Volvo partners with Baidu for self-driving taxi

volvo baidu
A Volvo self driving car on display at the North American International Auto Show media preview, January 19, 2017 in Detroit, Michigan. Image credit: Darren Brode /

STOCKHOLM (Reuters) – Volvo Cars has teamed up with Chinese search engine operator Baidu to develop a self-driving taxi for China, it said on Thursday, opening another frontier to secure its place in the robotaxi market while its Uber supply deal remains in limbo.

The Chinese-owned Swedish carmaker is one of a growing list of auto manufacturers tying up with technology companies or rivals to split the huge cost of developing functional and safe self-drive systems.

Volvo said the venture will give it access to Baidu’s autonomous driving software Apollo, which it intends to use to develop a so-called Level 4 car, only one off the top level and the most sophisticated yet attempted by Volvo.

The top Level 5 designation is for vehicles that should be capable of navigating roads without any driver input in all conditions.

CEO Hakan Samuelsson said he expects sales of robotaxis to ride-hailing operators to account for a “significant portion” of the vehicles needed to hit its target of achieving a third of its sales from self-driving cars by 2025.

“Robotaxis is a segment where we will compete not as operators but by selling cars to companies we’ve sold to previously,” he told Reuters.

The race is on to be the first to introduce an autonomous product to the ride-hailing market, which already accounts for more than 30% of the global taxi market. Goldman Sachs analysts believe the value of the ride-hailing market could achieve an eightfold increase to $285 billion by 2030.

Volvo is trying to make headway as a mid-size luxury player with more limited resources than a BMW or Audi and was forced to drop plans for an initial public offering this year because of international trade tensions and a downturn in share prices across the auto sector.

Partnerships are key

Samuelsson said he expects development costs for self-driving and electric vehicles will be about 5% of turnover and that partnerships are essential, such as its venture with technology company Veoneer to develop autopilots for cars to sell to individuals.

“We need to be humble and say that we need new partnerships to be strong in this segment … We definitely cannot do this in our normal development area,” he said.

Samuelsson expects partnerships with battery suppliers as well as producers of components such as electric motors, inverters and chargers, but said the company still intends to develop its own electric powertrain.

Volvo didn’t say when the Baidu car would be production ready and its actual sales programme in robotaxis depends largely on its deal to supply up to 24,000 Level 1 and Level 2 autodrive cars to Uber between 2019 and 2021.

That deal was thrown into doubt when Uber halted its road-testing program after a recent fatal collision, but Samuelsson said the deal was “back on track” with deliveries planned for next year.

However, three sources familiar with the matter have told Reuters that Uber has no intention of buying anywhere near the 24,000 cars the deal allows for, making the Baidu tie-up all the more important for Volvo.

The Baidu deal has no supply agreement, Samuelsson said, but is being viewed as a first step into the China market, which industry forecasts suggest could become the single largest market for autonomous cars in the coming decades.

Baidu last year opened Apollo to third parties to accelerate development in the face of stiff competition from Google’s Waymo and US carmaker Tesla.

It has since brought on BMW as an adviser and announced plans to begin testing self-driving cars with Ford by the end of this year.

(By Esha Vaish; Reporting by Esha Vaish in Stockholm; Additional reporting by Heather Somerville; Editing by David Goodman)

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