China stakes its claim in the self-driving race for success

Self-driving car sales are expected to hit 21 million by 2035. No surprise then that both traditional car makers and leading technology companies are vying to be the first to release a fully autonomous vehicle

Between 2009 and 2015, Google spent at least $1.1 billion developing technology to power self-driving cars. In December 2017 a patent application published by Apple revealed details of its autonomous vehicle research – labelled by CEO Tim Cook as “the mother of all AI projects” – while in March 2018 Japanese automotive company Toyota announced that it was teaming up with Aisin Seiki Co and Denso Corporation, in an attempt to fast-track its own fleet of self-driving vehicles. The soon-to-be-formed Toyota Research Institute-Advanced Development will create “fully-integrated, production-quality software for automated driving”.

There is no question that the concept of driverless vehicles has also become a hot topic for international discussion. In the battle for first place, the United States, Europe and Asia all have automotive markets investing in autonomous driving. The United States has long been viewed as the industry frontrunner, with some of the world’s largest technology companies – including Apple, Google, Microsoft and Uber – all focused on launching their own brand of driverless vehicles. German automotive giants Volkswagen, BMW, Daimler and Continental remain in the top 10 patent owners for filings related to autonomous driving, while prototype driverless cars have already been released in China – it is predicted that some cars could be available as soon as 2019 and widely distributed by 2021.

An industry in overdrive

US tech giant Intel is forecasting a so-called ‘passenger economy’, which will create huge opportunities for new businesses as people transform from drivers into riders and have more time on their hands. Unusual self-driving car innovations highlighted by IP filings include:

  • Ford’s patent for self-driving police cars;
  • Google’s patent for a sticky car hood; and
  • Uber’s patent for flashing car-door signs to communicate messages to other drivers.

Patent filings in autonomous vehicle technology have increased rapidly since 2009 (see Figure 1), when Google first invested in self-driving research. Between 2010 and 2014 patent filings grew as a result of more connected operating software requiring IP protection and patents for newly created brands related exclusively to self-driving cars.

Figure 1. AV patent filing trends

There will be numerous challenges for self-driving vehicles, along with technical setbacks, legal questions and safety considerations, that must be addressed before these cars hit the road. These challenges foreshadow the need for additional technology development around systematic decision making for the vehicle and better integration of self-driving vehicle components (eg, sensors and software) to achieve the goal of better safety. An accident or tragic death by a self-driving vehicle is likely to have more impact than a similar accident by a human driver. The result of this could encourage a surge in safety and related patent filings. These would include technologies covering security, damage mitigation to humans (both external and internal to the vehicle), warnings, alerts and operator-vehicle interfaces for providing optimal safety in irregular situations.

Technology giant Alphabet (Google) – through its self-driving division, Waymo – has led the patent race to bring driverless cars to market to date. Google started working on its self-driving-car project in 2009 and quickly secured investment from tech companies and car makers. Google’s project team has since equipped a number of different types of cars with its self-driving equipment, including the Toyota Prius, Audi TT, Fiat Chrysler Pacifica and Lexus RX450h. Google has also developed its own custom self-driving vehicle which uses equipment from Bosch, LG and Continental. At the beginning of 2017, Google reported its autonomous fleet had travelled a total of 636,868 miles in autonomous mode.

Traditional auto makers, pressured to keep up with Silicon Valley companies, have sharply boosted their own patent filings over the past five years. Prestigious UK brand Bentley has announced that it is working on autonomous technology, while Toyota is developing technology for regular production cars that would allow motorists to shift between assisted and full autonomy. Ford has taken a different approach altogether – developing a vehicle that will never need human intervention and likely will not have a steering wheel or pedals.

Baidu versus Google: who will take the lead?

Globally, the United States and Asia are leading innovation in the race to develop driverless cars. The United States, China and Japan top the list of major jurisdictions for autonomous vehicle patents (see Figure 2) but America’s Google and China’s Baidu are the two companies leading the market. Despite the fact that Baidu – the search giant nicknamed ‘China’s Google’ – began working on self-driving cars only in 2013, the pace of development in China has been rapid.

Figure 2. Major jurisdictions for AV patents

Analysts predict that Baidu will become the market leader in China and that this market could be worth more than $100 billion by 2025. In recent years the search-engine operator has positioned itself as an artificial intelligence (AI) company, developing autonomous car software for self-driving vehicles. AI is seen by many as the backbone technology of the so-called fourth industrial revolution and its application in the development of smart cars is now a national priority according to the country’s latest three-year plan. As a result, start-ups and venture capital investors in China are ploughing billions of dollars into developing the future of mobility.

