Super cheap robotaxi rides spark widespread anxiety in China

Hong Kong (CNN) — In China, it’s possible to travel six miles in a driverless taxi for just about 50 cents.

Self-driving cars, commonly called robotaxis, are being popularized at cut-throat prices in Wuhan, a sprawling metropolis of over 11 million people in central China where the first major outbreak of Covid-19 emerged in 2020. It has ambitions to become the world’s first driverless city, even as the vehicles often struggle to navigate the streets.

“You’ll never have to buy a car,” a passenger inside one of the white robotaxi sedans said in a video that has been viewed over 80 million times on Chinese social media platform Weibo since last week.

The fleet of 500 vehicles operating in the city belongs to Apollo Go, a unit of Chinese tech giant Baidu (BIDU). They serve an area that covers roughly half of Wuhan’s population, according to a May company release.

A major selling point is the price. Base fares start as low as 4 yuan (55 cents), compared with 18 yuan ($2.48) for a taxi driven by a human, state media Global Times reported on Wednesday.

The service launched in 2022 and started to gain traction during the first half of the year. The company aims to double its fleet to 1,000 cars by the end of 2024. Wuhan currently has around 17,000 regular cabs, according to the city’s transport bureau.

But the rapid adoption of the driverless taxis has rattled China’s gig economy workforce, which has suffered from stagnant wages because of deflationary forces stalking the economy following years of tight coronavirus restrictions and a real estate crisis.

“With the Chinese economy struggling a bit, Chinese people are likely much more fearful of losing their jobs, and this serves as a reminder of one of the ways that could happen,” Tu Le, managing director of Sino Auto Insights, told CNN in an email interview. He added that any significant job losses could be a few years away.

On Monday, the National Bureau of Statistics reported that the country’s gross domestic product expanded by just 4.7% in the April to June months, a much slower pace of growth than the 5.1% expected.

There have also been complaints from residents in Wuhan about traffic jams, as driverless cars fail to respond to traffic lights. Earlier this month, one robotaxi ran a red light and crashed into a pedestrian, state-run paper People’s Daily reported.

‘Stealing’ livelihoods

Backlash against the service, particularly against Apollo Go’s allegedly predatory pricing tactics, became the second top trending topic last week on Chinese microblogging site Weibo, with more than 75 million users chiming in on the discussion last week.

“Disrupting the market is the least of their worries. They will steal your rice bowl,” one user wrote, referring to the ability to make a living.

“Driving schools, road inspectors, and taxis are all going to shut down,” another user said.

An Apollo Go spokesperson disputed that characterization. The person told CNN that discounts and subsidies from local governments are commonly used during the initial launch period to get people to try the service. The “extremely low” pricing was a temporary strategy, they added.

Autonomous taxis currently operate on a relatively small scale in several cities around the world, mostly in the United States and China, while the United Arab Emirates is also welcoming companies worldwide to run driverless vehicle trials.

Several US companies, including Waymo, a subsidiary of Google’s parent company Alphabet (GOOG), and GM (GM) subsidiary Cruise, are working on autonomous ride-sharing services but have recently faced setbacks.

Cruise’s permit to test fully autonomous vehicles in California was suspended in October 2023 after a series of collisions, including one that caused grievous injuries to a woman after dragging her across asphalt. The company is now being investigated by the Department of Justice.

Waymo recently had to issue a recall after two of its cars hit the same tow truck within minutes of one another.

Uncertainty over the safety and reliability of driverless cars has cast a long shadow over the industry in the US. But Tesla (TSLA) CEO Elon Musk isn’t bothered, with the electrical vehicle giant vowing to unveil its robotaxi in the coming months.

Conquering the roads

China, already home to the world’s biggest car market, could someday also become the top market for automated vehicles, according to a 2023 report from consulting firm McKinsey.

It projects the sector could generate between $300 billion to $400 billion in revenue by 2035 in part due to support from Beijing to roll out more pilot programs.

Governments in several major Chinese cities, including Wuhan and Shenzhen, have granted commercial licenses for companies to pilot driverless services, while automakers and ride-hailing platforms are also investing in their automated fleets.

Last week, authorities in Shanghai’s Pudong New Area started handing out licenses to driverless car operators, including Apollo Go and Alibaba-backed AutoX, according to state media China Daily. California-based startup Pony.ai, backed by Toyota and Saudi Arabia, was also given the green light to test driverless vehicles in the financial hub.

Officials in Beijing said in June that they were “soliciting public opinion” on regulations involving the use of autonomous vehicles for buses, taxis and car rental services.

Earlier this month, the Beijing Municipal Bureau of Economy and Information Technology issued draft guidelines stating that autonomous vehicles should have drivers or safety officers on board, or be able to be intercepted remotely. Any traffic violations should be handled based on local laws and regulations, it said.

In the southern megacity of Shenzhen, Apollo Go was granted a license in February to run a trial in Bao’an district, People’s Daily reported, which allowed the company to charge. More such trials are expected across the country.

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