China’s truck industry is buying more driver assistance technology

BEIJING – China’s truck industry is finding more and more reasons to buy vehicles with driver assistance technology.

It’s a crucial step toward generating revenue in an emerging company that has attracted a lot of investor dollars, but has delivered relatively little so far.

One broad transformation is that China’s trucking industry is moving from one in which individual drivers dominated to one in which fleets hold the majority share, says Gui Lingfeng, director at Kearney Strategy Consultants.

He pointed out that five years ago, fleet operators controlled only about 20% of China’s truck market. Currently the figure is 36% and is expected to reach 75% by 2025, he said.

The companies trying to sell trucks to fleet operators are using driver-assistance technology as a way to make the vehicles more attractive, Gui said.

That early technology integration gives truck makers an edge in the amount of data they can collect — for training autonomous driving algorithms, he said.

In addition, Chinese authorities will require all newly produced trucks since 2022 to be equipped with basic driver assistance technology that warns against forward collisions and lane departures, Gui said.

Chinese driver-assistance trucking startup Inceptio claims it already has more than 650 trucks in China – mainly for logistics customers – and has traveled more than 50 million kilometers (31 million miles) in commercial operations.

Inceptio develops the driver assistance system and works with Original Equipment Manufacturers (OEMs) for mass production.

“As far as customers are concerned, there is a kind of countercyclical effect,” Inceptio CEO Julian Ma said in an interview in late August. “The economy is getting tighter, so the motivation to cut costs is getting stronger, not weaker. That makes our customers more anxious to use our products.”

Chinese logistics companies have experienced tremendous growth in recent years, thanks to the rise of e-commerce. That has led to price wars, while economic growth is slowing.

Industry giant SF Holdings reported a 5.1% decline in operating revenues to 189 billion yuan ($25.97 billion) in the first three quarters of the year, including a 6.4% year-on-year decline in the Third quarter.

But vehicle upgrade cycles can support continued truck sales.

Truck drivers typically replace the vehicles every four to five years, Ma said. “There are approximately 7 million heavy trucks in China. Even if the market does not grow, between 1.2 and 1.5 million new ones will be sold annually.”

The startup claims its trucks cost about 5% less than traditional options, on top of safety and environmental benefits.

Already, on average, about 95% or more of a thousand-mile truck journey is handled by the computer, meaning the driver is largely in standby mode, Ma said. “So the workload has been reduced a lot.”

Ma said Inceptio’s focus over the next three years is on cost-sensitive customers, such as in logistics. He expects driver assistance systems to dominate in the coming years, with 2028 being the most optimistic scenario for the commercial deployment of fully self-driving trucks.

Being able to completely eliminate drivers will provide the most cost savings for truck drivers.

Other startups are testing different forms of driver-driven trucks in China.

Kargobot, backed by driving giant Didi, operates more than 100 autonomous trucks between Tianjin, near Beijing, and the northern province of Inner Mongolia.

Many of those trucks operate through what is called platooning: a human driver sits in the lead vehicle and two or three trucks follow, completely self-driving, without any human staff inside.

Junqing Wei, CEO of Kargobot, predicts that in the next decade a network of nodes will emerge on the outskirts of cities, connected by highways on which self-driving trucks transport products. This was evident from his comments in October at CNBC’s East Tech West conference in the Nansha district of Guangzhou, China.

Yole Intelligence analysts are keeping a close eye on whether robot truck companies can meet production and delivery targets for the next two years.

It’s a $2 trillion market, with China accounting for about $650 billion to $750 billion and the U.S. a little more than that, says Hugo Antoine, technology and market analyst, computer and software, at Yole Intelligence, part of Yole Group .

“This is why many investors are investing in this market,” he said. “Because if you have one or two percent of this market, it’s huge.”

However, it remains unclear how quickly regulators will allow fully self-driving trucks on most roads, even if operators want to buy them.

“Even if the industry is technically ready, I think the transport regulator anywhere in the world will still need a year or even two years to validate the data and run their own tests before they can issue the driverless license hand over,” said Ma from Inceptio. .