The Economist: China’s super-smart Tesla-killers

Key topics.China leads in autonomous vehicle (AV) development and deployment.Regulation and cost remain major hurdles for AV mass adoption.The shift to Level 3 autonomy could revolutionise driving worldwide..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here..If you prefer WhatsApp for updates, sign up to the BizNews channel here..From The Economist, published under licence. The original article can be found on www.economist.com.© 2025 The Economist Newspaper Limited. All rights reserved..The Economist .Carmakers are pushing for autonomous driving's "ChatGPT moment"___STEADY_PAYWALL___.Sitting in his spacious office in the southern city of Guangzhou, He Xiaopeng is in an expansive mood. The boss of Xpeng, a Chinese electric-vehicle (ev) maker that is one of the frontrunners in the self-driving tech race, says that autonomous driving is on the cusp of a "Chatgpt moment". He points to the instant at the end of 2022 when, after years of development, Openai's chatbot pushed generative artificial intelligence from the realm of researchers into the mainstream..Mr He says this breakthrough moment is likely to happen later this year. China, whose autonomous-driving development he describes as "the fastest in the world", is likely to be a driving force. American drivers do not see the technology as a crucial feature in the way China's tech-savvy ev buyers already do, he notes..On a test drive in an Xpeng p7+ sedan through the bustling metropolis, your correspondent could see the reasons for his optimism. The car overtook a three-wheeled noodle cart, avoided scooters speeding the wrong way down the street and nailed a u-turn without intervention from humans. But the Xpeng driver did need to take control a few times during the twenty-minute ride. Improving the technology so that drivers barely have to touch the wheel on busy city streets is crucial to winning them over, says Mr He..Xpeng, like many of its rivals, is focused on the next front in a global battle. China's carmakers made evs better and more cheaply than the rest of the world and now want to do the same for autonomous vehicles (av). Though Chinese, American and European firms are still grappling over whose technology will dominate, China is racing ahead in deployment at scale..In the world of autonomous driving, there are two paths to commercial deployment: robotaxis and advanced driver-assistance systems (adas). Both are labelled by global industry standards from level zero (no automation) to level five (full automation without restrictions). l5 is far off because of technological, commercial and regulatory challenges, but cars at lower levels of autonomy are already on the streets..China's robotaxi experiment is the world's biggest. Robotaxis, which can be hailed through a fleet operator's app, are all l4, meaning they do not need a driver in the car but can operate only within approved areas. In China, five companies run more than 2,300 robotaxis, according to Bernstein, a research firm. Baidu leads with driverless fleets operating in 11 cities..Waymo, America's only fare-collecting robotaxi firm, runs over 700 cars in San Francisco, Phoenix and Los Angeles. Tesla, which has not fulfilled promises made over a decade to build driverless avs, claims it will soon launch a robotaxi service..Though Chinese robotaxis cost less than those made elsewhere, analysts say they are still prohibitively expensive for mass production, and operators are years away from breaking even. After investing more than $10bn in robotaxis, in December General Motors axed that loss-making project to focus on mass-produced cars with adas instead..adas is more about aiding drivers than replacing them. Everyone is watching to see when Chinese regulators will allow a move from l2, whereby cars can steer, accelerate and brake on their own with a human in the car, to l3, which requires no hands or eyes on the road in certain situations. The widespread adoption of l3 would transform transport. Drivers could legally check emails or watch films during tedious commutes, as long as they sit ready to take over if the car requests..Chart: The Economist.China has dominated the rollout of adas, too. As the world's largest auto market, it has churned out more l2 cars than any other country. These cars, including the more advanced l2+ subset, still require the driver to keep hands on the wheel and eyes on the road, but are gearing up for the shift to l3. Counterpoint, a research firm, in June forecast l3-capable car sales in China to be four times that of either North America or Europe in 2026, with more than 1m on Chinese roads by then.By 2040, 90% of all car sales in China will be avs of l3 or above, compared with nearly 80% in Europe and about 65% in America, reckons Goldman Sachs, a bank (see chart)..Intense competition helped China achieve its lead. In America and Europe, sophisticated