Driverless taxis in mainland China could control a market worth some $40 billion (£30bn) a year, boosted by advanced digital infrastructure and consumers’ enthusiasm for new technologies, HSBC analysts said in a research note on Monday.

The researchers said Chinese firms are “at the forefront” of the global autonomous driving industry and are “approaching an everyday reality”.

HSBC didn’t give a time frame for the projected market development, which amounts to 6.2 percent of the total taxi and ride-hailing business in China that totalled 465bn yuan (£48.3bn) last year, according to iResearch.

Cutting-edge infrastructure

“China is at the forefront of the global autonomous driving industry, aided by better connectivity, well-developed 5G infrastructure and a consumer base more open to autonomous driving,” HSBC said in its study.

“Robotaxis are fast approaching an everyday reality, albeit within strictly controlled parameters.”

In addition to the market for human rides, autonomous vehicles could generate an additional $30bn a year through logistics and delivery services, the report found.

Human drivers account for some 70 percent of the cost of a ride-for-hire trip, but replacing a human with an AI driver also incurs additional costs, HSBC said.

“We challenge this logic as it seems to ignore the cost of fleet management, such as cleaning, charging, parking and security, much of which is handled as a secondary function of the driver,” the report said.

“In addition, there is the cost of artificial intelligence inference, data handling, teleoperators and likely higher insurance costs, at least initially.”

Additional costs

Factoring in these costs, robotaxis were unlikely to break even on a cash flow basis until they had operated for seven or eight years, HSBC found.

Chinese autonomous vehicles currently operate mostly at what is known as Level 4, where they still require human oversight in some cases.

Multiple autonomous driving companies operate in large Chinese cities, with the biggest being Apollo, the self-driving unit of tech giant Baidu.

In Wuhan Apollo operates hundreds of driverless taxis across 35 percent of the city’s roads, while in other cities the vehicles operate in more limited areas.

Texas-based Tesla is applying for a licence to operate robotaxis in China, state-run China Daily reported last year.

Unmanned trucks

Chinese state-backed energy conglomerate Huaneng Group in May launched what it called the world’s biggest fleet of unmanned electric mining trucks at a coal mine in Inner Mongolia.

The fleet of 100 trucks are designed to autonomously load and unload mining material while operating in harsh weather in the Yimin coal mine in Hulunbuir, a large city in northeastern Inner Mongolia, the company said.

Li Shuxue, chairman of Huaneng Group subsidiary Huaneng Mengdong, told local news media that the vehicles could improve overall transport efficiency by 20 percent.