New Entrants of Chinese EV Market in 2021
The volatile Chinese new energy vehicle market in 2021 has seen a massive influx of vehicle models from both traditional and new players, as well as numerous technology companies joining the race to manufacture cars.
Let’s take a quick look at the new brands that joined the automotive race in 2021:
In March, Jiudou Auto, a joint venture between Baidu and Geely, was established.
In April, Xiaomi CEO Lei Jun announced a plan to manufacture cars with a reserve of 100 billion yuan. Huawei’s autonomous driving displays outstanding performance and entered the public’s view with the launch of the Huawei Inside platform. Additionally, Huawei and Seres jointly launched the Huawei Smart SF5, which was put on sale.
In May, 360 announced a partnership with NETA to build a smart car strategy for the 360 Group. In the same month, OPPO announced that its founder was leading the team to prepare for car manufacturing.
In November, Avita, a new brand under the Changan Group, made its debut, and the Salon, Great Wall’s new brand, showcased its first car model, the Mecha Dragon, at the Guangzhou Auto Show. Also appearing at the auto show was a newcomer, Light Orange Era’s first car model.
In December, Niu, a new energy vehicle start-up founded by Li Yinan, the founder of Niu Electric Bike, announced that it would deliver its first batch of cars in September 2022. AITO, a brand under the cooperation of Huawei and Xiaokang, launched its first car model, the AITO M5.
Of course, there are also enterprises that cross the boundary of car manufacturing, such as Evergrande Automotive, Yuzhou Group’s investment into WM Motor, Wanda, and FAW Hongqi. However, Xiaomi and Huawei, the two technology giants, are the most eye-catching participants.
Xiaomi and Huawei have been in competition in the smartphone market for nearly a decade. During this period, they have continually competed and made progress. Lei Jun of Xiaomi chose to focus on cost performance and founded the Redmi sub-brand, while Yu Chengdong of Huawei chose to develop its own chips and focus on the high-end market, but also established the Honor brand, which initially focused on cost-performance. Although the two companies have different priorities, they both have become leaders in the smartphone industry.
In 2021, Xiaomi and Huawei once again appeared on the new energy vehicle track. However, their development paths are vastly different from their smartphone market strategies. Huawei has chosen to become an EV component supplier, while Xiaomi has decided to become a complete vehicle manufacturer.
Rapid Iteration
In the run-up to the Shanghai Auto Show in 2021, Huawei’s Smart Driving video was released, and the HiAlpha S model was officially launched. It seemed to tell the automotive industry that “Huawei has arrived!”The Shanghai Auto Show will open in a few days. At the ecological cooperation conference hosted by SAIC, SAIC announced its joint venture with Huawei to launch the SAIC Huawei Select SF5, which was also exhibited at Huawei’s booth the next day. Huawei announced the official launch of the SAIC Huawei Select SF5 in its flagship store the following day and will sell it through its national retail channel network.
If you are familiar with Huawei’s intelligent automotive solutions BU, you will know that Huawei currently operates in the automotive industry with a dual-line parallel mode. One is led by the former president of the BU and current COO, Wang Jun, which provides software and hardware solutions for car companies and follows a supplier route. The representative terminal products include the mentioned Lynk & Co 01 HEV, Changan Auchan and so on. The other route is led by Huawei Consumer BG CEO and current BU CEO, Yu Chengdong, which provides software and hardware solutions for car companies while intervening in vehicle design and engineering, and even opening up Huawei’s terminal channels. The representative terminal product is the SAIC Huawei Select SF5.
Compared with the supplier model, the Huawei Select SF5 with “soul” is more like a trial by Huawei in the automotive market. SAIC’s SF5, owned by the Xiaokang Group, has been launched as early as 2015 and has been listed in the domestic market in 2019, but the monthly sales volume was only a few dozen and unknown to the public. So, does this SF5 become stronger with Huawei’s support?
For power, the Huawei Select version of the SF5 replaces the rear electric drive system with the Huawei Drive ONE electric drive system. In terms of cockpit operation systems, it adopts Android + Huawei HiCar intelligent interconnected system, and the audio system is provided by HUAWEI Sound technology. This does give SF5 some Huawei elements.
However, rather than saying that Huawei’s support has made the SF5 more powerful, it is better to say that Huawei has made the SF5 better known. After the SF5 entered Huawei’s sales channel, the monthly sales volume surged from just a few dozen to nearly a thousand. Of course, this is still far from enough to support a brand. But what is unknown to the outside world is that while the Huawei Select version of the SF5 was delivered in bulk, Yu Chengdong’s team was making rapid improvements to further Huawei-ify it based on the SF5.After only 8 months since the release of Huawei’s Smart Selection SF5, a new brand and model – AITO Quest M5 was unveiled at Huawei’s winter flagship product launch in 2021.
Unlike SF5, the AITO Quest M5 features a significant enhancement in Huawei’s design elements, and it’s not just a simple name change.