adas had been limited to premium models, though the tech is becoming more common now. But in the cut-throat Chinese market, carmakers were quick to include it as standard in order to compete, and many customers are now unwilling to pay for it. byd, the world's biggest ev maker, last month said even its cars priced under $10,000 would come with free adas that can get on and off motorways, change lanes, and park by itself. Though more advanced than byd's entry-level system, Tesla's self-driving software costs $8,800 on top of the cost of the car. Analysts hailed byd's move as the "democratisation" of autonomous tech. Competition among suppliers is also sharp. Hesai, which makes lidar sensors that help self-driving cars perceive the world, has slashed prices from thousands of dollars five years ago to about $200..Roadblocks ahead.Regulation is the biggest roadblock. America's industry, hobbled by safety investigations in recent years, has called on its government to develop a national framework for av development. "Federal inaction has created regulatory uncertainty," a lobby group wrote to the Department of Transportation in January, noting that Chinese competitors have benefited from their government's support. American self-driving carmakers and suppliers hope Tesla's founder, Elon Musk, who has called for fewer barriers to av deployment, will be a boon to the industry in his new position advising President Donald Trump. Tesla's gigafactory in Shanghai was a catalyst for the growth of China's ev industry. Its Full Self-Driving software, which relies on cameras and an ai model but still requires human supervision as an l2 system, has also spurred China's av development..With an eye to dominating the global av market, Chinese officials have paved the way for the rollout to accelerate. In 2020 the state planner set a goal for l3 mass production by this year. In June, the government gave nine automakers approval to test l3 systems on public roads. In October, the industry minister vowed to speed up rule-making. Competing local and regional governments provided permissive regulation and billions of dollars in subsidies for r&d, computing power and infrastructure investment that makes streets easier for driverless cars to navigate. At China's annual parliamentary meeting this month, Lei Jun, boss of Xiaomi, a smartphone maker that launched a popular ev, urged the government to allow self-driving functions by 2026..Some countries have legislated for higher levels of autonomy but have few firms making cars with those capabilities. Mercedes received approval to sell l3 cars in Germany and in the states of California and Nevada, allowing drivers to go hands-off, eyes-off below certain speed limits on approved highways. Though China only allows l2, many of its carmakers already advertise "l2.9" systems to show their tech is edging towards l3. Carmakers elsewhere had been less keen to invest in l3, which they saw as unprofitable, says Yale Zhang of Automotive Foresight, a consultancy. In China, by contrast, he says, "as soon as l3 is approved, that will be revolutionary and change the state of driving.".That potential shift raises questions about safety and liability. In January, Xiaomi recalled 31,000 of its su7 evs following several hundred complaints of crashes when the sedans tried to park themselves. Once China approves l3, hundreds of thousands of similar cars will be navigating more complex roads, at higher speeds than parking. What happens if a driver turns self-driving features on and the car kills someone? Experts say l3 shifts responsibility to automakers. Mercedes has assumed liability for its l3 system, when used as intended. But there are many details that regulators, carmakers, and insurers need to resolve..There are other big issues to contend with. Facing slower economic growth, China has to balance tech progress with job loss. In July a robotaxi collision with a pedestrian in the city of Wuhan set off debates about how taxi drivers will be affected. Then there are the troves of data that self-driving cars collect. The headwinds Chinese ev-makers face in entering big Western markets—including steep new tariffs from the eu and America—will only grow stronger for smart cars and connected technology. Though few China-made cars drive on American roads, the Biden administration proposed a ban on Chinese "connected-car" hardware and software on national-security grounds. President Trump must decide if that will happen..Mr He wants to convince drivers that self-driving tech is as useful as Chatgpt and just as safe. But the stakes are much higher sitting behind the wheel..Read also:.🔒 Tesla unveils Robotaxi plans as Musk predicts "epic" growth🔒 Tesla faces losing its EV market dominance in America🔒 Musk's image falters as Tesla struggles in China

The Economist: China’s super-smart Tesla-killers

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