Translation

In May 2020, Zhou Hongyi, the founder of 360, talked about an interesting topic in an interview with Wu Xiaobo. When asked by Wu Xiaobo if he thought netizens preferred Zhou Hongyi in 2011 or now, Zhou Hongyi answered that if it was from a perspective of watching excitement, of course, people would like the Zhou Hongyi of 2011 more. At that time, he needed to subvert the traditional antivirus industry to have the opportunity to enter that industry. Perhaps, if it were not for the recklessness of the young Zhou Hongyi at the time, he might not have made it to where he is today.

We are not bringing up this quotation to discuss whether “the people” still miss Zhou Hongyi, but to say that “subversion” is the most frequently mentioned word when the old Zhou talks about entrepreneurship.

On May 11, when 360 announced its strategic investment in NETA Automobile, Zhou Hongyi delivered a long speech, which mentioned not only the joint car-making with NETA Automobile, providing internet-enabled solutions, and helping the company connect with the capital market to make up for its weak fundraising abilities but also the core idea of “technological equality”.

On the afternoon of July 2, at the 360 Building in Beijing, Zhou Hongyi, who had plunged into the automotive industry, was once again interviewed by the media, in which he expressed his views on two current events in the automotive industry from the perspective of a product manager.

“Take An AK47 and Come With Me to the South”

Because Zhou Hongyi once said that “some people who have a great influence in the industry can just say something, and there will be self-media analysts to speculate on whether the influence is moving east or west,” and he also mentioned that “we should not analyze what the person thought when hitting a success, but focus on how he was thinking when he made his first product. This is where the real value lies in analysis.” I deeply agree with this statement.

Therefore, before delving into today’s topic, I want to address what Zhou Hongyi said in a media interview in May 2020: “360 needs to self-subvert. We cannot just stay on the PC. Although we used to make good mobile antivirus software, these days mobile manufacturers are making their antivirus software. Although the core technology is provided by us, they want to control their own products, which means that mobile phone manufacturers are subverting 360. Therefore, we believe that the next battleground must be IoT, but this market is very fragmented and has many scenarios, such as the automobile industry. Relatively speaking, we target the home scene, and currently, besides Xiaomi, it’s just us doing this.”It’s interesting that Lei Jun announced his plan to build cars at the end of March this year. After the news of Xiaomi’s car-building was released, a large number of media articles uniformly analyzed a similar conclusion, that future intelligent electric cars will become a super-intelligent terminal and an important part of the IoT business model, and Xiaomi’s car-building is a necessary part of their strategic choice. It’s coincidental that IoT is also what Zhou Hongyi wanted to do.

In addition, when Zhou Hongyi received this interview, it was obvious that we have been in the era of mobile internet for a while. Looking back on the transformation of the era, people are obviously more concerned about Nokia’s golden sentence “We didn’t do anything wrong, but we lost.” Apart from the functional phone market, there are also many PC-based companies that have been “beaten across the mountain” by the mobile Internet, such as Intel and Zhou Hongyi’s 360.

The decline of PC traffic has greatly reduced the proportion of advertising business in 360’s revenue structure, but I think this is not the focus. The focus is on the decrease in the number of users, which is more deadly for Internet companies. The practice of mobile phone manufacturers to control antivirus software products themselves makes it difficult for 360 to have any other space to play except for providing technical services. As Zhou Hongyi said, they are being subverted.

Zhou Hongyi is forward-looking. On Christmas Eve 2014, Zhou Hongyi sent an internal email to the company’s personnel titled “Bring your AK47 and follow me to the south to make mobile phones!”

In the email, Zhou Hongyi explained the necessity of making mobile phones like this: “Because the center of the future mobile internet may not be a phone like it is now. The Internet is changing rapidly and innovating is changing human life and business competition. In the future, the center of mobile Internet may be smart cars, smart watches, or things you can’t even imagine. But if we are only willing to be bystanders, just as preachers, then we will never innovate, and we will never take the lead.”

