On October 11th, 2021, the Third Global New Energy and Intelligent Automotive Supply Chain Innovation Conference was held in Nanjing, focusing on “Automotive Supply Chain Under Global Changes and Dual Carbon Goals”. In the “Automotive Supply Chain Under Global Changes and Dual Carbon Goals” high-level forum, Miao Wei, Vice Chairman of the Economic Committee of the National Committee of the Chinese People’s Political Consultative Conference, delivered a speech. The following is a summary:
Miao Wei, Vice Chairman of the Economic Committee of the National Committee of the Chinese People’s Political Consultative Conference
Respected scholars, experts, and industry colleagues, good afternoon! I am very pleased to participate in the “Global New Energy and Intelligent Automotive Supply Chain Innovation Conference”!
Today, I will focus on the trends of automotive industry transformation and share some personal thoughts. The report is divided into four parts:
Part One, the world’s automotive industry is undergoing unprecedented changes of a century.
Part Two, the automotive industry chain and supply chain are accelerating their restructuring.
Part Three, industrial upgrading and modernization of the industrial chain are imperative.
Part Four, vigorously promote the development of new energy vehicles towards the “dual carbon” target.
Now I begin my report.
Part One, the world’s automotive industry is undergoing unprecedented changes of a century.
The first change is that the powertrain system is shifting from internal combustion engine to pure electric drive. Please note that I am using “pure electric drive” here.
As early as 2012, the “Energy Conservation and New Energy Vehicle Industry Development Plan (2012-2020)” issued by the State Council gave a clear explanation of this. Specifically, it includes pure electric vehicles, plug-in hybrid electric vehicles, and fuel cell electric vehicles. They have a common feature, that is, the driving form has shifted from internal combustion engine to electric motor, excluding hybrid vehicles that rely mainly on internal combustion engines for driving.
In 2020, the sales volume of global new energy vehicles reached 3.07 million units, with a penetration rate of 4.0%, and the global stock of new energy vehicles exceeded 10 million units, with pure electric vehicles accounting for 67%. Among the 10 million units of stock, China’s stock of new energy vehicles is close to 5 million. More than 20 countries around the world have formulated policies on electrification of automobiles or prohibition of sales of fuel cars, and eight countries have formulated policies on near zero carbon dioxide emissions. The electrification of automobiles is an important way for the road transportation system to achieve the “dual carbon” target. The conversion of the driving system is already on the fast track.
The second change is that the control system of the entire vehicle is evolving from distributed control to centralized control.
With the increase in the application of electronic and electrical products in the entire vehicle, the number of ECUs has increased rapidly from dozens to over 100, which poses a challenge to the original electronic and electrical architecture. It promotes the evolution of the control system from decentralized control to domain controller architecture. The first step will realize the domain controller architecture, and the future will further evolve to the architecture of the central computing platform of the entire vehicle.## The third aspect: the industrial division system is evolving from an industry-specific system to an open collaborative system across industries.
In the past, the industrial chain and supply chain of the automotive industry were essentially vertically integrated chain relationships. A powertrain and parts supplier may supply multiple vehicle manufacturers with multiple models. Meanwhile, an individual vehicle model may require supplies from multiple suppliers, thus forming the supply system of the automotive industry. To reduce costs, suppliers frequently use one ECU to adapt to different models, with small programs written in assembly language stored in the ECU’s memory. To reduce costs, only minor adjustments are made to adapt to different vehicle requirements. Therefore, the ECU’s technology update is very slow. However, the current division system is a networked ecosystem, and the original division system has been broken. The specialized division system is being reshaped, and the networked industrial chain and supply chain systems are accelerating construction.
The second aspect: the restructuring of the automotive industry chain and supply chain is accelerating.
Traditional automotive industrial chain structures have been controlled largely by car manufacturers for over 100 years, who have mastery over core technologies such as engines, transmissions, and chassis. However, in the development of new energy vehicles, the power system industrial chain represented by batteries, motors, and electronic control is mainly provided by suppliers.
