Recently, there have been numerous controversies surrounding "Luobo Kuaipao." First, the ultra-low price of less than one yuan per kilometer and the fresh experience of fully autonomous driving attracted many Wuhan citizens to try it out and take photos. Then, the safety issues of autonomous driving became a subject of heated debate. This also sparked joint concerns from online ride-hailing and taxi services, questioning whether Luobo Kuaipao would steal the livelihood of taxi drivers.

With just over 400 Robotaxis, Baidu's Luobo Kuaipao and Wuhan have continuously trended on social media, attracting countless netizens and industry insiders to discuss. How long until Robotaxis are commercially available on a large scale?

Are Wuhan's "Stupid Radishes" being grilled by 10 million drivers?

In Wuhan, Luobo Kuaipao is known as "Stupid Radishes." In Hubei dialect, "Stupid" is used as an adjective to mean "foolish." Wuhan's traffic conditions are complex, and drivers tend to be more aggressive. During peak hours, drivers are generally very aggressive, and overtaking and cutting in are common. Out of safety considerations, Luobo Kuaipao strictly follows road rules when starting, changing lanes, or overtaking, lacking some flexibility, which is an important factor contributing to its nickname "Stupid Radishes."

Due to policy factors and safety considerations, Robotaxis like Luobo Kuaipao are required to have remote safety drivers in China. Depending on the region, each safety driver is responsible for 1-3 autonomous vehicles and can take over the vehicle under specific circumstances. In Wuhan, some Luobo Kuaipao autonomous taxis do not have safety drivers and rely entirely on the vehicle itself. The true "driverless" experience has attracted many people to try it out, further fueling the popularity of Luobo Kuaipao.

Starting in late May this year, Luobo Kuaipao sparked a wave of public opinion online. On the Wuhan citizen feedback board, over 300 comments related to Luobo Kuaipao, with many complaints about the vehicle stalling at green lights, rushing into intersections at red lights, or stalling during turns, causing traffic congestion and affecting citizens' travel.

Subsequently, the "Luobo Kuaipao" official account responded: "Recently, malicious complaints and false accidents have been circulating online. After verification and evidence collection, it was confirmed that they are severely inconsistent with the facts. We have promptly reported this to the public security authorities.

At the end of June, the "Luobo Kuaipao" official account stated that the public security authorities had successfully cracked a case involving "online trolls." After continuous investigations, the authorities arrested over 10 suspects, including Chen and Wang, involving more than 10 MCN agencies across multiple provinces and cities. It is reported that the suspects also manipulated hundreds of accounts to spread negative comments about "Luobo Kuaipao." Currently, five main suspects, including Chen and Wang, have been criminally detained, and the case is still under further investigation.

For Luobo Kuaipao, rumors have not stopped. Earlier, it was reported that Luobo Kuaipao's autonomous taxi fleet in Wuhan had exceeded 1,000 vehicles and accumulated 5 million orders. Influenced by this news, Baidu's share price surged, but the controversy over whether Luobo Kuaipao was stealing the livelihood of online ride-hailing and taxi drivers also spread.

In fact, the claim of 1,000 vehicles deployed is not true. This figure came from Baidu's Apollo Day 2024 press conference, where it was announced that "Luobo Kuaipao" would deploy 1,000 vehicles within 2024. In reality, only 400 vehicles have been deployed in Wuhan.

Other media reports claim that Luobo Kuaipao's peak daily orders per vehicle in Wuhan exceed 20, while traditional taxi drivers average around 20 orders per day, meaning that autonomous taxis have caught up with traditional taxis in Wuhan. However, data shows that Luobo Kuaipao's market share in Wuhan is only 1%, insufficient to impact the existing market.

Such comparisons have caused a sense of crisis among many drivers. Recently, an online image titled "Wandering Taxis on the Brink of Extinction" pushed this topic to its peak. In the screenshot of a statement attributed to Wuhan Construction Automobile Passenger Transport Co., Ltd., it reads: "Autonomous taxi Luobo Kuaipao is a trial operation and should be controlled within a certain range... The original intention of technology is to make people's lives better, but the reality is that it makes the bottom people go hungry."