Of course, for various reasons, the 360 special supply project was eventually suspended. But I think that just as Zhou Hongyi mentioned in the internal email, “because the center of the future mobile internet may not be a phone like it is now“, even if 360 missed the opportunity of the mobile internet, they should not be too regretful, but should go and find and judge what he thinks is the center of the mobile internet.

At today’s media meeting, Zhou Hongyi mentioned, “I’m almost 50 years old and still enthusiastic about making cars. I think smart cars will definitely have a revolutionary future, to overthrow an industry, to overturn an industry.”

Although he did not mention whether smart electric cars are the center of the mobile internet he thinks, the phrase “revolutionize” was mentioned 3 times, which shows that this is at least what he thinks is a better entrepreneurial wind direction.

And why it is NETA Motors? Actually, Zhou Hongyi gave the answer before. Among the car-making new forces with annual sales of more than 10,000 units, there are NIO, Ideal, XPeng, WM Motor, NETA, and Lingzhi.The top four have already secured financing and gone public, while Leapmotor, backed by Dahua Stock, may not necessarily lack funds. Therefore, they chose NETA Car, which has already produced over 40,000 vehicles. In addition to these reasons, I believe that 360 and NETA Car share similarities in terms of corporate philosophy and values, such as the five shining characters “serving the people” hanging in Old Zhou’s former office.

The Intelligent Cabin is just a Pad

With a good entrepreneurial trend, Old Zhou’s enthusiasm became understandable. Returning to the theme of Old Zhou’s media conference, he mainly shared two topics: First, an intelligent electric vehicle can be made for under RMB 150,000. Second, the single-pedal design is against human nature.

Firstly, Old Zhou believes that the Chinese market for vehicles under RMB 150,000 accounts for about 70% of total sales for all cars in China. If this market is not opened up, then intelligent electric cars will always be niche products. As new technology comes out, the cost is high and only a few people can afford to try it, but once a turning point in development occurs and users start to enter in large numbers, network effects will arise, further diluting the soft and hard costs. Scale can also stimulate the effect of Moore’s Law, thereby completely disrupting the entire industry.

In short, what Old Zhou wants to express is that in the future, intelligent things will be cheap, and the intelligent experience of a car under RMB 150,000 will not be much different from that of a car over RMB 500,000. Old Zhou even used a thousand-yuan mobile phone and a high-end phone for comparison, showing that the user experience in apps such as WeChat is not very different.

Here, I want to combine it with what NETA Car CEO Zhang Yong said in a recent interview: “When talking to many investors, they have different opinions on NETA Car’s positioning in the mass market.”

Here, I boldly speculate that Old Zhou was also a little “annoyed” by questions from investors, so he hoped to take this opportunity to give a unified response. For this “gun”, I will take the first shot as a sign of respect.

I believe that if we exclude “milking socialist benefits”, the good development of electric vehicles began from the high end and moved towards the low end. For example, early Model S and ES8 models, the reason why the starting point was not from the mass market was not constrained by the cost of intelligent hardware and software, but rather battery technology – higher costs, heavier battery pack quality, lower energy density, and less production capacity, which all determined the high prices of electric vehicles.

The reason why the entry threshold for electric vehicles has been continuously lowered in recent years is precisely because the battery industry has achieved scale, leading to lower costs, higher energy density, and increased production capacity. I believe this is the more important underlying reason.

In other words, from the perspective of historical time, the opportunity for high-end electric vehicles will appear earlier, while the opportunity for mass market electric vehicles will come relatively later. From the current sales of electric vehicles, although the high-end market cannot yet say it is on par with the fuel vehicle market, it has at least opened up, and the next step is the mass market, which is reasonable from the perspective of the supply chain.As for the positioning of the company, represented by NIO’s founder, Li-Peng Wei, the focus is still on the smart electric vehicle market above RMB 250,000, while the market for smart electric vehicles below RMB 150,000 is relatively less crowded, which is in line with the company’s strategy of seeking differentiated markets.

