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Asia300

Baidu rolls out self-driving bus in search of new growth

With 100 vehicles already made, Chinese company starts taking orders

Baidu CEO Robin Li shows off the 100th unit of its Apolong self-driving bus. (Photo by Naoki Matsuda)

BEIJING -- Top Chinese search engine Baidu on Wednesday announced the commercial launch of what it calls the world's first mass-produced self-driving bus.

CEO Robin Li told an audience in Beijing that the vehicle, the Apolong, features level four automation, which allows it to operate without human oversight under certain conditions. This is a step below full automation, known as level five.

The company hopes the new business will ease its dependence on online advertising revenue, which suffered after a medical advertisement scandal tarnished Baidu's reputation. The company seeks to ride Beijing's strategy of promoting automated cars.

Made by Xiamen King Long United Automotive Industry, the buses have neither a steering wheel nor a driver's seat. Baidu says it is in talks with buyers in Shanghai and Shenzhen. The company also looks to supply the Xiong'an New Area, a city being developed from the ground up outside Beijing as a pet project of President Xi Jinping.

While the buses cannot drive on ordinary roads, they could be used within gated communities or on university campuses. One hundred of the vehicles had already been made, and mass production is now gearing up.

Baidu also announced on Wednesday that it will work with SB Drive, a subsidiary of SoftBank Group, to bring 10 Apolong buses to Japan for testing. The vehicles could be put to use in housing developments that have many elderly residents, Li suggested.

Li did not explain how Baidu would profit from the buses, but the business model seems to involve both sales revenue and income streams that draw on the company's information technology, such as fare payments.

Besides being the world's biggest automobile market, China maintains light-touch regulation meant to encourage the development of self-driving technology.

The autonomous buses will first be tested within gated communities and on university campuses.

Baidu sees automated driving as an escape from its current structural reliance on internet search advertising. Sometimes called China's answer to Google, Baidu is one of the country's big three tech companies, dubbed BAT. But unlike bigger peers Alibaba Group Holding, China's e-commerce leader, and Tencent Holdings, the operator of the widely used WeChat app, it has not kept up with the spread of online shopping and smartphone-based services like mobile payments.

The company's core business took a hit in 2016, when it came to light that medical advertisements, which at the time made up 20%-30% of Baidu's revenue, contained misleading information. A college student died after seeking out a hospital that advertised an ineffective treatment on Baidu, drawing national attention to the issue and inflaming distrust toward the company.

The scandal led to Baidu's first-ever decline in net profit in the year 2016. Its bottom line recovered the following year, growing 57% to 18.3 billion yuan ($165 million), thanks in part to the sale of a food delivery app. But the company's earning power still pales in comparison to that of its BAT peers.

Automated driving, and artificial intelligence more generally, is seen becoming a new engine for growth. In 2017, the company launched Apollo, an alliance of more than 100 companies developing self-driving technology around Baidu's open platform. The project includes automakers such as Ford Motor, Honda Motor and Daimler, as well as IT heavyweights like Intel and Microsoft.

The Chinese government has made establishing the technology and infrastructure for self-driving vehicles a national priority, and has put Baidu in charge of developing automated driving for Xiong'an.  At Wednesday's event, it was announced that China's top electric vehicle maker, BYD, was joining the Apollo project.

The Apollo platform is "a real threat," an executive at a Japanese automaker said.

Baidu also unveiled proprietary AI chips, as well as technology including facial recognition cameras that could be used in automated-checkout stores.

In addition, Baidu showed off a device that uses AI to detect parasites in humans, developed jointly with a hospital in Tibet. Li spoke of the potential for the company to do good in areas without adequate medical care -- a move to expand business and restore the company's reputation.

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