Baidu began developing technology for self-driving cars around 2013, well before its peers but years after Google. It hit a major milestone in 2015 when a modified BMW completed an 18.6 mile route in Beijing using its self-driving technology. Vowing to release a driverless car this year, with mass production to begin by 2021, Baidu has enlisted companies from around the world – from car makers to ride-sharing companies – as partners. In August 2016, Baidu teamed up with Ford Motor Co to invest a combined $150 million in Velodyne LiDAR, Inc – a supplier of the technology that enables self-driving cars to see and avoid what is around them.

At the International Consumer Electronics Show in January 2018, Baidu unveiled the Apollo 2.0 platform – an updated system created alongside more than 90 industry partners. Among these is Microsoft – which will provide its Azure cloud computing platform – and integrations with self-driving computing platforms from Intel Corporation and NVIDIA Corporation. At the show, Baidu CEO Lu Qi said that China is rapidly closing the gap with the United States when it comes to AI, thanks to strong government support and the country’s huge population – both key ingredients in promoting the technology’s development.

Building on the success of the original Apollo platform, the newly updated system boasts added security, more robust positioning, and control and cloud simulation – enabling vehicles to be autonomously guided through basic urban environments, even at night. By partnering with other companies, Baidu aims to secure access to vast quantities of real-world driving data. This can then be fed into its algorithms, resulting in rapid improvements in autonomous driving. These additional functions will enable Baidu to integrate the Apollo platform into a wider variety of applications – from private passenger vehicles to public transportation and ride-sharing services.

Edging out the competition

Though Baidu is the most prolific Chinese technology company innovating in the self-driving space, it is not recognised as a major Chinese patent filer (Figure 3).

Figure 3. Major patent filers during first period of growth (2010 to 2014)

Baidu was not a major patent filer in self-driving technology during the first period of innovation growth in China (2010-2014). However, it sprang into the top patent filers list in the second period of growth, from 2015 to 2016, with 57 filings in 2016 alone. Most of these patents relate to image processing techniques, which are essential for developing self-driving vehicles.

In a surprise move last year, Baidu announced that it would provide open-source software for its self-driving car technology. The decision may have been inspired by the strategy employed by Google to dominate the smartphone market with its Android operating system, with Baidu claiming that Apollo is the “Android of the auto industry”.

The move is also reminiscent of Tesla’s limited, open-source patent pool for its electric vehicle technologies – including vehicle components, battery charging, energy storage and power optimisation. Keen to share Tesla’s technology for cleaner transportation, two years ago CEO Elon Musk announced that Tesla would “not initiate patent lawsuits against anyone who, in good faith, wants to use our technology”. Why give its patents away? To build the size of the market and encourage others to abandon internal combustion engines and consider going electric. As more people buy electric cars, the grid will get bigger and Tesla will likely dominate a larger area of the automotive market.

While Baidu has made all the right moves to establish itself as a major player in autonomous driving, Google was always going to find it difficult to compete. After refusing to accept Chinese censorship, Google lost its licence to operate in the country in 2010. Beijing is making it increasingly difficult for US companies, particularly those with proprietary data, to gain access to the Chinese market and this will be a challenge for Google.

Government first

Not only does Baidu have access to millions of vehicle owners that its main competitor cannot reach, it also enjoys considerable support from the Chinese government, which named autonomous vehicles as a key sector for innovation in “Made in China 2025”.

With driverless technology still relatively new, regulators need to spend time assessing and creating laws that will proactively govern autonomous driving in the future. This is where China and Chinese companies have an edge. In an interview with CNBC, Michael Dunne, president at Dunne Automotive, said: “[the] Chinese government can, and will, facilitate autonomous driving sooner than we will in the United States and China could take the lead very easily because of this. There’s more to it than just technology. Regulation matters a lot.”

China is governed by a single political party and this means that the decision-making process is faster and simpler than in other countries. It would not be unprecedented for a new self-driving law to be agreed within 24 hours. AI expert turned venture capitalist Kai-Fu Lee describes China’s regulatory system as “techno-utilitarianism”. At his Oxford Union address on February 19 2018, Lee explained his thoughts in more detail:

China has a techno-utilitarian approach that basically says, ‘Let’s get the product out there, iterate, collect data, fix things when they break, be very fast iterating, and be willing to change the laws when things are proven some other way’. And again, neither one is right or wrong, but in terms of making AI progress, I think analysis paralysis will be the problem. [This is] the Western world’s biggest danger in technology competition.

Fast track to a self-driving future

While Google’s complex relationship with China has helped Baidu to become a market leader in the country, Asia is quickly asserting itself as a significant market for autonomous driving innovation.

Research from Ford found that 84% of Indian and 78% of Chinese citizens could see themselves owning an autonomous car, compared with only 40% of those in the United States and 30% in the United Kingdom. Home to megacities such as Beijing and Delhi, and a population approaching 5 billion, Asia could benefit most from autonomy in travel.

The 2020 Summer Olympics in Tokyo is also a significant factor towards the wide deployment of autonomous vehicles in Asia. Thousands of visitors are expected to travel to the city for the games and Japan is aiming to adopt autonomous transport to deal with the influx.