However, Mr. Zhou also made some key points, such as his prediction that “in a year or two, Moore’s Law will happen in the lidar industry, which will make lidar affordable, maybe as cheap as a couple of hundred dollars.” Of course, there are also many claims online that if Huawei enters the lidar industry, it will definitely make lidar more affordable, resulting in similar statements.

Regarding Mr. Zhou’s statement, I can only partially agree. From the current technological roadmap of lidar, the 905nm wavelength lidar uses a silicon-based receiver. If the volume of front-mounted production is large enough, it is possible to achieve a scale effect and reach a price of a couple of hundred dollars.

However, there are two issues to consider. First, whether the 905nm lidar is able to support the sensing information required for fully automated driving. Currently, for example, Juchuang has doubled the imaging density of obstacle point clouds by increasing the vertical resolution of the central ROI area of M1 lidar from 0.2° to 0.1°. In high-speed work situations, the recognition distance of vehicles has been increased from 120-150m to 180-200m, and the detection distance of small static obstacles has been increased from 85m to 160m. I believe that such distances still have a certain gap compared to the 1550nm wavelength. Second, the receiver used in 1550nm wavelength lidar is made of indium gallium arsenide material, which appears to be unaffected by Moore’s Law due to material changes from the current supply chain.

Of course, Mr. Zhou also mentioned that “the smart cockpit is more like a pad, more like a computer doing things. The size of the smart cockpit screen cannot be too different, and I think the 10T calculation power is enough for the smart cockpit, including voice recognition and face recognition.” This is also where he believes “technological equality” has the greatest potential to be realized.

At first, I was quite inclined to refute this statement. However, in the subsequent QA session, Mr. Zhou explained that “it is actually in the experience of technology, which should be basically leveled.” This is because “the R&D cost of software can be widely used to spread to an infinite approach of 0, thereby narrowing the differentiation.”

However, in addition to software costs, there are many functional costs in the smart cockpit, such as whether it has genuine leather seats, whether it can be ventilated, heated, and massaged, etc., which cannot be diluted by software. But in the next sentence, Mr. Zhou said, “If, like Lei Jun, you want to tell others the prices, then there may not be much room for prices.”

If paired with the previous rumors of NETA S potentially adopting front double wishbone and rear multi-link chassis suspension, 0-100 km/h acceleration of 3.9 seconds, deer test vehicle speed exceeding 80 km/h, extended-range version with over 1,100 km of range, and a pure electric version with over 800 km of range and a maximum fast charging power of 240 kW.

At the same time, the new car will also be equipped with 3 laser radars, 5 millimeter-wave radars, 12 ultrasonic radars, and 6 cameras, based on Ethernet-based SOA electronic and electrical architecture, and will continuously iterate through OTA updates.

The key point is that the price will not exceed 200,000 yuan, which makes me ponder, is NETA Automobile, positioned in the mass market, also thinking of “comprehensive hardware gross profit margin not exceeding 5%”?

Is Single Pedal Driving Sinful?

Of course, in addition to supporting the mass market at this media event, Lao Zhou also spent a lot of space condemning the single pedal mode. This is in line with NETA Automobile’s previous product ideas, with most models maintaining the driving feel of fuel vehicles.

The reason why the single pedal mode makes Lao Zhou change his mind to one that advocates subversion, is that “it brings a huge hidden danger, it is a complete change in user habits, and consumers may mistakenly take the accelerator as the brake pedal, leading to danger.”

Of course, because the audience has a particularly wide range of consumer groups. Therefore, I tend to agree with Lao Zhou’s statement that “if NETA wants to do single pedal mode, I strongly recommend that it be an optional mode for users, not a default mode.”

As Lao Zhou said, change starts with a few, not all at once. Currently, there are many users who are transitioning from fuel vehicles to electric vehicles, and cannot adapt to energy recovery or single pedal mode in a short period of time, which I think is very reasonable.

