Shares in Chinese tech firm Baidu (BIDU) reversed 3% in pre-market trading today after the Chinese government halted new licenses for self-driving vehicles after a mass breakdown of the company’s cars on public roads last month.
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New trading tool for TSLA bearsAccording to a Bloomberg report China has suspended issuing new licenses for autonomous vehicles off the back of the high profile incident. This means that self-driving companies will not be able to add new robotaxis to their fleets, start a new test project or expand to a new city.
That’s a huge blow for Baidu as Apollo Go is the largest robotaxi provider in China, with hundreds of vehicles in more than a dozen cities. Shares in fellow self-driving car firm WeRide (WRD) also dropped around 3%.
What Happened to Baidu’s Robotaxis?
Around 100 Baidu Apollo Go robotaxis were stuck motionless on roads in the city of Wuhan at the end of March, because of a system failure. Some passengers decided to get out of the vehicles, but others worried about the heavy traffic flowing around them decided to stay put for up to two hours. Police were called and there were reports of crashes caused by the disruption.
The Chinese government was shocked by the failure and convened a meeting between the Ministry of Industry and Information Technology and officials from cities that have robotaxis or self-driving pilots.
It is understood that the government has called for local governments to conduct a full self-review and enhance safety monitoring to prevent similar incidents. The move will put the brakes on a fast-moving industry in China that has been estimated to be worth around $12.2 billion by 2030.
It could, however, be a boon to U.S. rivals such as Tesla (TSLA) and Alphabet’s (GOOGL) Waymo if drivers believe that their technology is more reliable.
Huge Impact on Baidu
Baidu has yet to comment on the reasons behind the mass breakdown. There has been speculation that it could have been due to cloud connectivity issues, software bugs pushed in updates, or problems with centralized fleet management systems.
The system collapse will be a huge worry for Baidu, which has been rolling out its robotaxis throughout China in cities like Wuhan, Beijing and Shenzhen. It is also pushing into international markets such as Switzerland, Abu Dhabi and London.
Is BIDU a Good Stock to Buy Now?
On TipRanks, BIDU has a Strong Buy consensus based on 9 Buy and 3 Hold ratings. Its highest price target is $200. BIDU stock’s consensus price target is $164.70, implying a 30.96% upside.
