China | China’s super-smart Tesla-killers
Behind Deepseek lies a dazzling Chinese university
Sitting in his spacious office in the southern city of Guangzhou, He Xiaopeng is in an expansive mood. The boss of Xpeng, a Chinese electricvehicle (EV) maker that is one of the frontrunners in the self-driving tech race, says that autonomous driving is on the cusp of a “ChatGPT moment”. He points to the instant at the end of 2022 when, after years of development, OpenAI’s chatbot pushed generative artificial intelligence from the realm of researchers into the mainstream.
Mr He says this breakthrough moment is likely to happen later this year.China, whose autonomous-driving development he describes as “the fastest in the world”, is likely to be a driving force. American drivers do not see the technology as a crucial feature in the way China’s tech-savvy EV buyers already do, he notes.
On a test drive in an Xpeng P7+ sedan through the bustling metropolis, your correspondent could see the reasons for his optimism. The car overtook a three-wheeled noodle cart, avoided scooters speeding the wrong way down the street and nailed a U-turn without intervention from humans. But the Xpeng driver did need to take control a few times during the twenty-minute ride. Improving the technology so that drivers barely have to touch the wheel on busy city streets is crucial to winning them over, says Mr He.
Xpeng, like many of its rivals, is focused on the next front in a global battle. China’s carmakers made EVs better and more cheaply than the rest of the world and now want to do the same for autonomous vehicles (AV). Though Chinese, American and European firms are still grappling over whose technology will dominate, China is racing ahead in deployment at scale.
In the world of autonomous driving, there are two paths to commercial deployment: robotaxis and advanced driver-assistance systems (ADAS). Both are labelled by global industry standards from level zero (no automation) to level five (full automation without restrictions). L5 is far off because of technological, commercial and regulatory challenges, but cars at lower levels of autonomy are already on the streets.
China’s robotaxi experiment is the world’s biggest. Robotaxis, which can be hailed through a fleet operator’s app, are all L4, meaning they do not need a driver in the car but can operate only within approved areas. In China, five companies run more than 2,300 robotaxis, according to Bernstein, a research firm. Baidu leads with driverless fleets operating in 11 cities.
Waymo, America’s only fare-collecting robotaxi firm, runs over 700 cars in San Francisco, Phoenix and Los Angeles. Tesla, which has not fulfilled promises made over a decade to build driverless AVs, claims it will soon launch a robotaxi service.
Though Chinese robotaxis cost less than those made elsewhere, analysts say they are still prohibitively expensive for mass production, and operators are years away from breaking even. After investing more than $10bn in robotaxis, in December General Motors axed that loss-making project to focus on mass-produced cars with ADAS instead.
ADAS is more about aiding drivers than replacing them. Everyone is watching to see when Chinese regulators will allow a move from L2, whereby cars can steer, accelerate and brake on their own with a human in the car, to L3, which requires no hands or eyes on the road in certain situations. The widespread adoption of L3 would transform transport. Drivers could legally check emails or watch films during tedious commutes, as long as they sit ready to take over if the car requests.
China has dominated the rollout of ADAS, too. As the world’s largest auto market, it has churned out more L2 cars than any other country. These cars, including the more advanced L2+ subset, still require the driver to keep hands on the wheel and eyes on the road, but are gearing up for the shift to L3. Counterpoint, a research firm, in June forecast L3-capable car sales in China to be four times that of either North America or Europe in 2026, with more than 1m on Chinese roads by then. By 2040, 90% of all car sales in China will be AVs of L3 or above, compared with nearly 80% in Europe and about 65% in America, reckons Goldman Sachs, a bank (see chart).
Intense competition helped China achieve its lead. In America and Europe, sophisticated ADAS had been limited to premium models, though the tech is becoming more common now. But in the cut-throat Chinese market, carmakers were quick to include it as standard in order to compete, and many customers are now unwilling to pay for it. BYD, the world’s biggest EV maker, last month said even its cars priced under $10,000 would come with free ADAS that can get on and off motorways, change lanes, and park by itself. Though more advanced than BYD’s entry-level system, Tesla’s self-driving software costs $8,800 on top of the cost of the car. Analysts hailed BYD’s move as the “democratisation” of autonomous tech. Competition among suppliers is also sharp. Hesai, which makes lidar sensors that help self-driving cars perceive the world, has slashed prices from thousands of dollars five years ago to about $200
Roadblocks ahead
Regulation is the biggest roadblock. America’s industry, hobbled by safety investigations in recent years, has called on its government to develop a national framework for AV development. “Federal inaction has created regulatory uncertainty,” a lobby group wrote to the Department of Transportation in January, noting that Chinese competitors have benefited from their government’s support. American self-driving carmakers and suppliers hope Tesla’s founder, Elon Musk, who has called for fewer barriers to AV deployment, will be a boon to the industry in his new position advising President Donald Trump. Tesla’s gigafactory in Shanghai was a catalyst for the growth of China’s EV industry. Its Full Self-Driving software, which relies on cameras and an AI model but still requires human supervision as an L2 system, has also spurred China’s AV development.
