Baidu’s Apollo Go Surges in China’s Robotaxi Market

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Baidu, often dubbed China’s answer to Google, is making substantial inroads into the realm of autonomous vehicles, particularly through its ambitious robotaxi program. This move aims to rejuvenate its business amidst sluggish revenue growth.

Recently, Baidu has outpaced rivals like Tesla in the Chinese market with its robotaxi initiative, Apollo Go. The rapid adoption of Apollo Go has positively impacted Baidu’s shares, showcasing the company’s leadership in the autonomous driving sector in China. Currently, Baidu operates a fleet of 300 self-driving taxis in Wuhan, providing 24-hour unmanned taxi services since the beginning of this year.

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Despite its early successes, Baidu’s financial performance has been underwhelming. In the March quarter, the company saw its slowest revenue growth in over a year, increasing by just 1 percent. Monetizing its cutting-edge AI technology remains a challenge, compounded by fierce competition in the advertising domain from companies like ByteDance, the owner of TikTok. As a result, Baidu’s Hong Kong-listed shares have plummeted by more than 30 percent over the past year. However, the recent success of Apollo Go has offered a glimmer of hope, propelling Baidu’s stock up by as much as 13 percent.

Baidu’s dominance in the robotaxi sector is facing imminent threats. Local competitors Pony.ai, AutoX, and WeRide are ramping up their efforts, and reports suggest Tesla has received approval to test its advanced driver-assistance system in Shanghai, with plans to unveil its own robotaxi soon.

Baidu’s early advantage stems from years of development and strategic partnerships. In 2016, Baidu joined forces with Nvidia to focus on autonomous vehicles and robotaxis, launching its Apollo open-source platform for autonomous driving a year later. These efforts have paid off, significantly reducing the production costs of its latest generation of robotaxis to less than half of the previous models.

Nevertheless, the growing popularity of Apollo Go has sparked significant pushback from local taxi drivers. Traditional taxi services, which are typically more expensive than robotaxis, have seen increased opposition from drivers who have petitioned for limitations on Apollo’s operations. This resistance is occurring amid rising social tensions in China due to high youth unemployment, which stood at 14.2 percent in May for individuals aged 16 to 24. As competition intensifies, this backlash could pose a significant threat to the growth of the nascent robotaxi sector.