Finance

Deeproute claims ‘deep cooperation’ with Nvidia on driver assist

Published

2 days ago

November 5, 2024

A car with autonomous driving system by Alibaba-backed DeepRoute.ai, drives on a street in Shenzhen, Guangdong province, China July 27, 2022.

David Kirton | Reuters

BEIJING — Deeproute.ai, a Chinese startup developing autonomous driving systems, announced a $100 million funding round Tuesday from an undisclosed automaker, while emphasizing close ties with chipmaker Nvidia.

Pitchbook data showed Chinese company Great Wall Motor led the investment.

It’s been difficult to obtain financing, especially from a non-government source, Maxwell Zhou, CEO of DeepRoute.ai, told reporters Tuesday in Mandarin, translated by CNBC.

The startup is also in “deep cooperation” with Nvidia, Zhou said, noting “in-depth discussions” with the chipmaker’s CEO Jensen Huang.

Zhou spoke on “Commercializing mass-produced autonomous driving solutions” at Nvidia’s closely watched GTC AI conference in March.

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Shenzhen-based Deeproute said it uses Nvidia’s Orin chip for its current driver-assist system.

The startup added it is part of the first batch of companies in China to obtain Nvidia’s newer Thor chip for cars and will release a new system using it next year that can use more visual cues to manage more complex driving scenarios.

“Lots of companies in China are competing on autonomous driving. It is actually a competition over AI,” Zhou said.

In terms of AI computing power, Deeproute said it has its own capacity, and can tap Alibaba‘s if needed. The e-commerce and cloud computing company led a $300 million investment round in Deeproute in 2021, giving it a valuation of more than $1 billion just two years after it was founded in 2019, according to the startup.

The U.S. in October 2022 imposed sweeping restrictions on China’s ability to access the most advanced semiconductors from Nvidia and other American companies. Automotive chips don’t currently fall in that category.

Nvidia is scheduled to release earnings for the quarter ended Oct. 27 on Nov. 20. For the quarter ended July 28, the chipmaker said its automotive segment saw revenue rise by 37% year-on-year to $345 million.

Eyes on Japan

Deeproute currently works with Chinese automakers selling in China. The company expects at least three car models using its driver-assist system will hit the road this year.

Already, Deeproute’s systems are running in more than 20,000 cars on the road, Zhou said. He expects that number to increase, potentially by ten-fold, next year.

The startup, which has an office in California, said it is looking to work with foreign automakers and plans to participate in Japan’s auto show next year.

Tesla competition

Deeproute has focused on using artificial intelligence to automatically drive cars, without relying on “high-definition maps.” That allows a vehicle to use driver assist tech on roads where those technical parameters haven’t been created.

It’s a trend car tech companies such as Xpeng and Huawei are pursuing — and Tesla‘s strategy for developing autonomous driving. Elon Musk’s car company has focused on using cameras and artificial intelligence to steer the vehicle, without heavy reliance on HD maps.

Those maps, used by autonomous driving companies such as Alphabet‘s Waymo, give a car a detailed picture of city streets. But they need to be created before a car runs on the road, a process that can drive up costs.

Zhou said the company is very eager for Tesla’s driver-assist product — called “Full Self-Driving” — to enter China. His reasoning is that Tesla’s product will encourage more consumers to become more interested in driver-assist features — and boost Deeproute’s prominence in the sector.

When asked about IPO plans, Zhou said the startup would keep to its own development pace, but it welcomed the latest public offerings of other industry players.

Chinese autonomous driving software developer WeRide went public on the Nasdaq last month, while robotaxi operator Pony.ai has filed for a U.S. IPO.

Industry focus on driver-assist

Companies in China’s autos industry are increasingly looking at driver-assist tech as a way to stay competitive in the market.

Pony.ai announced Saturday an agreement to cooperate on mass-development of fully autonomous robotaxis with state-owned Beijing Automotive Group’s new energy vehicle subsidiary.

Tencent on Monday announced it extended its strategic cooperation with German autos supplier Bosch to work on autonomous driving and tech-enabled cockpits. The two companies first agreed to strategic cooperation in 2020.

Clarification: This story has been updated to reflect that Deeproute was part of the first batch of companies in China to obtain Nvidia’s new Thor chip for cars.

Finance

Trump win and threat of more tariffs raises expectations for more China stimulus

Published

4 hours ago

November 6, 2024

Business Finance News

Chinese and U.S. flags flutter near The Bund, before U.S. trade delegation meet their Chinese counterparts for talks in Shanghai, China July 30, 2019.

Aly Song | Reuters

BEIJING — Donald Trump’s 2024 presidential win has raised the bar for China’s fiscal stimulus plans, expected Friday.

On the campaign trial, Trump threatened to impose additional tariffs of 60% or more on Chinese goods sold to the U.S. Increased duties of at least 10% under Trump’s first term as president did not dent America’s position as China’s largest trading partner.

