Editor’s note: “New Variables” is a column launched by Car News to share insights from frontline practitioners in the intelligent automobile industry. Through the eyes of insiders, it provides a glimpse into the key variables driving the development of intelligent cars.
Contributing author / Zhang Jie, Market Leader of the Binnisun China LiDAR project
Editor / Car News
The global economy has been disrupted by the pandemic, but there are always new and certain future trends that will burst with growth and new vitality. One of the most representative examples is the new energy vehicle industry, which is currently riding the crest of a wave.
On July 19th of this year, Tian Yulong, chief engineer of the Ministry of Industry and Information Technology (MIIT), announced a set of data at a press conference held by the State Council Information Office.
“Since 2022, China’s new energy vehicle industry has overcome numerous difficulties, such as sporadic outbreaks caused by the pandemic, and has achieved steady and rapid development. In the first half of this year, sales and production of new energy vehicles reached 2.661 million and 2.6 million units respectively, an increase of 120% year-on-year. The market penetration rate was 21.6%.”
According to statistics published by Cui Dongshu, secretary-general of the China Passenger Car Association, global sales of new energy passenger vehicles reached 4.21 million units from January to June.
Combining the above two sets of data, China’s share of the global new energy vehicle market is estimated at 60%, with this data being a result of China’s unwavering implementation of the “dynamic zero-emissions credits” policy.
With this policy in mind, China’s new energy electric vehicle market has already entered a fast lane of development. Looking at the micro level, we now encounter more vehicles with green license plates on our daily travels.
At the same time, as the momentum of the new energy vehicle industry continues, many new technological innovations have made breakthroughs. For example, LiDAR technology has been used to enable intelligent vehicles with computational power, which have been more widely accepted by consumers, making our travel experience safer and more efficient.
The “Momentum” of New Energy Vehicles in China
Let’s start with three cases (history/facts):
First, China’s road to industrial upgrading in the automotive industry has determined that new energy is a historic opportunity.
China’s automotive industry has gone through three stages from the establishment of the new China:
First stage: 30 years from nothing to something. After the establishment of new China in 1949, there was no complete industrial system on the land of China that had experienced various wars and wars. The cars on the streets were all “Wan Guo” brand. Chairman Mao Zedong visited the Stalin Automobile Plant in the Soviet Union and decided to introduce it to China. With the help of the Soviet Union, Changchun FAW and Shiyan Dongfeng were established, which achieved the construction of liberation, Dongfeng brand cars, trucks and other products.
Second stage: 1980 to 2010. Thirty years of exploring the development of independent passenger cars through the CKD mode.During this process, China expected to exchange market for technology, attract foreign investment through its vast market, and aimed to achieve a domestically produced passenger car industry system. During the process, with the emergence of policies encouraging individual car ownership and the opening-up and reform, the demand for cars among the increasingly affluent Chinese people was strong. In a huge incremental market, joint venture car-making enterprises also benefited economically, but localization progress was slow.
Of course, this was also due to the difficulties in high-tech access to some of the core auto parts.
Under the prosperity, China’s automobile industry made money from the CKD model, while private enterprises gradually developed after 1994 through the struggle of some in the auto industry, and domestic high-quality brands such as Geely, Chery, BYD and Great Wall gradually gained market share from a quantity perspective, but still found it difficult to achieve autonomy for some of their core products, and brand premiums remained in the hands of volume-oriented positions.
In the third stage, from 2000 to the present day, the closed environment of the automobile industry has gradually been broken, and in 2003, Tesla was established to initiate a “revolution” against fuel vehicles. The same year, Xi’an Qinling Automobile, acquired by Wang Chuanfu, officially entered the electric vehicle market.
Later, Ningde Times and BYD became the leaders in battery technology. China’s new energy electric vehicle policy subsidy and a surge of internet-related entrepreneurs gave birth to new paths in the entire auto industry.
At the same time, after Japan’s lithium-ion battery market peaked in 2000, the Japanese government began to lay out its next step in hydrogen energy based on its own advantages and disadvantages. Both the market and policy gave new space and impetus to China’s lithium-ion batteries and lithium-ion-based electric vehicles.
From the above picture, Fengtai represents Japan’s automobile industry, Volkswagen represents Germany’s automobile industry, and Ford represents the United States’ automobile industry.
