehicle-to-vehicle systems.

China Mobile

Qualcomm

China Mobile and Qualcomm announced that in collaboration with ZTE, they will test the implementation of 5G in China. 5G will enhance cellular service and open paths for AVs to communicate with each other through vehicle-to-everything (V2X) communications.