But new tariffs — potentially on a larger scale — would come at a pivotal time for China. The country is relying more on exports for growth as it battles with a real estate slump and tepid consumer spending.

If Trump raises tariffs to 60%, that could reduce China’s exports by $200 billion, causing a 1 percentage point drag on GDP, Zhu Baoliang, a former chief economist at China’s economic planning agency, said at a Citigroup conference.

China is very 'concerned' about the rhetoric around tariffs, says Longview's Dewardric McNeal

Since late September, Chinese authorities have ramped up efforts to support slowing economic growth. The standing committee of the National People’s Congress — the country’s parliament — is expected to approve additional fiscal stimulus at its meeting this week, which wraps up Friday.

“In response to potential ‘Trump shocks,’ the Chinese government is likely to introduce greater stimulus measures,” said Yue Su, principal economist at the Economist Intelligence Unit. “The overlap of the NPC meeting with the U.S. election outcome suggests the government is prepared to take swift action.”

She expects a stimulus package of more than 10 trillion yuan ($1.39 billion), with about 6 trillion yuan going towards local government debt swaps and bank recapitalization. More than 4 trillion yuan will likely go towards local government special bonds for supporting real estate, Su said. She did not specify over what time period.

Stock market divergence

Mainland China and Hong Kong stocks fell Wednesday as it became clear that Trump would win the election. U.S. stocks then soared with the three major indexes hitting record highs. In Thursday morning trading, Chinese stocks tried to hold mild gains.

That divergence in stock performance indicates China’s stimulus “will be slightly bigger than the baseline scenario,” said Liqian Ren, who leads WisdomTree’s quantitative investment capabilities. She estimates Beijing will add about 2 trillion yuan to 3 trillion yuan a year in support.

Ren doesn’t expect significantly larger support due to uncertainties around how Trump might act. She pointed out that tariffs hurt both countries, but restrictions on tech and investment have a greater impact on China.

Trump, during his first term as president, put Chinese telecommunications giant Huawei on a blacklist that restricted it from using U.S. suppliers. The Biden administration expanded on those moves by limiting U.S. sales of advanced semiconductors to China, and pressuring allies to do the same.

Both Democrats and Republicans supported the passage of those newer export controls and efforts to boost semiconductor manufacturing investment in the U.S., Chris Miller, author of “Chip War,” pointed out earlier this year. He expected the U.S. to increase such restrictions regardless of who won the election.

China has doubled down on bolstering its own tech by encouraging bank loans to high-end manufacturing. But the country had long benefited from U.S. capital as well as the ability to use U.S. software and high-end parts.

Republicans gained a majority in the Senate for the next two years, according to NBC News projections, though control of the House of Representatives remains unclear.

“If the Republican Party gains control of Congress, protectionist measures could be accelerated, amplifying impacts on the global economy and presenting significant downside risks,” Su said.

She expects Trump will likely impose such tariffs in the first half of next year, and could speed up the process by invoking the International Emergency Economic Powers Act or Section 122 of the Trade Act of 1974, which allows the president to impose tariffs of up to 15% in response to a serious balance-of-payments deficit.

U.S. data shows that the trade deficit with China narrowed to $279.11 billion in 2023, from $346.83 billion in 2016.

Su estimated that a 10% tariff increase on Chinese exports to the U.S. could reduce Beijing’s real GDP growth by an average of 0.3 to 0.4 percentage points in the next two years, assuming other factors remain constant.

China’s exports to the U.S. fell by 14% last year to $500.29 billion, according to customs data on Wind Information. That’s still up from $385.08 billion in 2016, before Trump was sworn in for his first term.

Meanwhile, China’s annual imports from the U.S. climbed to $164.16 billion in 2023, up from $134.4 billion in 2016, the Chinese data showed.

Other analysts believe that Beijing will remain conservative, and trickle out stimulus over the coming months rather than release a large package on Friday.

China’s top leaders typically meet in mid-December to discuss economic plans for the year ahead. Then, officials would announce the growth target for the year at an annual parliamentary meeting in March.

“China will likely face much higher tariff from the U.S. next year. I expect policy response from China to also take place next year when higher tariff is imposed,” Zhiwei Zhang, chief economist at Pinpoint Asset Management, said in a note Wednesday afternoon.

“I also don’t think the government will change the policies they already proposed to the NPC because of US election,” he said.

China’s growing global trade influence

Regardless of tariffs, China remains an export powerhouse to markets outside the U.S.

“Chinese exports have indeed shifted a bit in the past few years in terms of destination, with the U.S. representing less than 15% of total Chinese exports in 2023, compared with nearly 18% on average in the 2010s,” Francoise Huang, senior economist for Asia-Pacific and global trade at Allianz Trade, said in September.

“While China has lost market share in the U.S., it’s clearly been gaining in other places,” she said. “For example, China now represents more than 25% of ASEAN imports, compared with less than 18% in the 2010s.”