Automotive media under the Outing Bairen Group focusing on the evolution of the automotive travel industry chain
Author: Zheng Wen
Only when the tide goes out do you discover who’s been swimming naked.
This line from Buffet has been tried and true in various industries. Since 2018, the capital market has gradually realized the high R&D investment and short-term uncertainty of autonomous driving technology after experiencing the frenzy of autonomous driving. The frenzy quickly subsided and became calm. Therefore, time once again showed its magic, and more commercializable companies emerged.
After experiencing pure capital frenzy, bubbles, and a calm market, autonomous driving has come to the “scene defense battle” stage in 2021. This means that companies are trying to explore commercialization landing in a more detailed way by peeling off easier-to-achieve scenes and taking the lead in landing applications.
So far, there are many scenarios for the commercialization of autonomous driving, including ports, mines, trunk logistics, end distribution, Robotaxi, park logistics, etc. Among many scenarios, trunk logistics is expected to be the fastest to achieve commercialization and is considered the second-most commercialized application scenario after Robotaxi.
Trunk logistics refers to the backbone transportation in the road transportation network, with the main features of long-distance transportation, basic highway transportation routes, and heavy-duty freight and tractor truck as the main transportation models.
The market size of autonomous driving trucks is not smaller than that of passenger car markets, with foreign media predicting that the global scale of autonomous driving trucks will exceed $88 billion by 2027, and the potential market size will exceed trillions.
Since 2020, this scenario track has been heating up with leading players accelerating the race, and new players are constantly entering. After entering 2021, the heat is rising, with the landmark event that “TuSimple has successfully landed on NASDAQ, becoming the world’s first autonomous driving stock.” Autonomous driving trucks have returned to people’s discussion topics.
Head effect emerging
With continuous technological and business exploration:
On the same road, companies such as TuSimple, IMa Technology, Zhuixing Technology, WingoOn another front, players in the Robotaxi industry, such as Pony.ai, Ridecell, and Momenta, are also entering multiple scenarios with a strong technological advantage to give them confidence. For example, Pony.ai has passenger car autonomous driving technology and data advantages; Ridecell follows the layout concept of “road leads car” in a concurrent fashion; and Momenta has many years of experience in developing commercial vehicle ADAS and a customer base advantage.
When it comes to autonomous driving trucks, we cannot overlook the world’s first listed autonomous driving company, TuSimple, which has a market value of over $10 billion and focuses on developing commercially available L4 level autonomous driving truck solutions.
In 2020, TuSimple entered into a front-loading production agreement with truck manufacturer Navistar and Traton, which is owned by Volkswagen, to jointly create and deliver L4 level unmanned trucks. This vehicle has received 5,700 pre-orders and is scheduled to go into production in 2024.
Currently, the world’s first “autonomous driving freight network” AFN has been built around shippers, carriers, railway companies, freight brokers, fleet asset owners, and truck hardware partners.
Equally impressive is Plus.ai, which possesses L4 level full-stack autonomous driving technology research and development capabilities. In addition to single-vehicle intelligence, Plus.ai actively promotes the application of “autonomous driving + intelligent network interconnection” in trunk logistics scenarios, achieving L4 level autonomous driving from warehouse to warehouse under the coordination of vehicles and roads, exploring future intelligent transportation directions.
Plus.ai has already partnered with four of the top 10 truck OEM manufacturers worldwide, including China’s largest truck manufacturer, FAW Jiefang, and three other foreign OEM manufacturers. In mid-year 2021, Plus.ai helped FAW Jiefang launch the J7 L3 high-level autonomous driving heavy truck, which will be mass-produced and marketed.
Speaking of production vehicles, at the just-concluded 2021 World Artificial Intelligence Conference, Waymo Technologies showcased two mass-produced models of autonomous driving heavy trucks, which were jointly developed with Dongfeng Commercial Vehicle and China National Heavy Duty Truck Group. As a result, Waymo became the first company in the world to mass-produce autonomous driving heavy trucks.
Both of these heavy trucks are equipped with Waymo Xuan Yuan autonomous driving systems, which were released in March 2021 and are fully self-developed. After core algorithm and software acceleration upgrades, the advantages of semantic segmentation are obvious, allowing for accurate identification of small objects in driving scenes even in cases of obstruction or sparse point cloud input.The winning executive team is equally remarkable, including Ma Zheren, CEO of Winning Health Technology, who has a deep foundation in autonomous driving, as well as Yang Ruigang, former director of Baidu Robotics and Autonomous Driving Laboratory, Huang Gang, former general manager of Dongfeng Commercial Vehicle, Tian Chen, former vice president of technology at Huawei USA, and A Yushun, former general manager of the operating center at YTO Express.
With top talent and industrial capital support throughout the entire supply chain, Winning Health Technology has formed core capabilities in “full-stack research and development, heavy-duty truck mass production, and transport operation”.
Also at the AI Conference, cross-industry player Pony.ai made its presence known. This year, Pony.ai established the “PonyTruck” business unit, and obtained Guangdong Province’s first autonomous driving truck testing license, officially developing a dual-drive business layout of “Robotaxi + Autonomous Driving Commercial Vehicle”.