From the milestone events in the legend of the picture, China’s automobile industry has basically taken shape from scratch, and Germany, Japan, and the United States’ automobile industries have entered mass production.
From a time perspective, in terms of the mechanical industry, China is at least 30 years behind. If we look at it from the perspective of passenger cars, it will be another 20 years behind. These 50 years of development are basically the accumulation of technology and patents by a generation, and intangible barriers that cannot be broken through by “concentrating on doing big things” in a short period.
The auto industry not only requires technological breakthroughs, but also requires reliable products and the most cost-effective solutions.
Looking at it from the perspective of new energy, although Europe and the United States started early, they did not form a scale, and the development of battery technology was relatively slow, which to a certain extent can be caught up with and even surpassed.With macro guidance and micro innovation, the current Chinese market can be said to be a rare unified superpower which has collected capital, teams (talents), supply chain systems (such as batteries), and national policies (readers interested can refer to the “New Energy Vehicle Industry Development Plan (2021-2035)” issued by the State Council).
The second is the sensational landing of Tesla’s Shanghai Super Factory and the high localization rate of its products.
After Tesla’s entry into China, people have felt the cost decline over time, which is partly due to Tesla’s marketing strategy. Furthermore, the miracle of localization rate and mass production, Tesla achieved 95% localization rate of supply chain construction in just 3 years after establishment of its Super Factory in Shanghai, and delivered over 50% of Tesla’s global capacity in 2021. It can be regarded as a pioneering work of “Made in China”.
Third, the brand occupancy rate of new energy vehicles is historically leading.
According to publicly available internet data, except for Tesla and Volkswagen, all the top-ranked brands in 2021 are Chinese domestic brands.
In accordance with the laws of marketing, brand formation requires product strength (customer needs are met), advertising promotion and brand positioning, as well as reputation, and the formation of reputation has inertia and time.
New energy vehicle market undoubtedly provided a chance for domestic brands to break through brand premium and achieve pricing and definition of mid-to-high-end products.
These three cases represent a dimension in which we observe the Chinese market from the perspective of history and reality.
The three cases prove the huge potential of Chinese brands in the new energy vehicle market in terms of the era of opportunity, supply chain maturity, and brand acceptance.
Based on our observations, the future development of the Chinese new energy vehicle market will present 6 trends:
The first trend is that the market growth rate will continue to increase and the volume will gradually expand.Based on the official website data of the China Association of Automobile Manufacturers, we have analyzed the sales trend of the past 24 months (2 years), and found that the trend has been consistently strong since the only exceptions, the Chinese Spring Festival (traditional festival and vacation), and the COVID-19 control measures in April of this year.
At the same time, the production and sales have maintained an unusual consistency, demonstrating that the development of new energy electric vehicles is a market that gradually sells with the gradual improvement of production capacity.
With the future improvement of China’s manufacturing capacity, the trend is likely to remain so. According to official media predictions, the probability of achieving a total annual volume of 5.5 million cars in 2022 is high.
The second trend is the expansion of the influence of domestic brands and an increase in market share.
In the era of traditional fuel vehicles, high-end brands such as Mercedes-Benz, BMW, and Audi (‘BBA’) dominated the market. Domestic cars occupied the market share of the lower and middle-end markets in China, and were mainly focused on the markets of specialty vehicles and developing countries overseas.
However, in the new era of electric vehicles, BYD (a domestic brand) has recently entered the Japanese and European markets. The price of BYD Han has undoubtedly given it the pricing power of high-end brands. They have continued to rank at the forefront of large and mid-size car sales lists.
This provides technical and product possibilities and foundations for Chinese electric vehicles to go abroad and national branding strategies.
The third trend is the gradual increase in consumers’ acceptance and the gradual expansion of the market potential.
As the current mainstream consumer groups, people born in the 80s and 90s, determine the market heat and potential based on their consumption preferences. According to a third-party Deloitte survey report, China, South Korea, and Germany have the highest acceptance rates of new energy vehicles.
From a micro perspective, it is also not difficult to observe that at our flourishing shopping centers, there are large numbers of young people lining up in car experience stores like ‘Tesla’.
The fourth trend is government policy guidance and support.
As China’s GDP has declined and the three major drivers of economic growth have encountered some degree of suppression, the economy urgently needs to revitalize industries with large scale, wide audience, and broad relevance to people’s livelihoods.
