Overview
Shanghai is a challenging place for drivers. In this Chinese city of 25 million people, traffic is heavy most of the day. There are vehicles abruptly switching lanes without signalling, food delivery riders running red lights, and pedestrians crossing roads wherever they feel like it.
That’s why, in my most recent research trip to China, I am a bit scared when I climb into a car to test its Level 2++ assisted driving abilities – a system designed by software company Momenta that can control steering, acceleration, and braking. Only a few hours earlier I’d undergone a white-knuckle taxi ride in which the human driver repeatedly slammed on the brakes to get us through the morning traffic. I could only imagine what it would be like for a computer to navigate the hustle of downtown Shanghai during a busy lunchtime. I do have a driver (Shanghai law dictates that even with a Level 2++ system you must have someone with two hands on the wheel at all times). But much of the thinking would still be done by the car. Could it cope?
Chinese automakers, which have dominated the global electric vehicle (EV) industry, are making rapid advances in autonomous driving technology. In an EV market marked by cut-throat competition, they have looked to advanced assisted-driving features as a way to distinguish their products from rivals. Goldman Sachs estimates China’s autonomous vehicle (AV) adoption rates will be the highest in the world by 2040, with 90 per cent of sales made up of minimum Level 3-enabled vehicles where the car handles almost all of the driving. The forecast is 79 per cent in Europe and 65 per cent in the US.[1]
Such progress is a story writ large in other parts of China’s technology sector. After DeepSeek’s breakthrough boosted optimism about the country’s lead in the AI race, the escalation of US-China trade tensions fuelled concern about their impact on Chinese tech companies. But if the 20 or so businesses I met with on this trip were anything to go by, then it would seem geopolitical constraints haven’t stopped firms from innovating. Instead, advancements are being made across sectors. In just a few days I saw a biotech company that has developed an AI platform to forecast clinical success by using pre-clinical data, an autonomous electric aircraft provider that’s seeking to make flying taxis commercially possible, and a software company that enables household devices of different brands to connect or ‘speak’ with each other.
Those advances are supported by a number of structural advantages in China. The country’s domestic market, for example, with its increasingly tech-savvy consumers, is big enough to incubate local startups before they grow bigger or go global. The vast pool of talent in a country of 1.4 billion is also helpful: China produced more than four times as many science, technology, engineering, and maths college graduates as the US in 2020.[2] The government is accelerating its push for self-reliance in technology as the country faces a growing economic rivalry with the US. Last year, China invested $500 billion on research and development, three times what it was in 2012.
Take automated driving as an example: a total of 16,000 licences for driverless vehicles have been issued in China and 32,000 kilometers of roads have been opened for autonomous car testing.[3]
The scale of support goes a long way to explaining how far China’s AV technology has come. That prowess is quickly apparent in my test drive. After just a few blocks my unease has completely faded. The car skilfully navigates scooters, buses, multiple lanes, and a construction site without any human intervention. The whole 45-minute drive - including a 2.8-kilometre tunnel and a bridge that spans over 400 meters above the Huangpu River - turns out to be surprisingly smooth. There is space for improvement, but I have to say the ride is one of the most comfortable I’ve ever had in the city.
Still, some downside risks remain for the sector. Speaking from experience, it will take time for consumers to accept and adopt these often quite radical forms of automation. Competition and regulation are also worth monitoring.
I have no doubt after my memorable ride, however, that it won’t be too long before I can take a completely driverless car in this city - just me, an auto pilot, and the bustling streets of Shanghai.
[1] Partially autonomous cars forecast to comprise 10% of new vehicle sales by 2030 | Goldman Sachs
[3] China's Ministry of Public Security
