Software-defined car, there is no standard answer.
At the media communication meeting of Roewe recently, I silently wrote down this sentence in my notes.
The person who said this is Li Jun, the director of the software center of SAIC Group and a key figure in SAIC’s future electrification and intelligent layout.
What he said at the time is exactly the focus of this article – software-defined car.
Adding a subject, SAIC’s “software-defined car”.
Trend
In the past, if you asked what the core components of a car were, older generations would helplessly tell you it was the “big three” – engine, transmission, and chassis.
If you ask this question to new energy vehicle companies in the past two years, they will tell you with more confidence that it is the battery, motor, and electronic control.
Then what would the answer be if this question was put in the future?
“Smartphone on Wheels”
Let’s put aside this question and go back to the present. Li Jun’s view on the relationship between software and automobiles is as follows:
“With the development of 5G technology, cars will become highly integrated mobile intelligent terminals, and software will give them vitality, making cars no longer cold and lifeless machines.”
“Cars will constantly iterate and load more software throughout their lifetime, just like our smartphones, bringing new surprises every day or after a period of time through OTA.”
Like a smartphone, the description of the relationship between cars and software is quite easy to understand. Although it cannot be fully analogous, it is already vivid enough.
How Important Software Is
“Today, software accounts for 10% – 15% of the value of the entire car, which is a relatively balanced value chain model.”
Li Jun emphasized this issue in his speech:
“But in the era of software-defined cars, the pattern will change, and by 2025, 40% of the value of the entire car will come from electronics and software.”
If car manufacturers do not focus on this aspect, Li Jun said that they may become “workers” in the value chain.
My first reaction was that this statement is too much. Can code with zero material costs really be so valuable?
But on second thought, it seems that there is such a trend.
The electrification of cars requires a large amount of software support. As the “soul” level structure, software plays a decisive role in the interaction and function implementation of the entire vehicle.
Thinking of the bionic robots of Boston Dynamics, isn’t algorithm software their core value?
With this in mind, I seem to better understand the future value of software in cars.
SAIC’s “Soft Power”
Regarding the issue of software’s increasingly important position in the value chain of the automotive industry in the next few years, Li Jun said that SAIC’s OEM will make larger layouts in software to ensure profits.
Systematic and Confident“`
“The transformation of the entire supply chain system is the advantage of SAIC. We have a supply chain system to support us in doing this. We need to integrate our industry’s supply chain so that we have the ability to integrate external supply chains.”
This is a sentence from Li Jun’s logic about SAIC’s “software-defined car”. The word “transformation” can be felt in his words, which is lagging and needs “force” for the big industry.
Compared to those “new forces”, SAIC has its own supply chain system. This naturally provides it with a higher “right to speak” in the industry.
More importantly, under self-owned system, the initiative of change is in SAIC’s hands.
Strong Layout
Li Jun said that SAIC is very interested in software-defined cars and has the motivation to do it.
First, let’s listen to Li Jun’s introduction to the business sections of SAIC Software Center:
“The main business of the software center now focuses on the first major section – the digital creative factory, where we are building a people-oriented digital creative team.”
“The second larger team is our electronic architecture, committed to building a new generation of centralized electronic architecture.”
“We also have a large team, which is the basic software team for ICV, mainly responsible for integrated architecture from the operating system, business layer to the cloud management end.”
“There is also a team for data architecture and network security, because the direction of more work in the future is the use of artificial intelligence in the car. Artificial intelligence has several elements: computing power, algorithms, and data, so we will build a data factory.”
“There is also the interaction of vertical business, which includes the interaction of smart cockpit and smart driving.”
In addition, under many businesses, SAIC has also established a dedicated software company.
“Our software company has been officially registered. We are called Shanghai Automotive Group Co., Ltd. Lingshu Software Branch. We must empower our brand and bring commercial value to everything we do.”
Regarding why a software company was established, Li Jun’s answer is very characteristic of China:
“The timing, location, and people are all in place.”
Li Jun talked a lot about this part, and the simple summary is as follows:
First of all, the Chinese auto market is a fast-growing market, and facing electrification and innovation of car machines and chips, Tesla has set a good example and this path has been proven to be feasible. Therefore, let’s learn from it and catch up quickly, which is the best timing.
Furthermore, artificial intelligence and data are very important. The Chinese market has a huge volume and inherent advantages in this area under the background of intelligent interconnection, which is the best location.
Finally, and most importantly, Li Jun showed extraordinary emphasis on people in his speech.
During the epidemic period, Li Jun said that more than half of his working hours and even weekends were spent on recruitment.
“`
This recruitment is different from the past. We are seeking to attract top leaders in the industry, including some teams from Silicon Valley and talents from Europe. Such talents are very scarce. We will probably expand to 500 people by the end of this year, plan to reach 1000 people by the end of next year, and aim to reach a scale of 2200 people by 2023.
“We need to bring in people who are stronger than me to lead us and help us create value for customers and the company more efficiently.”
Regarding the “top leaders in the industry”, Li Jun also discussed salaries:
“My goal is that half the people I recruit should have higher salaries than me. I told HR that if the salaries of more than half of the recruits are not higher than mine, there is no reason for the success of the software center.“
More than just technology needs to change
The communication continued to the questioning session. During the process, the topic of software-defined cars was brought up again, which led to more thinking about the industry.
Let’s talk about Volkswagen again
During the discussion, the “software gate” of Volkswagen’s ID.3 was mentioned again. As a long-term joint venture partner of Volkswagen in China, SAIC’s viewpoint was considered to be meaningful.
However, it was unexpected that Li Jun did not discuss this issue from a technical perspective, but rather from a perspective of corporate culture and vision. Li Jun believed that the reason why Volkswagen encountered such problems in software was not only because of technical difficulties, but also due to the company’s cultural and vision deviations.
