There's a partnership between Volvo Cars and the Chinese search engine operator Baidu. The two companies intend to develop a self-driving taxi in China.
The new development will open up a completely new frontier that will secure its place in the robotaxi market. Volvo 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.
In a statement released by Volvo, the company revealed that the venture will give it access to Baidu's autonomous driving software Apollo.
The company will use the software in developing what it has called the Level 4 car. This move is one of the most complicated moves that Volvo has undertaken.
As we probably know, the top Level 5 designation is for vehicles that should be capable of navigating roads without any driver input in all situations.
According to the CEO Hakan Samuelsson, he mentioned that he expects the sales of robotaxis to ride-hailing operators to account for a considerable portion of the vehicles needed to hit its target of achieving a third of its sales from self-driving cars by 2025.
Speaking to Reuters, he said that "Robotaxis is a segment where we will compete not as operators but by selling cars to companies we've sold to previously."
What we're seeing here is an intense competition as Volvo tries to be the first to introduce an autonomous product to the ride-hailing market. Moreover, the ride-hailing market accounts for a considerable portion of more than 30 percent of the global taxi market.
According to an analysis that was done by Goldman Sachs, it is believed that the value of the ride-hailing market could achieve an eightfold increase to $285 billion by 2030.
This is part o the reason that Volvo is interested in this investment. The company 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.
According to Samuelsson, he revealed that he expects that the development costs for self-driving and electric vehicles to be about 5 percent of turnover. He also emphasized that partnerships will play a huge role in its venture with technology company Veoneer to develop autopilots for cars.
"We need to be mumble 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.
He also revealed that he expects partnerships with battery suppliers as well as producers of components such as electric motors, inverters, and chargers. However, he also mentioned that the company still intends to develop its own electric powertrain. The only thing that Volvo didn't mention was when the Baidu car would be production ready.
It's also important to remember that the actual sales program in robotaxis will heavily depend largely on its deal to supply up to 24,000 Level 1 and Level 2 auto drive cars to Uber between 2019 and 2021.
Unfortunately, there has been some doubt surrounding the deal after Uber halted its road-testing program. This happened after a recent fatal collision. However, Samuelsson claims that the deal was "back on track" with deliveries planned for the coming year.
Samuelsson said that the Baidu deal has no supply agreement. However, it is being viewed as a first step into the China market. According to industry forecasts suggestions, China could become the single largest market for autonomous cars.