In terms of batteries, motors, and electronic control, China’s enterprises have formed a complete industrial chain and supply chain system. As for the second feature, the operating system has become a battleground.
In terms of the operating system, the car operating system is divided into two parts: the car control operating system and the in-vehicle operating system. Among them, the car control operating system is divided into a safe car control operating system and an intelligent driving operating system. The safe car control operating system is mainly aimed at vehicle control areas, such as power systems, chassis systems, body systems, etc. The intelligent driving operating system is mainly aimed at the intelligent driving field and is applied to intelligent driving domain controllers and so on. The in-vehicle operating system is mainly aimed at information entertainment and intelligent cabins, which is mainly applied to control systems in car machines.
The broad operating system also includes system software and functional software. System software generally includes the kernel of the operating system, middleware, and virtualization management (such as Hypervisor), etc. Functional software mainly includes core common functional modules.
At present, car operating systems commonly use three types of underlying kernels: Android, Linux, and QNX. Each operating system has its advantages and disadvantages.
Domestic car operating systems such as AliOS, Zebra, and HongMeng are just starting.
Lack of chips and lack of soul has always been the pain of Chinese manufacturing. Operating systems are the key to realizing digital transformation of automotive enterprises and have become a strategic battleground that all companies must compete for. In the face of the three major international operating systems, domestic companies should also aim for success.
The third feature: the application of artificial intelligence represented by big data analysis has emerged in new vehicle models.
Artificial intelligence environment perception algorithms and machine learning algorithms are gradually being applied to driving assistance systems. Functions such as voice recognition are tailored to user needs, and the adoption rate is gradually increasing.From January to August 2021, the penetration rate of L2-level intelligent connected vehicles with features such as adaptive cruise control, automatic emergency braking, and lane keeping has reached 20%, and advanced autonomous driving systems based on big data are gradually optimized and iterated through data collection, labeling, continuous training and learning technology, as well as simulation and testing technology.
As the traditional supply system faces reshaping due to changes in the automotive electronic and electric architecture, enterprises in the automotive industry should accurately identify changes, adapt scientifically and proactively, firmly grasp the initiative of development, and form a complete ecosystem from hardware to basic software, from upper-layer applications to user data, in order to firmly grasp the value core of intelligent connected vehicles.
Tesla became the first to get rid of AUTOSAR and developed its own complete electronic and electrical architecture directly starting from Linux, while the Volkswagen Group took the lead in establishing a software development department, which will expand to a scale of 5,000 people by 2025. VW.OS system will be used for intelligent electric vehicle models under various brands of the Volkswagen Group.
Advanced industrial foundations and modernization of industrial chains are imperative as the chip will become a key factor in the development of the automotive industry. Function chips, including CPUs, GPUs, AI, and storage chips, account for approximately 20% of automotive-grade chips. In the future, with the development of intelligent connected vehicles, AI chips with high computing power will experience significant growth.
Power semiconductors, including IGBT, MOSFET, and power management chips, account for about 40% in traditional vehicles and up to 50% in new energy vehicles, making them the most scarce chips currently. Sensor chips had a global sales figure of 46 billion US dollars in 2020 and accounting for about 30% of the global automotive-grade chip usage, but less than 10% of the chips are domestically produced. Domestic car companies, such as SAIC, BYD, and Great Wall, and electronic information companies, such as ANSYS, SMIC, and Huawei, have begun to invest in automotive-grade chips. In terms of AI chips, companies such as Horizon Robotics, Black Sesame Technologies, and 4DAGE have developed and begun to apply their products in car companies. Solving the problem of chip shortage should be based on domestic production and cooperation between car enterprises and ICT enterprises.
The industry ecosystem will become the focus of future development. The current problems we face mainly include the limited capability of single-vehicle autonomous driving algorithms, difficulties in collaborative perception and control technology, insufficient support for communication system construction, an imperfect testing and evaluation system, and the fact that collaborative development is still in the initial stage.