However, in fact, the statement was issued by a taxi company due to operational difficulties, hoping that the government would control the total number of online ride-hailing vehicles, limit low prices and flat rates, and reduce taxes and fees, with a passing mention of autonomous vehicles.

On July 10, a relevant official from the Wuhan Transportation Bureau replied to the media that the Wuhan (taxi) industry is relatively stable, and there are many rumors online. According to public reports, Wuhan currently has an average of 29,400 online ride-hailing vehicles operating daily, with an average of 13.2 orders per vehicle.

The controversy surrounding the new species "Robotaxi"

Official information shows that "Luobo Kuaipao" is an autonomous driving travel service platform launched by Baidu Apollo, which has opened passenger test operations in 11 cities and conducted fully autonomous driving travel service tests in Beijing, Wuhan, Chongqing, Shenzhen, and Shanghai.

As Robotaxis continue to gain popularity, opposing viewpoints have emerged among consumers.

As we all know, one of the most attractive aspects of Luobo Kuaipao is its low cost. A Wuhan citizen posted on social media 205 Luobo Kuaipao orders over the past two years, totaling 1,170.44 yuan, or an average of 5.7 yuan per order. In a recent July trip, a 15-kilometer journey cost only 7.2 yuan.

Some supportive netizens argue that Robotaxis are cheaper because they don't have drivers, operate 24/7, and are half the price of online ride-hailing services, with no refusals or detours.

This price advantage has caused anxiety among many Wuhan online ride-hailing and taxi drivers. However, it's worth noting that at this stage, the ultra-low prices of autonomous vehicles are based on platform subsidies and new user incentives.

Moreover, as Luobo Kuaipao continues to expand its operations, its prices have also started to gradually increase. According to a frequent user of Luobo Kuaipao in Shanghai, the same 4-kilometer trip cost between 3-4 yuan last year but has risen to 6-7 yuan this year, occasionally exceeding 8 yuan.

Regarding this new species, Robotaxi, many people also hold opposing views, primarily those who fear losing their livelihoods, such as online ride-hailing and taxi drivers. What will they do when autonomous vehicles are deployed on a large scale in the future?

However, another viewpoint suggests that Luobo Kuaipao is not truly driverless but rather has drivers moved to a remote control platform, with each vehicle monitored by a safety driver. If autonomous vehicles are deployed on a large scale in the future, existing drivers can transition to become safety drivers.

However, there is still a long way to go before autonomous taxis can be deployed on a large scale. The first challenge to address is safety trust. For example, is autonomous driving truly reliable? How to respond in emergencies?

On July 7, a video of a Luobo Kuaipao autonomous taxi involved in a minor traffic accident with a pedestrian in Wuhan was widely circulated online, sparking heated public debate. On July 11, news of Luobo Kuaipao "striking" in the streets of Wuhan, causing traffic congestion, once again pushed autonomous driving to the forefront of public opinion. This even led to the trending topic "Traffic police cannot control Luobo Kuaipao, which requires attention."

In response, Luobo Kuaipao's customer service staff said that if such situations arise, customers can call the customer service hotline, provide vehicle information, and the customer service staff will forward the information to relevant personnel for prompt handling.

A person who once served as the lead safety driver and autonomous vehicle dispatcher for Luobo Kuaipao told the media, "From a technical perspective, the vehicle itself is highly safe. What truly affects autonomous driving safety are those who do not follow traffic rules in each city."

Furthermore, behind pure autonomous Robotaxis, there are cloud cabin safety drivers who can take over control when the vehicle malfunctions or experiences a failure. The system automatically switches to the abnormal vehicle's screen, allowing the cloud cabin safety driver to intervene quickly. Safety drivers who close their eyes for more than 3 seconds will be fined.

As the Robotaxi business model begins to take shape, it has also attracted many netizens' jokes, "Can I buy a Luobo Kuaipao? It can pick me up to and from work and be set to earn money during other times."

Is Robotaxi on the verge of commercial profitability?

Currently, the mainstream model of Wuhan's Luobo Kuaipao is Baidu's Apollo fifth-generation vehicle, with a cost of 480,000 yuan per vehicle.

Based on the mandatory retirement period of eight years for online ride-hailing vehicles, the daily depreciation cost of a single vehicle is approximately 160 yuan. Adding safety driver labor costs, electricity bills, car washes, and other operating expenses, Luobo Kuaipao's daily costs exceed 370 yuan.

