| Thanks for reading Hyperdrive, Bloomberg's newsletter on the future of the auto world. Please note: Our email domain is changing, so you'll now receive Hyperdrive from noreply@news.bloomberg.com. Scroll down for details on ensuring this newsletter keeps reaching your inbox. On a recent summer night in central China, a couple on a motorcycle swerved in front of a driverless cab, forcing the vehicle to brake rapidly. At an intersection, it hesitantly performed a three-point turn, careful to avoid a man with a bike gawking at the new technology from the roadside. Welcome to Wuhan, the city of 14 million people that's shaking off its Covid-19 stigma to position itself at the vanguard of smart-car technology — and the difficult questions it raises about the impact artificial intelligence could have on jobs in China and around the world. More than 500 electric robotaxis built by Baidu currently ply the city's streets, with plans for an additional 1,000 to be deployed by year-end. The expansion positions Baidu and other Chinese firms as competitors with Alphabet's Waymo and out in front of Tesla, which has delayed its highly anticipated unveiling of robotaxi prototypes by about two months to October.  Wuhan has become China's biggest proving ground for Baidu's taxis. Photographer: Qilai Shen/Bloomberg Moving fast to develop driverless taxis fits into President Xi Jinping's playbook to bolster the economy by making high-tech industries the centerpiece of China's economic future, transitioning away from a dependence on property and lower-value exports. The nation is already home to the world's two biggest electric-vehicle battery manufacturers and dominates the EV supply chain — a result of state subsidies and cutthroat competition that's made constant innovation a must. Yet, as Wuhan is discovering, running ahead of the curve can also have its drawbacks. Already, residents are complaining that Baidu's robotaxis, deployed under the Apollo Go brand in English, are causing traffic jams, partly because they're seen as driving too cautiously. Riffing off a phrase that sounds similar to the taxi's name in Chinese, Wuhan residents have christened the cabs "silly radishes" because they move at slower speeds and don't always respond to situations on the road the same way a human would. And even though Wuhan's robotaxi fleet represents just a fraction of the total cab population — which employs an estimated 24,000 drivers, according to Shanghai-based outlet The Paper — there's growing anxiety over the economic implications of the city embracing driverless technology. That's especially true in the ride-hailing industry, where some drivers are already reluctant gig workers who lost their jobs in other sectors. "The government needs to balance jobs and tech," said one Wuhan resident, who asked that he be identified by his family name, Wang. "It shouldn't only focus on wanting Wuhan to be a technologically developed city but also take care of the people who are still drivers." Economists echo those concerns. "It is exciting to witness robotaxis become reality, yet it's not clear how taxi drivers will face the challenge, and how the government will strike a balance between technological breakthroughs and weak labor market conditions," Zhiwei Zhang, chief economist of Pinpoint Asset Management Ltd. in Hong Kong, wrote in a recent note. Baidu is encouraging people to try its service by heavily discounting fares. A recent 30-minute daytime journey covering almost 10 kilometers (6 miles) cost about 14 yuan ($1.93) after a company discount of almost 26 yuan. That's roughly one-third the cost of a comparable ride in a premium-class, human-driven taxi with the ride-hailing service Didi.  More than 500 electric robotaxis built by Baidu currently ply Wuhan's streets. Photographer: Qilai Shen/Bloomberg That pricing gap has frustrated some taxi companies, who say the experiment already has gone too far. "The original intent of technology is to make human life better, but the reality is that it makes the lower class hungry," according to a statement signed by Wuhan Jianshe Automotive Passenger Transportation, which called for more restrictions on where the driverless cabs are allowed to operate. The pricing scheme also makes the current strategy commercially unviable, JPMorgan analysts wrote in a report last month, citing "discouragingly deep loss-making financials." Wuhan became China's biggest proving ground for Baidu's taxis partly because authorities there have taken a more relaxed regulatory approach relative to other regions and cities. There are also some practical advantages. The city's geographic layout — it's composed of three distinct areas separated by rivers spanned by suspension bridges — and a driving culture known for not following the rules of the road make it a complex and demanding testing ground. Bloomberg News put the Baidu service to the test last month, hailing one of the taxis via an app. Entering the vehicle, we found a transparent divider separating the passenger area from the unoccupied driver's seat. At one point, the car accelerated to a top speed of 50 kilometers per hour, though it was more typically traversing the busy streets at around 20 kph.  A recent 30-minute journey covering around 10 kilometers cost about 14 yuan ($1.93) after a discount. Photographer: Qilai Shen/Bloomberg The sight of a steering wheel moving on its own was a little unsettling. The in-car entertainment system was reminiscent of those available on a long-haul business-class flight, though the music selection was eclectic. At one point, our little robotaxi was cruising along the streets of Wuhan to the thumping electro house sounds of "Fast Cars and Superstars" by Cristian Marchi. Eric Hu, a 43-year-old insurance industry worker based in Shanghai, took advantage of a recent work trip to Wuhan to test out a robotaxi. Although similar services are available in Shanghai, he said they tend to be located in distant suburbs and are less useful to people working downtown. Hu deemed his experience in Wuhan "good" and said that he'd become a regular user of driverless cars — if fares remain low. He also expressed concern about the social impact of the technology. "If all taxi drivers lose their jobs, then that's something that governments have to be worried about," he said. — By Colum Murphy and Chunying Zhang  VW ID.3 electric vehicles inside the Autostadt delivery tower at Volkswagen headquarters in Wolfsburg, Germany. Photographer: Krisztian Bocsi/Bloomberg Volkswagen and BMW's margins shrank in the second quarter, with both carmakers feeling the pinch from weaker sales in China. Toyota, by contrast, posted a 17% jump in operating profit, helped by the weak yen and robust demand in North America. Jaguar Land Rover owner Tata Motors also reported upbeat results, with net income surging 74% from a year ago. | 
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