Mention the autonomous car and it’s hard to avoid the image of a Tesla gliding down a Californian highway. But the biggest automotive market in the world is China, which means the biggest market for autonomous cars will also be China, and companies that fail to notice will be missing a massive opportunity.

My Gartner colleague Gaurav Gupta has been researching the Chinese market for autonomous cars (details at Market Trends: Strategize for Success With Opportunities in the Autonomous Vehicle Technology Stack in China) and sees an industry being pushed by government initiatives to create world-leading technologies.

Not that it will be easy – anyone who’s been there will know that Chinese roads present a very different challenge to the aforementioned California highway. Lane discipline becomes fluid when vehicles of different widths share the same space. In towns the combination of bikes, scooters, rickshaws and other transportation that can appear bewildering to the foreign traveler, let alone an AI system, but the absence of motorcycles on express ways can simplify things.

China lacks a complete and exhaustive supply chain for the complex technology stack required to build autonomous vehicles. While several startups and big tech companies have entered the race in this emerging market, there are key pieces of technology that are missing and far from being competent or mature. Policy barriers will also make it hard to capitalise on the best technologies from Germany, the US and other countries.

Perhaps most important is the low cost of labour in China, which can undermine the business model that justifies autonomous vehicles.

Recognising these points, the 15 regions in China have released standards for testing of automatic driving systems, and 11 cities in those areas issued 95 test licenses for 27 companies. The Chinese government has built a site to test autonomous cars in highway conditions, on a section of Binlai Highway in Shandong province and the country is building a 100 km highway with dedicated lanes for autonomous and semi-autonomous vehicles.

Unlike North America and Europe, most technology funding and policies in China are strictly controlled by the government. The government has strong policies to help and promote local/domestic companies, as evident in the rise of tech giants like Baidu, Alibaba Group, DiDi Chuxing and Tencent. Foreign companies will need partnerships and close participation in government-backed consortia to succeed.

The Chinese market for autonomous cars offer huge opportunities in AI, sensors, location systems, and communications, for those companies who are willing to take an active role in developing that market.

*This article is reprinted from the Gartner Blog Network with permission. 

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