Prime Minister Shinzo Abe sees the Olympics as an opportunity to encourage Japanese companies to spend and innovate. Japanese robotics maker ZMP Inc has partnered with a taxi operator in Tokyo to launch a self-driving taxi in time for the games. As a major Olympic sponsor and Japan’s largest automaker, Toyota believes that the Olympics will be an important venue for showcasing new technology and has already announced that it will bring a fleet of autonomous cars to the Japanese games.

A drive towards Silicon Valley

Silicon Valley is well known as the home to US powerhouse technology companies including Tesla, Uber and Google. Now, Chinese companies are catching up with their Silicon Valley counterparts and developing more sophisticated driverless technology. In recent years China has invested heavily in California to conduct R&D around autonomous technology. By expanding operations in California, Chinese companies have access to first-class talent from Apple, Google and Tesla. Baidu often credits its investment in R&D in California for providing it with the knowledge to help reap bigger sales and profits in China – working with industry veterans stateside and commercialising ideas back in China. Uber rival Didi Chuxing has now set up an R&D centre in California for a specially selected team of scientists, engineers and researchers to look into the use of AI in security and intelligent driving technologies.

Despite China’s focus on the self-driving car market, Beijing allowed autonomous vehicle road tests only in December 2017. For this reason Chinese companies have continued to head to California to conduct road tests. According to data released by the California Department of Motor Vehicles, 12 of the 50 firms seeking permission to conduct tests in 2018 are from China or have a Chinese founder. Chinese transportation start-ups JingChi and TuSimple, California-based and others are all testing self-driving cars in California.

California may traditionally have been the best place to test autonomous vehicles to date but in January 2018 China completed the first draft of its national rules for driverless vehicle road testing, including city-planning elements that are crucial to testing autonomous cars. In addition to detailing the testing requirements for drivers, cars and companies, the regulations seek to identify suitable road sections for tests and how roads should be reconstructed to offer a better testing environment.

With opportunities to test autonomous vehicles opening up in Asia, China’s successful tech companies could shift their efforts back to home soil. Alternatively, they could continue to expand R&D operations in Silicon Valley – and globally – to add pressure to Google’s established market.

The road to self-driving success

Outside of the United States, China has used its innovative AI companies to speed ahead and establish Asia as a significant player in the autonomous car industry. Global development of self-driving cars has been relatively slow to date, as with most current fields of technology, but a rapid acceleration of the sector is anticipated.

China’s global influence in innovation is increasing rapidly – a conclusion supported by insight into the competitive landscape of the most innovative companies and R&D organisations. Information for Industry, Inc recently reported a record number of 320,003 patents granted by the US Patent and Trademark Office in 2017, with a 28% growth in grants for Chinese companies.

Chinese government officials have made innovation a priority for the past decade, with the goal of importing products to the United States, as well as having local sales offices in the United States that bring Chinese products to market. In 2008, China received barely more than 1,000 US patents. By 2016 that number had increased to 8,800 patents and in 2017 had risen further still to 11,241. Considering this upward trend and the time lag between patent application and patent grant, this number is likely to be considerably higher today.

Asia is proving to be a continent that can progress ideas quickly and safely. Supported by a nation of people willing to trial autonomous vehicles and a government focused on facilitating a profitable new industry, the future looks bright for self-driving technology in China.

Action plan

More and more companies are investing in self-driving technology. Traditional automakers, technology companies and ride-sharing firms are all competing for market share in the autonomous vehicle space but there are two technology juggernauts leading from the front. Google versus Baidu pits the United States against Asia. With Chinese automakers setting up research labs in Silicon Valley to catch up with US technology developments – and the Chinese government’s ability to facilitate autonomous driving far sooner than other nations – does Asia have the ability to leapfrog the West? Below are some of the significant milestones in this race to the top:

  • In a surprise move last year, Baidu announced that it would open-source its self-driving car technology to facilitate market growth and collaboration.
  • Baidu has positioned itself as an artificial intelligence (AI) company, developing autonomous car software for self-driving vehicles. AI is seen by many as the backbone technology of the fourth industrial revolution and its application in the development of smart cars is now a national priority for China.
  • By 2025, the Chinese government wants half of all new vehicles sold in China to be equipped with advanced autonomous technology.
  • China is governed by a single political party, making the decision-making process a faster and simpler task than for other nations.
  • In recent years China has invested heavily in California to conduct R&D around autonomous technology. Expanding operations there gives Chinese companies access to first-class talent from Apple, Google and Tesla.
  • In January 2018 China completed the first draft of its national rules for driverless vehicle road testing, including city-planning elements that are crucial to testing autonomous cars.

Gaurav Agnihotri is CPA Global’s assistant vice president, operations, India

All patent data in this article was extracted from Innography using self-driving specific technology terms and relevant patent classification codes

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