Baidu’s Apollo, the underdog of autonomous driving platform

• Overview of the autonomous vehicle sector in the global automobile industry
• Search giant Baidu’s entry into the autonomous driving space
• Baidu’s approach in becoming a front-runner in the autonomous driving sphere

The global automobile industry is undergoing a rapid transformation and with the rise of new technology and innovation, the economics of the business is also changing. The autonomous-car is one of the more recent developments in the automobile industry, with the potential to change the dynamics of the industry’s business model and unlocking of new opportunities for the industry and its adjacent industries as well. According to a study by the Allied Market Research, the global autonomous vehicle industry is expected to be valued at $54 billion in 2019 and is projected to reach $557 billion by 2026, with an anticipated CAGR of 39.5% (between 2019-26). The main drivers that will contribute to this growth are firstly; safety as accidents due to manual errors will be eliminated, secondly; the carbon dioxide emission will reduce since vehicles will be powered by electric engines.

Chinese search engine tech giant Baidu has become the new poster boy in the autonomous car platform with its Apollo. It is an open source software platform designed with the motive to encourage and enter into collaborations with varied players from different verticals of the auto industry for accelerating the development of self-driving cars. The company has reeled in more than 100 global and domestic partners to build its ecosystem and aid its foray into autonomous driving since the launch of Apollo in 2017. Moreover, from top Original Equipment Manufacturer to the top auto suppliers, Baidu has signed contracts with major partners in just about 14 months of its incorporation. The advantage for Baidu with an open platform is that with its ecosystem it can focus on its expertise of AI (artificial intelligence) and software development while letting its partner clients to work on improving the hardware and other manufacturing components required to stay ahead of the tough competition within the autonomous driving sector. It is also worth noting that the company has reserved a couple of applications including the high-definition mapping and artificial intelligence under its control as these are considered few of the key areas of expertise.

Baidu now claims itself as one of the world’s largest partner ecosystem for an autonomous driving platform with more than 100 partners. Hence, with such varied partnerships, Baidu provides both a ‘reference vehicle platform’ and a ‘reference hardware platform’ so that partners can develop, test and deploy autonomous vehicles faster. Qi Lu of Baidu called the platform ‘Android of the autonomous driving industry, but more open and powerful’, with the aim to provide developers with the much-needed data, API’s, open source code and even reference hardware to help bring autonomous driving vehicles to the market.

At the Baidu Create 2018, the company also announced its plan on the mass production of Apolong, a fully autonomous bus in partnership with King Long and a consortium of 40 companies. The Apolong will be launched across the major cities in China this year and is initially designed for enclosed spaces such as airports, tourists spots and other controlled areas. The company also announced its plan to expand it to Japan by 2019, this will be in partnership with SB Drive; SoftBank’s autonomous driving division.

Furthermore, some notable competition for Baidu in the open platform is from Lyft, which in July 2017 launched its own open platform for autonomous driving. While Lyft does not have the web of partnerships like Apollo, it has about 10 partners and some of these are very prominent players in the space like Magna, General Motors, Waymco and Aptiv. The other notable software platforms include Voyage also an open platform, which is a spin-off of the education startup Udacity and also Comma.ai’s an AI startup, which has developed its own open source self-driving platform called the openpilot. There have been several other autonomous vehicle software developers which have and had launched their own versions, but very few can boast the kind of varied partnerships that Baidu has signed for its Apollo software.

Additionally, Baidu has also ventured out beyond its Apollo platform by investing across multiple startups. The company has dedicated a separate $1.5 billion investment fund called the Apollo Fund, which will invest in autonomous driving related projects. Few of the notable investments by Baidu in the autonomous vehicle startups are:

1. Hesai Tech, a company specialising in designing and manufacturing of laser sensors.
2. LiDARs (3D scanners for self-driving cars and robots), Baidu co-invested $39 million in series B round investment.
3. iDriver Plus, a company which is into developing unmanned autonomous vehicles. Baidu has invested an undisclosed amount in this start-up.
4. Velodyne, a LiDAR technology company. Baidu co-invested $150 million along with Ford in the start-up.
5. NIO, a Chinese automobile company specialising in designing and developing electric autonomous vehicles. Baidu along with Tencent led an $87 million funding round for the company.

The company is still heavily focused on improving its in-house capabilities for autonomous vehicles despite all its partnerships and investments. Baidu has also spoken recently with regard to shifting of its expenses to research and development (R&D) from its selling, general and administrative (SG&A) expenses, in order to ramp up its artificial intelligence and autonomous vehicles technology. The result was seen in the latest 2017 R&D expense figures, which saw a 35.9% increase from 2016. If we compare and look into the R&D expenses as a percentage of sales for Baidu with that of Tesla and Google, it shows that it is relatively higher. In 2017, the numbers for Baidu were 15.2%, while for Google it was 15% and for Tesla it was 12%. Additionally, a look into the 2017 employee data for the R&D shows that Baidu has more than 50% of its total employee in R&D as compared to Google’s, which had R&D employee base of about 38% from its total employees.

One can say, Baidu is comparatively younger in the automotive journey as equated with other giants like Waymo (Google backed automotive company) and Didi (Chinese ride sharing, AI and autonomous technology company). Further, when we talk about the driver data, a very critical aspect required to perfect the algorithm, which is expected to guide the autonomous vehicle Baidu has still expanded in this segment through lateral growth. The company’s extensive partner clients and its open platform enable it to access such data indirectly while also help it to develop the platform required for autonomous driving. In addition, other than collaborating with industry stakeholders, it has also partnered with automobile players in the US and China to test its Apollo platform in the coming months. Addedly, with the announcement of mass production of its Apolong bus and the limited on-road launch by this year, Baidu’s will reaffirm that it is a reckoning force in the autonomous vehicle space. The advantage for Baidu is the fact that it is China based, which is one of the most favourable economies for autonomous cars backed by a strong support from the government. The Chinese government is highly dedicated to becoming a global leader for artificial intelligence under its 2020-2030 plan, whereby it has eased regulations for autonomous cars so that the industry can accelerate quickly towards commercialisation. This is going to help all the technology leaders working in China including the autonomous vehicle companies. Hence, with the autonomous car segment continuing to move up the ladder and becomes a reality, the companies like Baidu seems to be moving in the right direction.