According to Baidu's official data, as of April 19, Luobo Kuaipao has provided over 6 million rides in total; it provided approximately 826,000 rides in the first quarter, a year-over-year increase of 25%. During the earnings call, Baidu's founder, chairman, and CEO Robin Li stated that in the first quarter, the proportion of driverless orders in Wuhan exceeded 55% and continued to rise to 70% in April, with expectations of rapidly rising to 100% in the coming quarters.

Regarding Luobo Kuaipao's profit expectations: "Baidu's Robotaxi project, Luobo Kuaipao, aims to achieve a break-even point in Wuhan by the end of 2024 and enter a full profitability phase in 2025, making Luobo Kuaipao the world's first autonomous driving travel service platform to achieve commercial profitability."

According to Baidu's projections, the sixth-generation Luobo Kuaipao autonomous vehicle, equipped with Baidu Apollo's sixth-generation intelligent system solution, will cost only 204,600 yuan. It is expected to achieve full coverage in Wuhan in 2024 and plans to deploy 1,000 sixth-generation mass-produced autonomous vehicles. Some research reports also suggest that Luobo Kuaipao's service costs will drop to 0.2 yuan per kilometer in the future, achieving break-even by the end of this year.

However, this calculation only considers basic operating expenses such as electricity bills and car washes, without considering larger expenditures like vehicle, technology, and safety driver costs. The cost of Robotaxis consists of three parts: vehicle depreciation costs, gradually reduced operating costs as operational experience and systems improve, and safety costs brought by safety drivers and maintenance personnel. These costs will also gradually decrease as autonomous driving technology advances and vehicle operation efficiency improves.

Recently, JPMorgan conducted field research on autonomous taxi operations in Wuhan and Shanghai, concluding that there are three key variables: pricing, vehicle costs, and the ratio of vehicle safety drivers. JPMorgan believes that Baidu's current pricing for autonomous taxis is not commercially viable and insufficient to cover costs from an economic perspective.

Currently, Luobo Kuaipao's hardware costs (i.e., depreciation) are double its gross transaction value (GTV). However, Baidu's next-generation taxi (Yichi 06) will cost 60% less than the current generation. Therefore, adopting Yichi 06 will reduce hardware costs by approximately 60%.

Currently, the market for autonomous taxis is still in the education phase, and before achieving economies of scale, prices must be lowered to gain market share. The low prices in Wuhan are primarily due to Baidu's substantial subsidies. Without subsidies, the prices are not significantly different from online ride-hailing and taxi services.

Of course, for Luobo Kuaipao to achieve profitability smoothly, in addition to cost optimization, it also depends on revenue performance. In this regard, Luobo Kuaipao's business model, based on orders, is relatively simple: average passenger miles per ride x average daily rides per vehicle x revenue per mile. To achieve higher revenue targets, it is necessary to continuously improve temporal and spatial coverage.

Currently, the pricing of Robotaxis in most domestic cities is based on similar market pricing, adjusted dynamically during peak and off-peak hours. For the same 3-4 kilometers, it costs only around 5 yuan during off-peak hours but may rise to over ten yuan during peak hours, roughly 80% of online ride-hailing prices. If we calculate based on a maximum of 20 rides per day for online ride-hailing drivers, the daily income per vehicle does not exceed 100 yuan. In other words, even without considering upfront R&D and vehicle insurance costs, Wuhan's current pricing model is far from covering operating costs.

Reducing labor costs and achieving true "driverless" operation is a crucial step for Luobo Kuaipao to achieve commercialization. In 2022, a Baidu autonomous driving executive stated in an interview that commercialization only makes sense when "driverless" operation is achieved.

Currently, although some Luobo Kuaipao vehicles have achieved true "driverless" operation, most vehicles still have safety drivers, which increases the labor costs of autonomous taxis.

JPMorgan's report also mentions that Luobo Kuaipao's labor costs are three times its GTV, partly due to Baidu's aggressive pricing strategy but more importantly because of the two-shift safety driver system.

