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Self-driving technologies will likely enable Chinese companies to leapfrog developed countries in the automotive sector, as the value chain of the industry is expected to shift from hardware to software.
"Self driving is an area where China and the rest of the world are on the same starting line. And many of the Chinese teams have staff with world-class technological capabilities," said Kuang Ziping, founding managing partner of Shanghai-based Qiming Venture Partners.
Globally, there are three major forces in the driverless race — established technology companies, startups and traditional automakers.
"In terms of the size of the autonomous vehicle industry, the United States is a little bit ahead of China. But Chinese technology companies like Baidu, and startups like JingChi Corp, are doing as well as their US peers," Kuang said.
Conventional automotive firms, by comparison, are off the pace of early leaders in Germany or the US, he added.
Some reports have predicted a profound shift in the value chain of the automotive industry.
Currently, the overwhelming majority — approximately 90 percent – of the value of a vehicle relates to the hardware, such as the power train, the chassis, interior seating and lighting, according to global consulting firm Strategy&.
But in the future, the software layer — which provides the intelligence running the cars, and the applications layer, which offers services and content to meet consumers" transportation needs — will collectively take up 60 percent of the value of a self-driving car, according to Morgan Stanley"s estimates.
Wang Jing, CEO of JingChi Corp, a startup focusing on self-driving technologies, said China has lagged behind in the automotive sector in the past, but things may change in the near future, as cars would gradually become "software-defined".
However, one of McKinsey"s surveys showed 61 percent of the respondents think that car original equipment manufacturers are expected to have the best autonomous driving technology. Only 12 percent expect technology players to build a wide lead in the field.