Part 4: Promote the Development of New Energy Vehicles with “Dual Carbon” Targets
We often say that the development of new energy vehicles is the first half of the competition. China’s new energy vehicle development has performed well in the international competitive environment in the first half, with cumulative sales reaching nearly 1.8 million vehicles and a penetration rate of 10.9% from January to August 2021, showing a rapid growth trend and entering the fast lane of development. However, I believe that the key to determining victory or defeat is still the competition in the second half, represented by intelligent connected vehicles. China has taken the lead in proposing an innovative plan for the concerted development of autonomous and connected vehicles, using platforms such as the physical information system architecture and computing technology platform, cloud control basic platform, high-precision map basic platform, and onboard terminal to accelerate the process of industrialization. We need to maintain strategic determination, accelerate technological innovation, maintain our existing advantages, and continue to play our unique strengths in the competition in the second half of the development of intelligent connected vehicles, striving for overall victory.
Regarding the development of fuel cell commercial vehicles, as of August 2021, the penetration rate of new energy vehicles in the commercial vehicle field was still less than 3%, and the imbalance between passenger vehicles and commercial vehicles was very significant. The main reason for this is that commercial vehicles, represented by heavy-duty loading vehicles, compete mainly based on load tonnage. Traditional power batteries are too heavy and inconvenient for charging, which is a certain constraint. There is now a broad consensus in society that fuel cell vehicle technology should be promoted and popularized first in medium and heavy-duty long-haul commercial vehicles. However, the biggest bottleneck is still the construction of hydrogen refueling stations on the nearly 5.2 million kilometers of roads, or the 160,000 kilometers of highways across the country. This is a very large systematic project that must be planned ahead to meet the needs of the development of fuel cell commercial vehicles for medium and heavy-duty long-haul transport.
Accelerating the development of new energy vehicles to promote energy transformation and the development of green and low-carbon. From the perspective of a zero-carbon energy structure, the development of new energy vehicles represented by electric vehicles undoubtedly does not produce CO2 emissions during their operation. In the future, as the number of new energy vehicles increases, the effect of developing electric vehicles for storing energy between the vehicle and the grid can also be realized. Each new energy vehicle is a storage unit, and in the future, the energy stored on the vehicle can be fed back to the grid to obtain certain benefits. The State Grid Corporation can also reduce the problems caused by building pumped storage power stations in the past.The development of intelligent connected vehicles will continue to promote the development of sharing, and it can also contribute to the reduction of carbon emissions in road transportation. The most typical example is that if we can reduce the empty driving rate and increase the load rate for all vehicles through big data analysis in the future, the resulting benefits will create a win-win situation. From the perspective of passenger cars, if we realize fully autonomous driving in the future, the utilization rate of vehicles will greatly increase, and people can share vehicles to achieve maximum social benefits with minimum energy consumption and emissions. Therefore, people, vehicles, roads, and infrastructure need to be considered integratedly to significantly reduce carbon dioxide emissions through overall planning.
Looking forward to the future, we remain confident in the development of the industry.
Firstly, during the “14th Five-Year Plan” period, under the new development pattern with domestic circulation as the main body and domestic and international circulations promoting each other, the automobile industry chain and supply chain need to strengthen their weak points and enhance their strong points, especially by increasing the technical breakthroughs in key core technologies and products such as the automotive-grade chip, vehicle operating system, and new electronic and electrical architecture, and accelerate the construction of an open and shared, collaborative and evolving industrial ecology.
Secondly, towards the goal of “carbon neutrality,” we will stick to the strategic direction of pure electric drive, accelerate the development of the new energy vehicle industry, and realize the intelligent and connected empowerment of new energy vehicles.
Thirdly, we will give full play to our country’s advantages, adhere to the strategy of single vehicle intelligence + connected vehicle empowerment, and strive to build a Chinese standard intelligent connected vehicle system while proposing China’s solutions to the world’s automobile industry, thereby accelerating the construction of an automotive powerhouse.
That’s all for my report. Thank you, everyone!
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.