“Chuxing 100 People” Media Focus on the Evolution of the Automotive Industry Chain

Author: Zhou Pei

“In the next decade, a world-class Chinese brand will surely emerge globally!”

This statement made by Changan Automobile Chairman Zhu Huarong at the 2021 Changan Automobile Technology Ecological Conference has been used frequently by major media outlets, and has high expectations. It is clear that the industry is eagerly anticipating whether Changan’s high-end brand “Aiways” can successfully compete with Tesla.

Over the past six months, traditional car companies that have been pushed forward by the times have set flags with greater speed and courage than ever before. Whether it is the goal of reaching 4 million vehicles by 2025 behind Great Wall, the new brand Salon Zhixing which has not made any progress yet, or Geely’s road to reaching 3.65 million vehicles four years later, these are all as indispensable as Changan’s transformation battle to reach 3 million vehicles, represented by Aiways.

“World-class Chinese brand” sounds impressive and attractive, and the three domestic independent brands all hope to become one of them. However, currently no Chinese car brand can stand on the world stage like Volkswagen and Toyota.

Therefore, the hope has turned to the intelligent era, where “developing new energy” has become the common choice for the top three independent brands. Domestic manufacturers’ ambitions for the high-end market are well known, but it is not so easy to compete with Tesla.

Although this point of view may be opposed, it must be admitted that, just like Changan, Geely and Great Wall’s path to the top, they must overcome multiple barriers, including joint ventures. Today, the new forces of traditional car enterprises represented by Aiways, Zeekr and Salon, must overcome the obstacle of Tesla.

Looking at the current new energy strategy route of domestic manufacturers, basically using the low-end and high-end polarization to avoid Tesla, there are only a few models that choose to confront Tesla head-on. Therefore, when Aiways, as Changan Automobile’s high-end brand, was listed publicly, the industry began to have a new expectation.

“Will Aiways confront Tesla head-on?”

Who is Aiways?

Aiways, as a chip for a new energy high-end brand, is composed of Changan Automobile, CATL and Huawei.

Regarding Aiways, a name that is not well known, we need to go back to three years ago. On July 10, 2018, Changan NIO New Energy Automobile Technology Co., Ltd. was established, which is the predecessor of Aiways Technology.At that time, NIO was in the midst of a heated period, just a few months away from the launch of its first car model, the ES8. Meanwhile, “loss-making” Tesla’s Shanghai Super Factory was buzzing with machines, and Musk, wearing a wrinkled suit, was eating pancakes on the streets of Beijing and meeting with national leaders in Zhongnanhai.

The 3-day visit to China by Musk tightened the strings of many auto industry insiders’ hearts. Just as Musk successfully stirred up the storm in the pure electric vehicle market and repeatedly shouted out about the new era of car-making forces facing the cruel times, the outcome of the gamble was soon to be revealed, and everyone involved was eager to see it.

Changan was one of the companies interested in this opportunity.

However, the collaboration with NIO was not as smooth as it was thought to be when the partnership agreement was signed. Due to Changan’s years-long adjustment period and NIO’s enormous difficulties, the collaboration process came to a halt. In May 2020, Changan acquired 45.38% of Changan NIO’s equity for RMB 90 million in cash. After the acquisition was completed, Changan Automobile held a total of 95.38% of Changan NIO’s equity. As of August last year, Changan had taken back all of its shares, and the joint venture company that never took off, Changan NIO, come to an end.

It seems that Changan’s high-end brand has been in a state of silence for more than two years since April 2018, when it first announced that it would be creating an independent high-end AB brand. In the era of traditional fuel-powered high-end vehicles, Volvo and WEY are heading to the racetrack, and in the era of intelligent vehicles, traditional automakers such as LanTu and Jikr are eager to launch new car brands, while Changan only has its UNI car series.

Just as everyone thought that Changan NIO would become a thing of the past, Changan Automobile announced for the first time at the Guangzhou Auto Show last November that it would work with Huawei and CATL to create high-end pure electric vehicles. Then in April of this year, Changan announced again that the three parties would build the CHN high-end electronic and electrical architecture, which gave Changan’s high-end brand a glimpse of hope.

A month later, Changan announced that Changan NIO New Energy Automotive Technology Co., Ltd. would officially change its name to “Avita Technology Co., Ltd.” Since then, Changan Automobile has only three times announced relevant news about its high-end brand to the public.

