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Volvo Cars and Chinese Internet giant Baidu agreed to jointly develop electric vehicles capable of Level 4 autonomous driving, with the aim of serving the robotaxi market in China.
The companies announced the deal Thursday at an event in China without releasing any financial details.
It’s the latest move by Volvo to become a leading player in the robotaxi sector. Last year Volvo signed an agreement with Uber to sell it up to 24,000 XC90s that will become part of the ride-hailing firm's first robotaxi fleet.
“We have taken another step forward showing we are serious about the robotaxi segment,” Volvo CEO Hakan Samuelsson told Automotive News Europe prior to the official announcement of the deal. “While we won’t be an operator in the sector, we will be there as a very competent supplier of cars that are compatible with each company's software packages.”
With Baidu that means Volvo’s vehicles will be adapted to work with the tech company’s Apollo autonomous driving software platform.
Last year, Baidu decided to make Apollo available to third parties in a bid to help speed up the system’s development to better compete against U.S. firms such as Tesla and Waymo. In July, Baidu also announced that it has signed a memorandum of understanding with BMW to give it access to the Apollo platform.
Volvo said in June that it wants autonomous cars to generate a third of its global sales by 2025. Samuelsson told ANE that a “considerable” portion of that number would be sold to robotaxi firms.
“These will be cars that are compatible with the software products from whoever the big players will be in this field,” he said. The CEO anticipates that Baidu will be a sector leader in China and Uber will be strong in North America. “But there are several others in the segment that also could be partners for us in the future,” he added without elaborating.
Robotaxis are expected to pioneer the use of autonomous driving technology, in which the automotive industry is on track to spend $20 billion to $30 billion (18 billion to 27 billion euros) 2017 and 2022, analysts estimate.
China is poised to become the world' largest-single market for autonomous cars with a volume of 14.5 million by 2040, Volvo's release said based on data from market researcher IHS Markit, which expects a total of 33 million autonomous cars to be sold globally by that year.
Samuelsson said the Volvo and Baidu plan to have their first product ready “sometime after 2020” and although the partners still have to decide what type of car they will make it will either be underpinned by the second generation of Swedish automaker’s scalable platform architecture (known internally as SPA2) or the current version of its compact modular architecture.
The CEO said both SPA2 and CMA are capable of underpinning full-electric cars and both architectures are or will be installed at its factories in China.
It appears, however, the more likely candidate is SPA2 given that Volvo has said it would eventually offer Level 4 autonomy on the platform, which will debut with the launch of the third-generation XC90 crossover due in 2021. The automaker has also promised that by 2021 it will offer a vehicle with Level 4 capabilities. In addition, Samuelsson said in September that Volvo “should have one specialized car for ride-hailing companies” based on SPA2.
Samuelsson also pointed out that the Baidu-Volvo end product could look very different from what’s on the road today. “We have to consider possible adaptions to the body shape, which we are looking into,” he said “It is possible to do something really tailor made for this market segment.”
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