According to the "Guidelines for the Safe Service of Autonomous Vehicles (Trial)" issued by the Ministry of Transport, remote safety drivers can be used in designated operating areas by local regulatory authorities, and each remote safety driver can monitor no more than three autonomous taxis. As the domestic autonomous taxi industry will soon adopt a 1:3 ratio, this could reduce labor costs by 67%.

Highly dependent on high-precision maps, Luobo Kuaipao relies on a human intelligent control center to monitor and take over vehicle operations when necessary. If the vehicle malfunctions, manual intervention is required.

For Robotaxis to achieve break-even, it is related to the number of deployed vehicles.

Zhang Ning, Vice President of Pony.ai, also indirectly supports this claim: "In first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen, when the deployment of Robotaxis exceeds 1,000, operations will reach the break-even point. Beyond this point, every additional vehicle will reduce costs and increase gross margins, entering a positive self-sustaining stage."

Market size reaches tens of billions

The era of driverless cars is truly coming

As early as September 2022, Wuhan and Chongqing took the lead in issuing fully autonomous commercial pilot policies, granting Baidu the country's first batch of autonomous demonstration operation licenses. Subsequently, Baidu's "Luobo Kuaipao" began operations in Wuhan.

According to relevant reports forwarded by the Wuhan Municipal People's Government's official website from the "Changjiang Daily," as of 2023, Baidu's Autonomous Driving Business Unit has obtained the 1000th autonomous driving license issued by Wuhan Economic Development Zone.

On June 1 this year, Hubei's official account published an article titled "What Do You Think of Wuhan Becoming the 'First City of Global Autonomous Driving'?" Specifically mentioning that on May 30, on the Wuhan city feedback board, the Wuhan Transportation Bureau's response to citizens' demands for more positive promotion of autonomous driving attracted widespread attention.

Autonomous driving is no longer a new concept. After years of development, cities such as Beijing, Shanghai, Guangzhou, Shenzhen, and Chongqing, in addition to Wuhan, have gradually opened commercial pilot programs for autonomous travel services. On July 3rd, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of Transport, and other five departments officially announced that China will conduct integrated application pilots of intelligent and connected vehicles in 20 cities, including Beijing, Shanghai, Guangzhou, Shenzhen, Chongqing, and Shenyang.

Recently, legislation to ensure the safe operation of autonomous vehicles on the road in Beijing is set to be introduced. According to a report by Beijing Daily, the Beijing Municipal Bureau of Economy and Information Technology has recently solicited public opinions on the "Beijing Autonomous Vehicle Regulations (Draft for Comments)," proposing to support the use of autonomous vehicles for urban public bus passenger transport, ride-hailing services, car rentals, and other city travel services.

In Shanghai, during the 2024 World Artificial Intelligence Conference on July 4th, four companies were awarded the first batch of Shanghai's driverless intelligent and connected vehicle demonstration application licenses.

Last year, Tesla released FSD Beta V12, the world's first "end-to-end" AI autonomous driving model, which was widely regarded as a "milestone moment" in the industry. On May 15th of this year, Baidu announced during Apollo Day that their L4-level autonomous driving service, Apollo Go, officially launched its sixth-generation unmanned vehicle. At the same time, the world's first large model supporting L4-level autonomous driving, Apollo ADFM (Autonomous Driving Foundation Model), was also released.

This year, Pony.ai, Toyota China, and GAC Toyota announced that their joint venture is about to complete registration and plans to launch the first batch of 1,000 BotRide 4X autonomous vehicles in the Chinese market. Additionally, GAC Aion and Didi jointly funded the establishment of Andi Technology, with their first commercial L4 model scheduled for launch in 2025. Moreover, Tesla's Robotaxi has already started its deployment in China. According to a May 8th report by China Daily, the Chinese government may support Tesla in launching "autonomous taxis (Robotaxi)" domestically for testing and demonstration purposes.

Statistics show that the global autonomous or driverless vehicle market is expected to reach 72.514 billion yuan in 2023, with China's autonomous driving market growing even faster, reaching 20.601 billion yuan. According to a report by information service provider IHS, the global market for autonomous vehicles is predicted to grow from 20.3 million units in 2021 to 62.4 million units by 2030, with a compound annual growth rate of 13.3%. Some companies predict that within the next 5 to 10 years, China will become the world's largest market for highly autonomous mobility services.