Compared with the rapidly advancing industry, most people in the industry remain skeptical. Just as there are doubts about Salon Zhixing, which is backed by Great Wall Motors, there are still doubts about whether Avita is too late to the game, even with Changan Automobile as its backing.

It is not strange to have this question. Mainly because the market is sensitive and variable, and it is difficult for users in the intelligent era to be captured, which has become a major issue for traditional car companies to change their thinking and operate new brands. Whether it is Volkswagen or Geely Great Wall, there have been no apparent successes. Even NIO, which has always been user-oriented, has now fallen into a new issue of user communication.

Especially behind the prosperity of 2021, there is the anxiety of chip shortage. What can Avita bring to this market that is both lively and torn apart? What will Changan, Huawei, and Ningde Times do in response to this era?

Will the market need it?

Today, the question that was asked at the beginning of the birth of Qoros Motors in 2013, “Do we need a new car brand?” has been asked repeatedly in recent years. Capital, resources, and talents, due to a pile of concepts, formed one bubble after another, and then the bubble burst, becoming the final outcome of many participants in the first batch of new car-making forces.

It was thought that after the painful aftermath of the bursting of the bubble, the market would enter a period of “stability”. Unexpectedly, it is also within reason that the rush of hot money has made numerous new brands become new participants again.

Regardless of the rough way that Lei Jun and Evergrande buy, buy, buy or Zhou Hongyi’s investment in NETA, various newcomers who are eager to get involved have torn open the boundaries of the auto industry time and time again, making traditional car companies feel pressured. They have to open up their inherent industrial chain, and look for new blood to join at the risk of offending their existing suppliers.

Therefore, Changan announced the collaboration with industry giants such as Huawei and Ningde Times, to jointly create a brand-new high-end intelligent electric vehicle brand. This is a new approach, different from Geely’s introduction of Zeekr and Great Wall’s introduction of Salon Intelligence.

In Changan’s layout plan, Huawei will jointly build the entire value chain of R&D, channels, services, ecology, etc. with Avita Technology through its ICT technology, providing a full-stack intelligent automotive solution. Ningde Times will provide intelligent electric vehicle power battery technology, and Changan Automobile will build an intelligent electric network-connected car platform based on Huawei and Ningde Times technology.

A mature manufacturing industry chain, advanced autonomous driving technology, and improved battery solutions are being produced by the collaboration between the automaker, supplier, and ICT companies. The division of labor is also clear, but whether this new brand and new car can achieve a greater than 1+1+1 situation remains to be seen.

At the Technology Ecology Conference, Changan unveiled for the first time the Avita Technology’s first high-end intelligent electric mid-size SUV jointly developed by the three parties, with the internal code name E11 for its partial styling.In fact, both the Avita new brand and the unveiling of the E11 new car are currently only partially revealed. What is the brand logo and other vehicle design concepts besides the powerful streamlined bodywork are not yet clear.

The revealed information at present is that the E11 model is the second new car of Huawei Inside, positioned as a mid-size pure electric SUV, born on the EPA2 platform, and built on the CHN architecture jointly created by Changan, Huawei, and CATL. It is equipped with a full-stack intelligent automotive solution and CATL’s latest electrification technology.

“The debugging work of the E11 model has not yet ended, and many of the previously scheduled plans are unreasonable and are still being continuously modified,” said an internal engineer at Changan. However, the SUV positioning indicates that Avita’s first car model is not intended to directly enter the sedan market where Tesla Model 3 is located, and may instead compete with the Model Y in the future.

As for whether or not Avita can create a new brand that meets the needs of the market, it has yet to take the first complete step, and the road ahead is long.

After all, except for the opponents who have already gone into production and sales, Salon Zhixing, whose first car is priced above 300,000 yuan, is also a major obstacle for Avita’s future. “Not satisfied with just being a leader in the pure electric racing track, but also committed to being a pioneer in the hydrogen-powered new track.”

Salon Zhixing, which has recruited many talents from large companies such as Geely and NIO, is waiting for a breakthrough, and Zeekr 01 has temporarily stopped taking orders. It seems to be reminding Avita that “there are many obstacles on the road ahead”, and everyone wants to be the new brand that is needed.

So, does the market still need a new car brand?

Is Avita ready to answer this question? As a new startup project of Changan Automobile, just like Salon of Great Wall Motors, Avita is behind its competitors in the same arena.

The key is to not hurt oneself

With the unveiling of Avita to the public, another question from the market is whether “Changan has the strength to operate a high-end brand?”

