BAIC wants to drive along a different road

The Chinese government's encouragement for autonomous driving and alternative vehicles has put pressure on traditional auto manufacturers.
BAIC bought Borgward in 2014.
BAIC bought Borgward in 2014.

Chinese state-backed car manufacturer BAIC Group has joined the first round of fundraising for RoboSense, a manufacturer of autonomous driving light-detection-and-ranging (LiDAR) products. The startup raised Rmb300 million ($45 million) from BAIC along with Alibaba’s logistics affiliate Cainiao and SAIC Group, another state-owned car company.

Proceeds will be used to develop solid-state LiDAR as well as related chips and AI algorithms. LiDAR is a remote sensing method that can be used in advanced driver-assistance systems. The equipment emits laser beams and calculates the distance between emitter and obstacle by measuring the reflected pulses.

RoboSense has a more than 50% market share of all LiDAR sold in Asia, thanks to the rapid development of autonomous driving, according to Mark Liu, co-founder of RoboSense. It has already drawn the attention of investors from various industries, including an undisclosed previous amount from securities firm Haitong and Shanghai-based conglomerate Fosun.

For BAIC, this investment is another attempt at a way-out of the auto industry, as China heads towards a new era of green and smart transportation. 

The Chinese government has been encouraging autonomous driving and alternative vehicles as it aims to become a big auto nation; but not in the old manner, which was to throw subsidies at the sector. The government issued a notice in February this year that cut down further electric vehicle subsidies. That has put a lot of pressure on traditional fuel-engine auto manufacturers such as BAIC which have leaned heavily on these subsidies when trying to sell new energy vehicles.

Nonetheless, companies are still following the state's instructions. Ever since April last year, when Chinese government said that it would build an internet platform to support Level 4 autonomous driving by 2020, all Chinese companies have been trying to find a way to enter this market. That includes both internet giants and traditional car makers.

BAIC wants to show how determined it is to move from traditional fuel-engine cars to high-tech alternative energy vehicles. In an attempt to shift its public image, it has begun with a number of high-profile moves like getting rid of some costly car manufacturing.

Earlier this week, BAIC announced plans to sell its loss-making 67% stake in Germany's Borgward. It only bought into the Bremen-based car manufacturing company, which makes full-sized yet fuel-consuming SUVs, a couple of years ago for 5 million ($5.7 million). Borgward reported a net loss of Rmb275 million last year, and Rmb1.6 billion from January to August this year.  

Proof of its is green intentions came a couple of months ago when BAIC listed its electronic vehicle subsidiary BJEV by the back door. The stock price, however, plunged 36.88% on its debut. The market hasn't shown much confidence in BAIC's electric vehicle business as the Chinese government has been cutting electric vehicle subsidies each year since 2016.

With its investment in RoboSense, BAIC wants to speed up the development of a new generation of car. By cooperating with a tech startup and supporting it both financially and technologically, it wants to bring smart and environmentally friendly vehicles to the customer as soon as possible. But most of all, it wants to profit from this technology as soon as possible to make up for the subsidy it is losing from the government.



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