25 is the “Sengoku period” of autonomous driving, and President-elect Trump is the accelerator

Competition for autonomous driving will begin in earnest in 2025. Automobile manufacturers, starting with US Tesla, are on the offensive in the market where McKinsey estimates that it will be on a scale of 40 billion dollars by 35, but it may not be easy to obtain the benefits.
Cars that don't require humans to put their hands on the steering wheel are appearing. In the industry, autonomous driving technology is classified at levels 0 to 5, from partial support functions such as warnings to fully autonomous driving that does not require human involvement. Waymo in the American alphabet, China's Pony AI (Pony AI), and Baidu are already driving level 4 rentable cars called robot taxis without a driver in the test zone. According to Canalis, among the cars sold in '24, only 5.5% are level-2+ cars that automatically perform cruise control and lane changes to maintain a constant speed during driving.

The next US President Trump may be the detonator. According to the US newspaper Washington Post, he wants regulations related to AI (artificial intelligence) development to be reduced. In fact, a committee called the Ministry of Government Efficiency was established to reduce bureaucracy, and Elon Musk, Tesla's chief executive officer (CEO) and creator of Cybercab, was appointed at the top of it. Even in small steps, such as expanding trial programs, automobile manufacturers can collect data and realize practical application of progress at an earlier stage.

What's going to happen next. What you should pay attention to is China. At least 19 companies are testing fully autonomous vehicles. Goldman Sachs predicts that 90% of sales volume will be level 3 or higher in China by '40, while the US is 65%. If Trump accelerates the introduction of self-driving cars, American highways will become like China's. Europe and the rest of the world are under pressure to follow suit.

Progress brings risk. Automakers attract customers with both incentives (sales incentives) and functions. In China, autonomous driving technology has become a deflationary weapon in price competition. According to Bernstein's survey, when purchasing an electric vehicle (EV), half of Chinese consumers expect an autonomous driving function to be installed at no additional charge, and according to the city survey, models of 200,000 yuan (28,000 dollars) or less will be equipped with an autonomous driving function in 25, and it is expected that this will be a decisive factor in purchasing.
In other words, it is difficult to get a prize of 400 billion dollars. Prices of autonomous driving technology cannot necessarily be raised as a result, and costs will rise. Even so, products that do not have that function lose their competitiveness, and latecomers must spend money to catch up.

BYD (002594.SZ), a major Chinese EV company, has announced plans to invest 14 billion dollars in autonomous vehicle development, which the founder once denied. Toyota (7203.T) has indicated a policy to invest 1.70 trillion yen (11.3 billion dollars) in software development this year. There is also an option to buy innovation. German Volkswagen (VW) (VOWG_p.de) invested 700 million dollars to access technology owned by China EV Xiaopeng (Xiaopeng) (9868.HK). In addition, Ideal Auto (Re-Auto) (2015.HK) and smartphone manufacturer Xiaomi (Xiaomi) (1810.HK) are also pioneers who can be attractive partners. Next year, automobile manufacturers will compete in order to remain victorious in the autonomous driving race.

(The author is a columnist for “Reuters Breakingviews.” (This column is based on the author's personal opinion)