As is well known, after reaching the peak of one million vehicles in 2015, Changan underwent a period of adjustment lasting more than three years. After more than a year of preparation for new product launches, Changan began to regain its momentum in the second half of 2020.

It was not until 2020 that the UNI series was launched, positioning itself as a high-end product, that Changan began to break the “curse of not handling mid-to-high-end models” and into the high-end market. However, there is a big difference between making a good product, a car series, and creating a completely new brand that requires a huge leap.”We’ve actually been researching or attempting high-end development well before, and I can still say that this is a path that we will continue to take. Moreover, high-end development is not an end result, but a process. The Changan brand must move upwards, which is the directional choice for the development of the automotive industry. Changan brand’s upward movement is a gradual process,” revealed Changan Automobile President Wang Jun.

Wang Jun’s remarks about gradual progress were illustrated in a car revealed alongside the E11 during the Science and Technology Day event. The C385 is a new crossover sedan and is defined as Changan’s new starting point and flagship vehicle in their new strategy. Built on the EPA1 new pure electric platform, it is Changan’s new pure electric vehicle model, equipped with the industry-leading APA7.0 remote unmanned valet parking system, and the world’s first electric drive high frequency pulse heating technology, a major heavy technology released by Changan.

The reason why the C385 is defined as a new starting point is that it is a new energy vehicle that is equipped with Changan’s next-generation super-set electric drive. The new generation super-set electric drive integrates multiple functions into one through the deep integration of advanced technologies such as new materials, new processes, and artificial intelligence, creating an electric drive system with ultra-high efficiency that has two major features: “deep integration” and “ultra-high efficiency.”

Simply put, it is an electric drive system that deeply integrates multiple functions such as the motor, reducer, motor controller, and DC boost. It can cover a wide voltage range of 240V-800V and meet the ultra-wide mileage demand of 400-1000km.

Notably, this technology maximizes the reduction of mechanical and electromagnetic losses, reducing overall losses by approximately one-third. The total efficiency of the electric drive system exceeds 95%, and the average efficiency under working conditions is over 90%, while the current average efficiency of the industry’s existing electric drive system is only 85%.

One way to understand this is that, with the new generation super-set electric drive system, the entire vehicle can effectively reduce mechanical losses and ensure the stability and durability of the three-electric system in terms of quality. As a result, some technology media have rated this technology as “looking at hardware parameters, super-power electric drive can be considered as leading, and even can be said to be able to challenge Tesla’s charging new technology.”

As for whether they can compete head-to-head with Tesla’s charging technology and form a positive confrontation, there is currently no definitive conclusion. However, for Changan, not hurting themselves first is crucial.”800V fast charging with fast charging battery cells can achieve a 10-minute charge and a 200-kilometer driving range” – this familiar 800V may cause controversy like Krypton Yuan did due to over-promotion, and Changan may learn from other’s mistakes.

The release of E11 and C385 shows that Avita technology and Changan New Energy are developing in parallel, but Avita is positioned as a high-end product, which is the top priority of Changan New Energy’s strategy, as can be seen from the relocation of the company’s registered address from Nanjing Jiangning District to Chongqing.

In November last year, Changan released the Ark architecture, which marks the beginning of Changan’s car-making philosophy in the era of R&D 4.0. The Ark architecture upgrades the basic performance of the vehicle body, chassis, and other vehicle components with intelligent and big data technology. The company plans to launch 105 new cars within five years, covering a wide range of A0 to C-class vehicles. UNI-K is one of them.

In the following months, on the first day of the Technology Ecology Conference held in August, Changan announced the SDA architecture, which is a new open digital architecture based on software-defined vehicles and belongs to the exclusive track of new energy vehicles. It integrates and upgrades Changan’s existing EPA0, EPA1, and EPA2 electric vehicle platforms.

Based on this architecture, Changan will develop 11 new models including sedans, SUVs, MPVs, and other new species of cars over the next three years.

“Changan wants to cover high, medium, and low-end markets but it all boils down to a familiar issue: can Changan handle a complex product line in the future?” Market analysts are worried about this.

The entry of many new energy models will put Changan’s product line integration ability to the test. The urgent challenges that need to be addressed due to the market competition and product scale are common to every traditional automaker and their new brands.

As for whether Changan New Energy product line will block Avita’s path, it depends on Changan’s operational wisdom.

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.