Ali and SAIC’s internet car platform Banma Network has had two recent developments: first, it announced a first-round financing of over 1.6 billion CNY, and second, it has partnered with Intel and DT Mobile on chips and communication protocols in the field of vehicle-to-road coordination.
By the way, as Banma has been exploring the smart car ecosystem ahead of others, we have been closely following this company. However, this may be the last time we introduce Banma as “SAIC Alibaba”, as Banma is gradually becoming independent from both its business and capital.
As for the business opening up, it was only SAIC at first, but later Dongfeng Citroen, Changan Ford, and GAC Trumpchi joined one after another. In terms of capital, it completed a first-round financing of over 1.6 billion CNY, with Innovation Works Investment leading and Yunfeng Capital and Shangqi Capital following.
Those who have been following that period of history know that it was chaotic before the RX5 was launched, and it was not until Shi Xuesong was appointed as the first CEO of Banma that the situation improved. Today, Banma has completed financing and is becoming independent. Its announcement describes itself as the “world’s largest internet car platform.” Thinking carefully, this seems to be quite true, and it is still impressive.
AliOS, the internet car operating system with Ali doing the underlying work and Banma doing the adaptation and optimization, is a rare innovation in China’s automotive industry. This makes it sound like an advertorial, but let me give you two examples.
Banma CEO Hao Fei revealed something in an interview: a BMW SVP worldwide exclaimed after experiencing Banma’s solution, “The time difference between Munich and Shanghai is 6 hours but the gap felt is 15 years.” Hao Fei specifically emphasized that no manipulation was done with this statement.
This incident is particularly interesting. In the past year, BMW has been accelerating its own actions in the field of connected cars. From account systems, cloud platforms, to the A4A (Apps for Automotive) strategy, Dieter May, the BMW Digital and Service Senior Vice President in charge of the BMW vehicle system, bluntly told the media, “If you are not fast enough, you will certainly lose. This is beyond doubt.”
In fact, whether the statement is true and whether that SVP is Dieter May or not is not important. Wu Xuebin, vice president of Baoneng, as found on Baidu, praised Banma, saying “We are very lucky that Banma has become a part of China’s auto industry. When we talk about China’s auto industry, we are very honored to say that we have the Banma brand.”
In conclusion, even GAC Trumpchi, which is part of Baoneng, has joined the Banma ecosystem, which speaks volumes. As for the new car companies that keep their heads down, such as NIO, WM Motor, and XPeng Motors, which of their connected car departments does not have two ex-Banma employees?## The Challenges Faced by Banma – The Internet Car Venture of Alibaba and SAIC
Despite the refreshing experience brought by the RX5’s on-board services when it was first launched, Banma has actually encountered some difficulties in the past year.
On the operational front, Banma is striving to expand its attraction by collaborating with various parties including TSPs, software providers, chip manufacturers, smart hardware companies, insurers, traffic operators, rescue services, entertainment and communication providers, account services, cloud platforms, restaurants and more. The outcome has been fairly positive. For example, it has attracted the attention of BMW’s SVP.
However, Banma’s original intention was to act as a platform providing an excellent ecosystem service, and hoped to collaborate with BMW. After seeing Banma’s presentation, BMW’s thoughts were: “Chinese people have done a great job. We need to speed up. If you are not fast enough, you will definitely lose. That is beyond doubt…”
So why hasn’t the expected prosperous ecosystem emerged? Why would a luxury car brand like BMW let a joint venture controlled by SAIC and Alibaba handle such a crucial position as the central control screen?
This may explain why Banma is accelerating its openness. China National Innovation Fund, the lead investor in Banma, is a typical industry investor. Before investing in Banma, the fund had invested in BYD, CATL, Jusheng Electronics, Takata, and others, almost all of which are related to the smart electric vehicle industry chain.
The co-investors, Yunfeng Fund and Shangqi Capital, are both familiar with Jack Ma who founded Yunfeng Fund. Does this mean that Banma’s “faux openness” will be exposed? However, pony Ma and Yuzhuo Shi are both LPs in Yunfeng Fund. So how should we interpret this? Look at Shangqi Capital, SAIC’s equity investment company. Apparently, this is a “faux openness.”
In my opinion, this matter does not need to be over-interpreted. The fact that China National Innovation Fund is the lead investor in Banma speaks for itself in terms of capital invested in the industry. Additionally, the co-investment of Yunfeng Fund and Shangqi Capital can be seen as a transition from direct investment by Alibaba and SAIC to indirect investment, as part of an orderly exit. Haofei has mentioned that in terms of equity openness, there is actually no one coming or going. SAIC and Alibaba are simultaneously reducing their shares, in order to attract more industry capital or even automakers.
The solution to the problem of Banma’s underperformance in ecosystem development lies in a combination of operational and equity openness. The second problem is that Banma’s ecosystem is becoming increasingly seamless, causing dissatisfaction among automakers.
What does this mean? Let’s take an example. Geely’s Geeks integrated the vehicle navigation maps of the BAT trio. This “not putting all eggs in one basket” approach not only guarantees Geely’s independence in the car ecosystem but also forces BAT to continue to innovate and provide better products and services to win automakers’ favor.This is the dilemma that Baidu faces: from the improvement of basic functions such as car insurance, traffic, rescue, communication entertainment, accounts, cloud platforms, and catering, to the introduction of AR-Driving, an augmented reality navigation/ADAS product, and research on vehicle-road collaboration with Intel and Datang Telecom, Baidu is doing more and more, which will make car manufacturers feel insecure.
A feasible solution is to fully open up technology and ecology, as mentioned before by Hao Fei, to cooperate with the AliOS team and open the underlying SDK to car manufacturers. If the car factory has the ability to do some customization, then Baidu will do less and focus on the prosperity of the ecology, rather than the control of the central screen.
Why didn’t Baidu elaborate on this part? Maybe we can look forward to the upcoming Yunqi Conference.
Hao XPeng speaks: What is the real smart car?
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.