In terms of power, the AITO Quest M5 uses Huawei Drive ONE series electric drive assembly on both front and rear. During the launch event, Richard Yu emphasized the “not-so-important” 1.5T 4-cylinder range extender, and according to him, Huawei engineers even intervened in the calibration of the range extender, which can achieve 3.2 degrees of electricity per liter of fuel, a 20% improvement compared to the industry standard.
In addition, Huawei also used oil cooling for the three-in-one electric drive assembly in the AITO Quest M5. According to Huawei’s official data, the motor can achieve continuous acceleration from 0 to 100km/h, twenty times, without overheating even when cruising at 180km/h, improving the durability of the electric drive system.
Regarding intelligence, the AITO Quest M5 adopts Huawei’s ecosystem. Hongmeng OS cabin ecology combines with HUAWEI SOUND audio system, with a new UI & UX design, voice assistants at the forefront in China, and a smooth in-car experience, showing a significant gap from Hi Car on the SF5.
Regarding the complete vehicle, Huawei no longer participates in the AITO Quest M5’s R&D process like the SF5. According to Richard Yu, Huawei’s industrial design and software teams for smartphones participated in the development of the AITO Quest M5.
Sales channels are open to everyone, starting from January 20th this year, the AITO Quest M5 will gradually begin test drives throughout 500 Huawei stores in 118 cities across China.
Huawei has invested a lot of resources in AITO Quest, naturally having a longer-term plan for this model.
According to Huawei’s statement at the brand launch event on December 2nd, 2021, AITO Quest will soon release an intelligent pure electric SUV, and a medium to large-sized luxury SUV. Obviously, AITO Quest’s product line will rapidly expand. After all, AITO Quest aims to become a top 3 global new energy vehicle.Behind the significantly faster product iteration than the automotive industry is Huawei’s software strategy of “Little Bu Runs Fast and Continuous Iteration” leading the development of automotive hardware.
Taking WeRide’s M5 as an example, from the perspective of the entire vehicle platform, the WeRide M5 still uses the platform of the Seres SF5. The result is that apart from significant updates to configurations that consumers can actually perceive, such as electric drive and cabins, the underlying basic platform hidden in the depths is still the SF5. For example, the WeRide M5’s electronic and electrical architecture does not support higher-level assisted driving functions. Additionally, the extension of the range is obviously not a strategy that Huawei will continue to promote.
To become a top 3 player, Huawei will undoubtedly delve further into the product itself. This means that the components of Seres will become less and less, and ultimately Seres may become a “contract manufacturer” of automakers.
So, what will Huawei look like in 2024 with its rapid iteration? By then, Xiaomi, which was once a “friendly competitor” in the smartphone industry, will also compete with Huawei in the new energy vehicle market.
Final Battle Cry
Speaking of Xiaomi’s entry into the auto industry, we need to go back to April 2021. Lei Jun, Chairman of Xiaomi Corporation, announced that Xiaomi would invest 10 billion yuan to make cars and launched the slogan “Fight for Xiaomi cars.” In October, at an investor conference, Lei announced that Xiaomi’s car is expected to enter mass production in the first half of 2024.
Compared with Huawei’s choice of rapid iteration, Xiaomi’s road to car manufacturing seems much slower. After all, “Huawei cars” have already entered stores, and “Xiaomi cars” haven’t even completed their PPT yet.
Since April 2021, Lei Jun has left a legend among national automakers, and all departments of Xiaomi’s car-making operation have begun preparations. Despite entering the market late, Xiaomi’s appetite for talented personnel is insatiable.
Fortunately, Xiaomi’s auto division had Hu Zingnan, the “key man” of Geely, and later was joined by Yu Liguo, the former CEO of Jixihux. We have mentioned Hu many times. Geely’s SEA vast architecture is credited to him. And what about Yu Liguo?
Yu Liguo has been working at BAIC Group since graduation and has been in charge of BAIC New Energy’s strategic planning, medium- and long-term product planning, digital application, ARCFOX Business Unit, and cooperation with Huawei to establish the Davis Innovation Lab, among others.The Magna quality of ARCFOX, as well as the cooperation with Huawei in autonomous driving, are closely related to Yuli Guo. For Xiaomi, Yuli Guo is capable of building ARCFOX from scratch, which is exactly what Xiaomi’s current stage of automobile development needs.
According to Automotive Industry News, Yuli Guo’s formal title is Vice President of Xiaomi Automobile and Political Commissioner of Xiaomi Automobile Beijing Headquarters. He is responsible for overall management, special business promotion, organization and talent development of Xiaomi Automobile Beijing Headquarters, reporting directly to Xiaomi Automobile CEO Lei Jun.
In addition to attracting talented senior executives, Xiaomi is also investing heavily in attracting technology and R&D personnel. As shown in the figure, Xiaomi Automobile still has a large number of vacancies for positions, though different from those in 2021 for architecture design, radar algorithm, data platform, autonomous driving, etc. At this stage, Xiaomi Automobile is beginning to build teams for the intelligent cockpit, software testing, and other intelligent parts.
