The two-month lockdown in the spring severely damaged the local economy. The city is now looking for new growth areas. The problem: access to the necessary technology.
Shanghai is one of the leading centers of the Chinese automobile industry. In 2021, 2.83 million vehicles were manufactured in the city.
When it comes to developing plans that will catapult China to the forefront of technology, the pace and scope of the local authorities is hard to beat. On Monday last week, the city administration of Shanghai presented a concept intended to transform the economic metropolis on the Yangtze River Delta into a hub for intelligent driving. Just one day later, the “Commission for the Deepening of Reforms” in Beijing came forward with a plan to help China achieve a global breakthrough in key technologies.
Shanghai officials estimate that smart driving will have an economic potential of $72 billion by 2025. The government’s new paper stipulates that Shanghai will build a “leading domestic innovation and development system” and make “great progress” in research into key technologies for intelligent driving – and become independent of foreign supplies for key components.
Shanghai is one of the leading centers of the Chinese automobile industry. In 2021, 2.83 million vehicles were manufactured in the city. General Motors and Volkswagen have had large factories in the city for decades; In 2019, Tesla opened its Gigafactory in the south of the city. In no other country in the world does Elon Musk’s company sell more cars than in China.
Shanghai relies on autonomous driving
Shanghai’s economic planners are primarily focused on the development of technologies and solutions for autonomous driving. According to plans, by 2025, 70 percent of the cars produced in the city will have Level 2 and Level 3 as standard for autonomous driving. Level 4 autonomous driving is intended for “special areas and situations”, the authorities said.
With level 2 autonomous driving, the driver is in control of the vehicle at all times; at level 3, the driver can keep their hands off the steering wheel, and with autonomous driving at level 4, the driver can leave control completely to the car – so-called driving with eyes closed.
According to the ideas of the Shanghai authorities, research institutes and companies should join forces in the future and develop, among other things, appropriate memory chips, AI algorithm applications and laser radar components.
advances in the auto industry
China has made tremendous strides in the automotive industry in recent years. Just fifteen years ago, the world smiled at the hybrid and electric vehicles from manufacturers like Build your Dreams (BYD) from Shenzhen in southern China. Even the then Chinese Technology Minister Wan Gang, who had worked in the German auto industry for many years, compared the cars to soapboxes. Today, China’s streets are full of powerful and stylish electric speedsters. In no other country in the world are more electric cars sold than in China. Former top dogs like the Volkswagen Group have switched to crisis mode in China – China’s customers despise the ID.4 electric model from Wolfsburg.
Meanwhile, brands like BYD, Xpeng and Nio are busy conquering international markets. Michael Dunne, one of the leading experts on the Chinese automobile industry, recently called Nio the best-quality electric car in the world. In the second quarter of the current year, BYD dethroned its American competitor Tesla as market leader. The group delivered from Shenzhen between April and June 354,000 electric cars out. That was an increase of 266 percent compared to the same period last year.
But the push into autonomous driving will not be a sure-fire success for Chinese manufacturers. The biggest obstacle is access to the necessary technology. The week before last, the American government announced that chip manufacturers Nvidia and AMD would now have to apply for approval if they wanted to sell their AI chips to China. The restrictions are likely to complicate China’s efforts to develop autonomous driving solutions. As the Business magazine «Caixin» writes, some Chinese manufacturers use Nvidia chips for cloud computing platforms to train algorithms.
The Xpeng boss warns
“The bad news is that the restrictions will pose challenges for cloud computing platforms to train AI algorithms for autonomous driving,” wrote He Xiaopeng, founder and chairman at Xpeng, on his personal WeChat account. “But the good news is that we have purchased enough product to meet demand for years to come.” Xpeng competitor Nio also relies on Nvidia chips when developing solutions for autonomous driving.
An evaluation of tender documents from more than a dozen Chinese research institutes by the Reuters news agency also revealed that almost all of them have purchased Nvidia chips in recent years. Among them are the renowned Tsinghua University and the Chinese Academy of Sciences.
In recent years, China has invested billions in developing its own chip industry. But even though the country has made significant strides and SMIC, China’s largest chip maker, is said to be able to produce chips as small as seven nanometers, the country still lags behind the market leaders from Taiwan and the US by years.
targets missed
The goal formulated in the “Made in China 2025” plan, according to which China should be 70 percent self-sufficient in chip production in three years, is probably unattainable. Another reason for the backlog is that subsidies seem to be misused time and time again and disappear into dark channels. Running against numerous founders and veterans of the Chinese chip industry Investigations into corruption.
In order to help the chip industry gain momentum, among other things, the head of state and party leader Xi Jinping has now personally intervened again. On Tuesday last week, China’s strongman chaired the meeting of the “Central Commission for the Comprehensive Deepening of Reforms”. have come out several papers with guidelines, to ensure that China achieves decisive breakthroughs in important key technologies in the coming years. Among other things, the allocation of resources must be improved, it is said, and reforms in the academic world must be deepened. However, no specific measures were mentioned in the communication.
Shanghai, which is trying to regain its footing economically after the devastating lockdown in April and May, now wants to focus fully on autonomous driving – and promises companies that get involved plenty of funding.