Li Hengyu, vice president of Pony.ai and head of PonyTruck, introduced that its autonomous driving trucks, focusing on trunk logistics, have carried out more than 200 days of road testing. On May 11th, PonyTruck announced that it has been issued a road transport operating license and has officially launched commercial operations. Currently, it has completed about 13,650 tons of cargo transport and commercial operating distance of 37,466 kilometers.
As for the advantage lost by latecomers, Li Hengyu does not seem to be so worried: “There are many experiences that can be transferred between passenger and commercial vehicles, such as simulation systems, underlying perception, and control capabilities, etc. The learning process will be accelerated because we already have the basics and experience of driving.”
It is worth noting that autonomous driving trucks have a very long perception distance requirement. Currently, TuSimple and IMAuto have developed the 1000-meter perception technology. Pony.ai is also catching up in this area.
Li Hengyu emphasized in a media interview, “We never really considered these companies as true competitors. Our common goal is to liberate human labor in various fields and scenarios, and even do better and safer than human drivers.”
Another 10 to 15 years of suffering?
According to data from the National Bureau of Statistics, the total social logistics cost in China in 2020 was 14.9 trillion yuan, accounting for 14.67% of GDP. In the logistics transportation structure, road freight transportation occupies an absolute dominant position, accounting for more than 70% in the long term, and the number of heavy-duty trucks exceeds 9 million.However, despite its trillion-dollar market, 60% of transportation capacity in this industry is controlled by small fleets and individual operators, leading to safety issues being the biggest pain point in highway freight transportation. According to data from the Ministry of Public Security in 2016, freight vehicles accounted for only 12% of motor vehicles but caused 48% of traffic accident deaths.
Tanmo Chen, Chairman of TuSimple, envisions a future where drivers are freed from the burden of monotonous highway driving, enabling them to handle city distribution, load and unload goods, and enjoy a cup of coffee or a cigarette without feeling exhausted. However, driving on highways is not only boring but also dangerous for the driver and others on the road. This is where they hope to create value for society.
The ideal is rich, while reality is poor.
“Whether in terms of application complexity and technical difficulty or commercialization progress in the field of autonomous driving, truck self-driving technology is sure to be the first to land,” says Liu Chang, a commercial vehicle industry expert. However, there is still a long way to go before it can be put into mass production.
Indeed, the self-driving truck industry seems to have reached a turning point in 2021.
The first publicly listed company has emerged, mass production vehicle orders have been placed, and real-world road tests are being conducted. Upstream and downstream players are forming strong strategic partnerships. Nevertheless, the entire self-driving truck industry still faces considerable commercial uncertainty.
“From the appearance of the first mass-produced vehicle, we thought it would take 10 to 15 years for all cargo transportation to become unmanned,” says Tanmo Chen, speak candidly. Between announcing mass production partnerships and new vehicles rolling off the line, it takes at least 3 to 4 years. From the time they leave the factory, TuSimple believes it will take another 10 to 15 years to achieve full unmanned cargo transportation.
According to Chen, the biggest challenge for the commercialization of self-driving trucks is matching resources. Autonomous driving requires a vast amount of resources. Upstream requires the involvement of automakers, including sensors and chips. Downstream needs market demand to exist.
The self-driving long-haul logistics industry ecology including new parts suppliers and technical service providers such as LiDAR, chips, and high-precision maps, autonomous driving technology companies, commercial vehicle major manufacturers, logistics scene partners, as well as cloud service providers and communication networks service providers all make up a vast industrial chain.
The consensus among industry experts like Ma Zheren is that “those who work on autonomous driving should not harbor the naive idea of overthrowing the automotive industry from the very beginning.” The immensely complex and cooperative relationships within the automotive industry chain are not due to its backwardness, but rather the result of the industry’s ultimate pursuit of safety, scale, and efficiency. Autonomous driving will undoubtedly disrupt the existing automotive industry chain, but it must be deeply integrated with the traditional automotive industry chain instead of overturning it.
Before that, these tech companies need to work hard to survive. This means that TuSimple and similar companies will continue to burn money, seek funding, and persevere through the pre-dawn darkness.
Autonomous driving is renowned for burning money. Waymo, the industry leader, began challenging Level 4 high-level autonomous driving with an annual expenditure of nearly $1 billion when it was founded.
Although the domestic leader TuSimple has received a total of 5,700 truck orders, the orders have not yet been delivered, and continuous losses are the norm. According to TuSimple’s prospectus, the net losses for the company from 2018-2020 were $45.018 million, $145 million, and $199 million, respectively. The latest financial reports show a net loss of $385 million in the first quarter of this year. The loss is continuing to expand.
Fortunately, a single Chinese bayberry tree is tantalizing enough.
According to EO Intelligence’s estimates, China’s heavy-duty truck ownership in the primary logistics market will reach 6.27 million vehicles in 2030, and the potential economic benefits of autonomous driving in the primary logistics market will reach 1,404.5 billion yuan. Considering the impact of factors such as technology, supply chains, policies, and laws and regulations, the market size of autonomous driving in the primary logistics market will reach 853.9 billion yuan by 2030.
Therefore, hold on. Whoever persists until the end will succeed.
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.