(JW Insights) Aug 15 -- BYD has walked away from a deal to equip its electric vehicles with Baidu's autonomous driving technology, as the world's largest EV maker eyes in-house development of intelligent car software, according to two people familiar with the matter, reported South China Morning Post on August 15.

BYD had initially agreed to use Baidu's technology, including navigation and automated valet parking, in its EVs in March 2022. The deal was then seen as a major coup for Baidu's autonomous driving unit Apollo, which was created in 2013 in pursuit of perfecting autonomous driving, an area CEO Robin Li Yanhong had set his eyes on before shifting his attention to a ChatGPT-like chatbot.

Baidu said during its third-quarter results in November 2022 that one of China's largest carmakers intended to use the Apollo technology suite, calling the partnership a sign of “increasing appetite for its self-driving solutions from automakers.” The partner was subsequently revealed to be BYD, reported South China Morning Post.

The scrapping of the deal is a huge blow to Baidu's autonomous driving ambitions, and is a reflection of the troubles facing the Chinese self-driving industry as fully autonomous driving has so far proven difficult.

Baidu has invested billions of RMB in Apollo and still sees self-driving as a priority, according to one of the sources, who is an employee and declined to be named.

Still, Baidu boasts the largest robotaxi fleet in China among autonomous driving companies. It has operated and tested more than a hundred robotaxis in designated areas in several major Chinese cities. It received permission from the Beijing city government in March to operate ride-hailing services in the Yizhuang industrial zone without drivers or safety operators in its vehicles.

Despite these achievements, industry insiders and investors say large-scale robotaxi operations and autonomous trucks are nowhere close to achieving profitability because of the technology's shortcomings, regulatory limits, and safety concerns, said the South China Morning Post report.

(Li PP)