But as a heavy user of single pedal mode, I also want to share with you the usage posture of single pedal mode. Many years ago, I participated in a driving training camp for a certain fuel vehicle brand, and the first class was about the usage posture of the accelerator and brake pedals during driving.

The brand believes that when driving an automatic transmission vehicle, we should use our right foot throughout the process, and the left foot should naturally be placed on the left side. The heel of the right foot should be vertical to the brake pedal, and the seat should be adjusted to allow the right foot to press the brake pedal to the bottom at any time.The control of the accelerator pedal is to keep the right foot heel still, tilt the right foot to the right side, and use the area around the toes and the ball of the foot to control the accelerator pedal. In other words, if this driving method is adopted, the position of the heel is strictly constant, and there is no need to constantly switch the entire foot between the two pedals. This way, the muscle memory formed will be to tilt the accelerator pedal and press the brake pedal straight, which can largely avoid misoperation. This is better than simply telling consumers that the right is the throttle and the left is the brake.

I believe that the same driving method is also applicable to single-pedal electric vehicles nowadays. Because I insist that the root cause of misoperation is not only caused by the single-pedal mode, but more due to bad driving posture.

Or in other words, when there was no single-pedal mode in the past, cases of mistaking the accelerator for the brake were not uncommon. After the appearance of the single-pedal mode, obviously, this blame should not only be attributed to the single-pedal mode.

In addition, as a veteran of the safety industry, Mr. Zhou also talked about automotive safety, and he believes that “the automotive industry, I think, is probably only worth one point. Giving a score of one is already too high, and many I think are negative.”

This is because the automotive industry used to be in the B-to-B model. In the past, everyone sold cars to 4S stores, but now they are sold directly to consumers, with the addition of Apps and OTA functions, which will cause many vulnerabilities.

Moreover, the factories of the new forces of car-making in China currently have very high utilization rates of robots and CNC machine tools, and intelligent mechanical equipment has also begun to be networked, which means they can be attacked.

Furthermore, according to Mr. Zhou, car manufacturers follow the industrial Internet idea, and are interconnected among the supply chain and dealerships. Even if the car manufacturers are well protected, there will still be vulnerabilities.

Mr. Zhou also mentioned a heart-wrenching question he asked Elon Musk during a dinner. Mr. Zhou mentioned that 360 had once hacked Tesla’s cars. Musk replied, “Tesla does not use Linux, so the vulnerabilities of Linux do not work, and there is no App Store on the car, so you cannot install software randomly. It is a closed, isolated, and very secure system, you can never hack it.”

Mr. Zhou asked again, “What if we hack into your company’s servers? Through remote OTA, we have tried this method on many cars, and it has never failed.”

After hearing this question, Musk ignored Mr. Zhou, because he thought he had touched Musk’s sore spot. But in fact, Mr. Zhou believes that any car manufacturer has vulnerabilities, and everyone needs to face this problem.

Final thoughts

Finally, I would like to talk briefly about the founding experience of 360. Back then, 360 completely overturned Kaspersky’s business model with its free antivirus, and after years of ups and downs in the internet industry, this company has left an imprint of user supremacy in its bones.> The following is the translation of the Chinese Markdown text into English Markdown text. HTML tags inside Markdown should be preserved. Only corrections and improvements should be made in the translation without explanation.

Lao Zhou has repeatedly mentioned that “the basic creed of internet companies is that users are very important. As long as there are users, you have a way to make money.” Zhang Yong also mentioned that I think in the next period of time, the traditional channel model will undergo a drastic change, and the most important thing is that we must serve users well.

In specific actions, NETA Motors has begun to deploy more directly-operated networks in first- and second-tier cities. From this, we can also see that 360 and NETA are strategically compatible.

As for whether the NETA S launched by the collaboration between 360 and NETA Motors in the future will be a subversive national intelligent car, we will wait and see.

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.