The nascent driverless car market, the value of which is forecast by UBS analysts to reach a whopping $2.8 trillion by 2030, is becoming ever more crowded as Chinese tech giant Tencent enters the race.
The company behind the WeChat messenger app, hugely popular on Chinese-speaking markets, has started advertising for Machine Learning and autonomous vehicles experts to join a new team based in Silicon Valley, California. The move into the U.S. market follows last year’s initiation of a joint venture with the Guangzhou Automobile Group to develop ‘smart cars’.
China is expected to be the biggest market for driverless vehicles, followed by the USA. Alibaba and Baidu, respectively known as the Chinese Amazon and Chinese Google, having built their businesses on core ecommerce and search engine verticals, are currently the main players in China’s development towards a driverless economy. However, with Tencent’s core business units in gaming and social media struggling to maintain rates of growth and its share price dropping 29% since the beginning of the year, the third member of BAT, China’s answer to the FAANGs, has thrown its hat into the ring for a slice of the driverless pie.
German auto maker giants BMW, Mercedes-Benz and Audi are also already testing driverless technology in China, alongside start-ups such as Pony.ai and Jingchi. In the USA and Europe, the German car giants, GM, Tesla, Uber and Alphabet-owned Waymo are all engaged in a fiercely competitive race towards the commercialisation of driverless robo-taxis. Tencent’s recruitment of a Silicon Valley team indicates the ambition to compete across markets.
China’s big tech sector has generally suffered a chastening year on the stock market but Tencent more than most. China’s government has moved against the gaming industry over fears that children are spending too much time playing computer games, one the repercussions of which is a boom in short-sightedness. Beijing has put a freeze on the release of new video game titles by halting the approval of licenses for online games as well as trying to limit the amount of time children spend playing them. With gaming Tencent’s biggest revenue stream the company’s share price has been hit particularly hard.
The move into the driverless car sector is likely to be followed by Tencent investing in other tech verticals in an attempt to diversify its business’s reliance on computer games.