Two Deals Highlight China’s Push To Make Self-driving Cars

A couple of relatively small recent M&A deals have caught this Bystander’s eye.

Auto parts maker Ningbo Joyson Electronic Corp. said it had signed the deal it announced in February to pay $920 million for Key Safety Systems Holdings, an American firm that makes airbags for cars but, more critically to this deal, is developing collision avoidance technology and other autonomous car-safety systems. Ningbo Joyson’s other deal is a $205 million acquisition of TechniSat Digital, a German maker of sat nav systems.

Where the deals fit into the broader scheme of things is that both sets of technology are needed for the development of self-driving vehicles. China, the world’s largest auto market, does not want to be left behind in what promises to be the next revolutionary development in the car industry and a potentially whole new industry of shared mobility services.

Hitherto, much of the research in this area has been done by the military. The National University of Defence in Bejing is reported to have road tested a prototype driverless car in 2011 and the Military Transportation University in Tianjin to have done so the following year.

Commercializing military technology to help push China’s manufacturers up the value chain appears to have been given the green light, with autonomous vehicles a clear early application. Easing traffic congestion and air pollution and improving road safety are three reasons that the government would put its weight behind the initiative. Beating out the U.S. and Europe in a new, technologically driven market would be another.

State media have reported that the National University of Defence plans to cooperate with FAW Automotive, one of China’s ‘Big Four’ vehicle makers, to develop driverless vehicles.

In an uncanny echo of Google’s venture into autonomous vehicles, the search engine Baidu has teamed up with Germany’s BMW to focus on self-driving buses and jitneys. Its target is to have them operating on the roads by 2019 and in mass production within five years. Yutong, China’s largest bus builder, has already tested a prototype of its own.

Baidu spent $10 million buying Indoor Atlas, a data mapping company, and is developing Baidu Brain, a system to improve image recognition. It road tested a prototype car (a converted Series 3 BMW, not a bus) at the end of last year.

Volvo, which is owned by Zhejiang Geely, also plans to test 100 driverless cars in cities around China, though details are sketchy.

The Boston Consulting Group has forecast that China will be the world’s largest self-driving market by 2035. Ningbo Joyson’s deals suggest it believes that forecast will prove well founded.

Update: Changan, one of China’s ‘Big Four’ automakers, has sent a self-driving sedan on a 2,000 kilometre trip from its research headquarters in Chongqing to Beijing, claiming to be first Chinese automaker to undertake such a lengthy driverless journey.

 

 

 

 

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