Volkswagen is too large, as the saying goes, an elephant is hard to turn around. In this case, Volkswagen took too big a step, while its corresponding capabilities did not keep up.
SAIC, on the other hand, has learned from many experiences and lessons in the industry, and the current overall strategy is to move forward step by step, striving to make each step solid, just like building a house, where the foundation must be laid first before the high-rise building is constructed to avoid imbalance.
New technology, new business model
The cost of technological innovation is “expensive” in terms of funds, and Volkswagen has spent 7 billion euros to expand its digital software department.
“The cost of software is very high. Without the innovation of new marketing and business models to support this, software-defined cars are only a theory and will not succeed.“
On this issue, Li Jun gave the example of the transformation of smartphones.
“Everyone is a mobile phone user. Initially, sending an email was considered a smartphone until apps appeared, the development from 3G to 4G, and the emergence of touch technology. When technology was integrated, the business model changed immediately, and companies that couldn’t keep up ended.“
During the discussion, Li Jun also talked about his future ideas on this matter:
“In the past hundred years, the sales model of the automobile industry has been relatively fixed. There is still a long way to go in the process of transformation. From a pure theoretical perspective, software platforms and technology will certainly support future software subscription services and corresponding business models.”How to Explore Marketing in the Automotive Industry? I think this is a very big space. Previously, we said that cars needed gasoline, but nowadays in the intelligent era, cars need data. Data determines the entire embodiment of intelligence, so data is capital. This is also a very big business arena. How to study it, how to play the price, these are theoretical, and there must be commercial value and business logic. If not, it is not sustainable.
During the conversation, Li Jun repeatedly mentioned “commercialization”. This commercialization is not only the final solution, but also an essential logic during research and development, as indicated in his tone.
After hearing this, I thought back to a few years ago when the popularity of 4G technology rapidly propelled the development of video content, especially with the explosive growth of various short-video platforms.
Under the support of 5G technology, what new business models will there be for highly electrified automotive architectures? In my mind, a series of images emerged:
If the latency is low enough and the real-time picture is high-definition enough, could there be remote driving through the network?
Or, could road condition information be collected on the car and transmitted to the cloud for calculation and conversion into commands that are downloaded and executed in real-time, without the need for implanted computing hardware for assisted driving?
Who knows?
Past Glory
“Hello, Banma”
Remember this familiar wake-up word? Several years ago, Alibaba and SAIC launched Banma Intelligent Car, with voice control and various car networking functions, which left people in awe for a period of time.
At that time, Banma Intelligent Car accomplished more than most of its peers, and it was the “first experience” of many consumers for intelligent car machines.
However, there are always newcomers.
In just a few years, various smart car machines have emerged on the market, and some new forces have brought more eye-catching solutions to the stage of smart network connection, including former employees of the Banma team.
Nowadays, when people mention “Hello, Banma”, the average person may feel unfamiliar, while industry insiders may associate it with “the Huangpu Military Academy of intelligent car machines”.
The former leader is no longer as glorious as it used to be.
What Have They Been Doing These Years?
Again, a few years ago, during the time when the ERX5 competed with the Song DM and the Ei6 competed with the Qin DM, Roewe and BYD were constantly in competition in the new energy market.
In the following time, BYD successively launched the replacement Tang, Qin PRO, Song PRO, and pure electric E series.
In comparison, Roewe’s major upgrades were coming a bit slower and there were not many new products.
What’s even more frustrating is the market performance of their flagship model, Marvel X.
This reminded me of Li Jun’s words, “Tian Shi Di Li Ren He”, but that’s a story for later. In any case, Marvel X’s important attempt this time has disappointed Roewe.
Perhaps Building Up Momentum?
Looking at BYD again, although there have been continuous new products in recent years, there have not been many surprising breakthroughs in terms of product strength.In my opinion, a more extensive product line may not necessarily bring in matching sales growth, but to some extent, it could be a burden to the brand.
However, BYD’s new products this year are outperforming expectations, with the Han, the Song PLUS, and the second-generation modified Tang all showing strong competitiveness.
At first, I was worried about Roewe. The market was silent for a long time, making me wonder whether the company was not going to make a move or was just holding back its ace in the hole.
The appearance of the Marvel R concept car leaned my thoughts towards the latter.
The Marvel R has introduced unprecedented highlights in appearance and product concept, which naturally fits what a new car should be.
Moreover, the new R brand’s unwavering commitment to an intelligent and pure electric path surprised me, as it is straightforward for an excellent company to focus solely on just one thing.
During the media communication meeting, I focused on recording SAIC executives discussing software-defined cars.
From the content above, it can be seen that SAIC Roewe indeed has a high level of concern and a grand layout of relevant industries.
Perhaps in the years of silence, Roewe gradually understood the direction of the blue ocean of electrification:
New energy vehicles are not the battlefield, intelligent cars are.
Speaking of this, I suddenly remember a friend who said that if SAIC can produce design masters like Shao Jingfeng, it must have an environment that can cultivate such masters.
I also thought of the director of the software center, Li Jun, who said that there is no standard answer for software-defined cars. At the time, I was pensive, but now I have a different interpretation of his words:
Software-defined cars, I believe I have my answer.
Back to reality, I admire this attitude, but I am still not entirely sure how Roewe’s product line will perform. After all, in today’s market, BYD is not the only competitor. This open examination of intelligent cars will receive countless answer sheets, with Tesla efficiently slicing up the market, veteran car manufacturers investing heavily, and newcomers emerging abruptly.
For Roewe, the answer sheet has come too late in the era where newcomers are striving to overtake the rest in high-gear. The answer sheet needs to be exceptional to produce results.
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.