Of course, car manufacturing also requires suppliers. From Xiaomi’s 2021 investment strategy, it can be seen that Xiaomi is investing heavily in the field of car manufacturing. Regarding the three-electric system, Xiaomi has invested in Zhonghang Lithium Battery, Ganfeng Lithium Battery, Bee Nengyuan, Haizhibo Electronics, Aici Technology, and Konghui Automobile. For visual sensor, it has invested in Silicon Labs, PronoSee. For LiDAR, it has invested in Hesai Technology and Tudatong.
Naturally, chips were not neglected, and Xiaomi has invested in Crystal Vision Intelligence, Rui Ming Laser, Cloudtour Semiconductor, and others. As for autonomous driving solutions, Xiaomi has acquired Deepmotion Technology directly, and has invested in Zongmu Technology, Geometric Partners, and so on.
From the invested companies, Xiaomi mostly chooses rapidly developing enterprises with a wide range of relevance, which apparently lays a solid foundation for better future cooperation.
As for the Xiaomi car that will begin mass production in 2024, it is necessary to make an attractive vehicle within a limited time. Inevitably, prioritizing intelligentization will be on the top of the list. For a technology-based company like Xiaomi, an intelligent cockpit is a natural task, and what is more anticipated is Xiaomi’s solution to autonomous driving.
Regarding the direct acquisition of Deepmotion Technology by Xiaomi, it is worth discussing. For Deepmotion Technology, joining Xiaomi is a very good choice. Since the completion of series A financing in 2018, Deepmotion Technology has not announced further financing news, and the difficult-to-obtain qualification for high-precision maps has forced it to turn to the perception direction.For Xiaomi, Deepmotion Technology was like a buried treasure underwater. Before being acquired, Deepmotion Technology had already developed a fully integrated autonomous driving solution. Xiaomi bought the company for only 500 million CNY. Although Deepmotion Technology is a small company with only a few dozen employees, it is not subpar. Its 4 co-founders, CEO Cai Rui, CTO Li Zhiwei, CSO Yang Kuiyuan, and R&D Director Zhang Chi, all come from Microsoft Research Asia, which has provided many top AI algorithm talents in the industry, such as Cao Xudong, CEO of Momenta, Ren Shaoqing, VP of NIO Autonomous Driving, Xu Li, CEO of Sensetime, and so on. This acquisition has brought the 20+ employees of Deepmotion Technology to Xiaomi’s autonomous driving team, with its core staff taking on the responsibility for various modules of Xiaomi’s autonomous driving system.
Assuming there aren’t any major changes to Xiaomi’s autonomous driving team in the next year, it can be determined that Xiaomi’s autonomous driving solution will be more geared towards visual perception combined with high-precision maps. This is somewhat similar to Xpeng’s development path for autonomous driving, although Xpeng has added lidar to both the P5 and G9, lidar still plays an auxiliary role in Xpeng’s algorithms, with main algorithms relying on visual perception, and Xpeng has already planned to remove high-precision maps in its future development.
At the same time as technological change, Xiaomi’s commercialization capabilities are gradually becoming apparent. Compared to the three startups, WM Motor, XPeng, and Li Auto, Xiaomi’s automotive business has started much faster. According to the Beijing Daily report on January 6th, Xiaomi Automotive was officially incorporated into the 2022 Beijing Municipal Government Work Report, “promoting Xiaomi Automotive construction.”
According to the news released by the Beijing Economic and Technological Development Zone Management Committee’s official public account at the end of November 2021, Xiaomi Technology and the Beijing Economic and Technological Development Zone Management Committee signed a “cooperation agreement” for Xiaomi Automotive. According to the agreement, Xiaomi Automotive will construct its headquarters base, sales headquarters, and R&D headquarters, and will build a complete vehicle factory with an annual output of 300,000 vehicles in two phases, the capacity of the first and second phases being 150,000 vehicles each. The first car is expected to go into production and achieve mass production in 2024.
Xiaomi won’t have to worry about its sales channels with more than 10,000 Xiaomi home stores offline. Transforming some larger storefronts to sell cars will be easy.
With expanded talent, large-scale technology investment, and factory construction, Xiaomi Automotive, led by Lei Jun, has taken every step steadily. This fleetingly 3-year-old Xiaomi Automotive is truly something to look forward to.
Final WordsAbandoning the three traditional components of fuel vehicles, the threshold for electrification is getting lower and lower. A large number of non-traditional car manufacturers have entered the race to make cars. However, even tech giants like Huawei and Xiaomi are still cautious when entering uncharted territories. Huawei iterates quickly on the Siles, constantly trying. Xiaomi starts from scratch, taking it step by step, and it takes only three years to make a move.
It is not yet known which strategy is better between Huawei’s “small steps, quick iteration” and Xiaomi’s “dig deep, store grain, and slowly become king,” but the automotive industry should know that both are formidable rivals.
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.