With an eye to dominating the global AV market, Chinese officials have paved the way for the rollout to accelerate. In 2020 the state planner set a goal for L3 mass production by this year. In June, the government gave nine automakers approval to test L3 systems on public roads. In October, the industry minister vowed to speed up rule-making. Competing local and regional governments provided permissive regulation and billions of dollars in subsidies for R&D, computing power and infrastructure investment that makes streets easier for driverless cars to navigate. At China’s annual parliamentary meeting this month, Lei Jun, boss of Xiaomi, a smartphone maker that launched a popular EV, urged the government to allow self-driving functions by 2026.
Some countries have legislated for higher levels of autonomy but have few firms making cars with those capabilities. Mercedes received approval to sell L3 cars in Germany and in the states of California and Nevada, allowing drivers to go hands-off, eyes-off below certain speed limits on approved highways. Though China only allows L2, many of its carmakers already advertise “L2.9” systems to show their tech is edging towards L3. Carmakers elsewhere had been less keen to invest in L3, which they saw as unprofitable, says Yale Zhang of Automotive Foresight, a consultancy. In China, by contrast, he says, “as soon as L3 is approved, that will be revolutionary and change the state of driving.” In Australia the Chinese navy’s activities are causing rows ahead of federal elections, due within weeks. The centre-left Labor government, led by Anthony Albanese, says it has “stabilised” relations with China, which in the past couple of years has lifted restrictions imposed in 2020 on Australian exports worth more than A$20bn ($13bn) annually. China hawks in the opposition centre-right Liberal Party complain that Labor has gone too soft on China in order to restore that trade.
During Australia’s spell in the doghouse—for daring to call for an inquiry into the origins of covid-19—it found other buyers for its coal, barley and the like, enabling it to achieve a record trade surplus in 2022. But its concerns about China’s military behaviour kept growing. Australian officials acknowledge that their own armed forces operate in international waters and airspace close to China. But China’s response is sometimes dangerous. Last month a Chinese fighter jet released flares close to an Australian P-8A surveillance plane over the South China Sea.
Both Australia and New Zealand have another worry, that China may be strengthening its ability to deploy its forces in the region by cosying up to South Pacific microstates. In February the Cook Islands agreed to form a “comprehensive strategic partnership” with China and announced plans for Chinese investment, including port-building.
New Zealand’s foreign minister, Winston Peters, said his country was “blindsided”. It has close ties with the Cook Islands, including an arrangement to co-ordinate their security and foreign policies. Mihai Sora of the Lowy Institute, a think-tank in Sydney, says China has reason to be drawn to the Cook Islands (population: 16,800). It could, he says, become a good spot to refuel and resupply task forces—like the one sailing around Australia.
A new film is breaking box-office records in China
Film-makers in China have long tried to find the secret sauce for movies that wow audiences while pleasing the Communist Party. The epics that evolved became known as zhuxuanlu(主旋律), or “main melody” films, because they are in tune with the party line. But the heavy doses of patriotism that they usually involve have fallen out of favour. Instead, one Beijing studio has struck gold with a cartoon reimagining the tale of a “demon child” from a 16th-century novel.
The film, “Ne Zha 2”, is a sequel, in which the eponymous child battles monsters and immortals on a quest to save his friend and protect his family’s fortress. Launched over the Chinese New Year holiday, it has taken more than $2bn and become the most successful animated feature ever made anywhere. It has overtaken “Spider-Man: No Way Home” as the seventhhighest-grossing film ever. And it has done so by tapping deep into China’s cultural roots.
By the mid-2010s, film-makers were nailing the main melody of the patriotic blockbuster. Before “Ne Zha 2”, the two most popular films were “The Battle at Lake Changjin” from 2021 and “Wolf Warrior 2” from 2017. Both were action flicks involving the defeat of dastardly foreigners. Such films topped China’s charts from 2017 to 2023 (except 2019), according to data from Maoyan, a movie-ticketing service. The state invested in their rise. A law passed in 2016 to support the film industry listed “promoting core socialist values” as one key theme. But their popularity peaked in 2020, when they accounted for more than half of box-office receipts of the 20 highest-grossing films. This year, that share fell below 2%. Triumphant narratives of national strength seem detached from reality, with Chinese viewers now struggling in a depressed economy.
Enter the demon child. “Ne Zha 2” has perhaps caught on because it is not forcing anything on anyone. Chinese people know the character from folklore. The film is packed with humour delivered by endearing characters, and it resonates because of its messages of self-determination, the unconditional love of family and the pursuit of justice. The technical sophistication has amazed viewers and pitched domestic animation studios as serious competitors to their Hollywood counterparts.
At a cinema in the eastern city of Hangzhou Ms Zheng, a 20-year-old student, is watching the film with her friends. She says she found the hero epics too heavy—“They force-feed patriotism”—and has already seen “Ne Zha 2” three times. Like many young people disillusioned by the current paucity of job opportunities, Ms Zheng says she finds hope in the rebellious and righteous Ne Zha. “Nowadays we are overwhelmed by social pressure, but he tells you that you can define the type of person you want to be.”
To boost consumption during the holiday, local governments gave out cinema vouchers to attract more moviegoers. Once it was clear the film could break records, more people rallied to see it. Schools took students, and firms stopped production so employees could attend. One cinema in Sichuan province said that it would hold off screening the recently released “Captain America: Brave New World” in order to boost “Ne Zha 2” sales. “Our Chinese animation deserves to be seen by the world,” it said.
The world has not yet been won over, though. So far, less than 2% of ticket sales have come from abroad. That could be the next melody Chinese filmmakers learn to play.