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China's growing support for autonomous driving technology is giving pioneering driverless taxi companies an early lead in some of the country's largest cities.

An analysis by The Wall Street Journal pointed out that these Chinese companies may soon become global leaders in a market potentially worth more than $100 billion.

A Pony.ai self-driving car waits at a traffic light in the high-level autonomous driving demonstration zone in Beijing, China.

Big cities usher in the era of autonomous driving

In recent weeks, cities including Beijing, Shanghai and Guangzhou have taken steps to usher in the era of autonomous driving, including allowing unsupervised driverless taxis on the road, expanding driverless testing areas or releasing detailed infrastructure construction and regulatory plans for the emerging industry. On Saturday, Shenyang became the first city in northeastern China to commit to building new roads specifically for driverless vehicles.

China now has more than 32,000km of roads available for the first generation of driverless taxis, part of a wave of investment in “new quality productivity”.

The effort is helping companies — from internet giant Baidu to local startups WeRide, Pony.ai and a dozen others — bring driverless cars to China’s streets and propel them to stock exchanges from Shanghai to New York.

Chen Qing, an analyst at Bocom International, called it a turning point for China's driverless taxi industry, noting that government policies and efforts to promote the development and commercialization of self-driving taxis are "accelerating" this year.

Self-driving technology isn’t ready for prime time, and some experts caution that investors have been too hasty in chasing a handful of stocks in the sector in recent months. But the pace of policy change and China’s relatively high penetration of electric vehicles have fueled market enthusiasm for the sector.

Goldman Sachs recently estimated that the global autonomous driving industry could be worth more than $100 billion by 2030. Goldman Sachs analysts believe that the full popularization of autonomous driving technology will take at least a few years, but commercial autonomous vehicles may arrive sooner, including driverless taxis. They wrote in a recent research report that by 2030, there may be millions of commercial autonomous vehicles used as online ride-hailing vehicles on the road around the world.

Leading company in the industry

Baidu leads in terms of large-scale operations and consumer coverage. The company's test demonstration zone in Wuhan is the largest in China. Baidu's Carrot Run has more than 400 driverless taxis in the Wuhan demonstration zone and plans to expand the fleet to 1,000 by the end of this year. Baidu is one of the few listed companies recommended by Goldman Sachs in the field of autonomous driving.

Other companies Goldman recommends include Chinese state-owned Desay SV Automotive, AI giant Nvidia, Intel Corp’s Mobileye, Japan’s Renesas Electronics and Taiwan’s Quanta Computer.

There are more companies waiting in the wings. Pony.ai, a local startup with nearly 300 self-driving taxis in four major Chinese cities, received approval from Chinese regulators in April to go public in the U.S. Meanwhile, WeRide, which is testing cars in several Chinese cities, plans to raise up to $119 million in New York. BYD-backed Horizon Robotics recently received Chinese regulatory approval to list in Hong Kong, with the company valued at nearly $9 billion in its latest funding round. In addition, Black Sesame Intelligence, a system-on-chip company, recently raised about $122 million in its Hong Kong IPO.

Analysts say China’s self-driving technology is not as advanced as Tesla’s Autopilot system, which uses AI trained from video and other inputs, while many other companies use traditional coding and programming.But China also has other advantages, such as being the world's largest electric vehicle market.

Electric and hybrid vehicles are often equipped with advanced software that can be more easily integrated with self-driving technology than traditional cars, with electronic architectures that require fewer wires and can be updated remotely.

China has been promoting the construction of "vehicle-road-cloud integration" in an attempt to promote the progress of autonomous driving. Deploying roadside sensors and using a unified cloud system to help cars make better decisions can reduce costs for self-driving taxi manufacturers and help narrow the gap with more advanced automotive technology.

Analysts say these efforts may soon bear fruit. Last month, China selected 20 cities as pilot cities for "vehicle-road-cloud integration" applications to build infrastructure to support autonomous driving. Meanwhile, companies have accumulated more than 120 million kilometers of driving test mileage.

John Zeng, Asia forecasting director at consulting firm GlobalData Automotive, said Chinese companies are expected to take the lead in the field of driverless cars thanks to policy support, infrastructure construction and the popularity of electric vehicles.

"China's autonomous driving development will definitely be faster than other countries," said John Zeng.