Of all of the basic necessities of daily life, travel is undoubtedly one of the most significant markets. With the popularity of new energy vehicles, the demand for supporting equipment will show some gaps. At the same time, the effect of the recent rise in raw material prices has brought negative impacts, which have to some extent suppressed the release of some market demand.This determines that the country will definitely make efforts in the automobile market, provide new or maintain existing policies from the policy side and supporting side to ensure the smooth conversion of market demand. These policies include subsidies, circulation trading, supporting facilities, and configuration indicators.
The fifth trend, breaking through range anxiety through battery and charging technology.
Since the emergence of new energy vehicles, the most criticized aspect is the driving range. Without checking the charging pile’s availability, the anxiety of not being able to return will arise.
As a result of the formation of the “Production-Channel-User-Production” closed loop based on government guidance, companies have increased their focus on technological accumulation and research and development resources.
Next year, new solutions for range anxiety will emerge, represented by the “Ningwang” CTP3.0 battery technology and XPeng’s SiC platform 800V charging platform, marking a significant step towards resolving the issue of driving range anxiety.
The sixth trend, a new model for carmaking, creating advantages through cooperation.
New energy vehicles represent electrification from a driving perspective, which is a good solution from an environmental and energy perspective. However, in terms of product and function dimensions, we will notice that the focus of advertising for new energy vehicles is often on the car’s intelligent driving assistance, which enables smarter and better driving.
Therefore, intelligence is the accelerator and critical point of new energy vehicle development, which is why Chinese companies can occupy a significant market share in new energy vehicles. This has also led to the saying “software-defined car.”
In the intelligent electric vehicle manufacturing industry, we have seen two or even three parties cooperate, gradually becoming a trend of brand collaboration and launching. This includes familiar names such as Huawei, Alibaba, and Baidu.
When internet thinking is introduced into car manufacturing, intelligent cars will become more accessible to the public.
Based on the six major observations, we can identify three major directions for China’s future development of new energy vehicles:
Over the next 5-10 years, the Chinese new energy vehicle market will have a long cycle of momentum.
All practitioners related to hardware, software, and data in this industry chain will welcome a good period of development opportunities.
Trends in the Future of the Automobile Market —— Intelligence
Currently, intelligence in the automotive industry mainly refers to advanced driving assistance systems, which can help drivers/vehicle owners achieve a more intelligent and safe driving experience under specific circumstances.
So how is intelligence achieved?
By examining products on the market, it is clear that current intelligence is achieved through enhancing a vehicle’s perception and computation capabilities, combined with AI to achieve autonomous decision-making under certain conditions.
Two main characteristics of these vehicles are evident:
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First, the fusion of sensors achieves high redundancy and safety.
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Second, significant computing power is devoted to achieving short-term high-volume calculations.
Through these configurations and algorithms, intelligent driving can be achieved in the most concentrated driving scenarios, such as parking, city roads, and highways.
For example, the autonomous parking demonstration of the XPeng P5 Lidar version or the autonomous and unprotected turning in the Huawei JingFox- HI version for city roads.
We have compiled the product release plans of major brands, and it is evident that 2022 and 2023 are periods of significant concentration and outbreak. This seems to indicate that 2022 and 2023 are the initial outbreak periods for the conversion of intelligent technology, which is particularly important for all new start-up brands in terms of product releases and planning.
Regarding the road toward intelligence in vehicles, in the long term, there is a new point that is easily overlooked. Recently, Meizu branded mobile phones were “acquired” by Geely, announcing that the “Meizu” brand has transformed into a “Geely” phone, and the phone’s strategy will be centered around the development of automobile brands.
In a speech at a strategic investment conference, Li Shufu, the head of the Geely Group, stated:
“The technical innovation and ecological integration of the consumer electronics and automotive industries is imperative. In the future, the race for intelligent automobiles and smartphones will not develop in isolation but will develop in the direction of integration for common users, multiple terminals, all scenarios, and immersive experiences…… The close interaction and sharing of mobile phone and car technology in the future will cross boundaries to create an ecological chain and achieve super coordination.”
I believe this passage also perfectly explains the underlying reason for Lei Jun’s venture into the automotive industry with Xiaomi Automobile.
If we also consider a passage spoken by Huawei’s Yu Chengdong when announcing the Mate 7:
We are bringing a super desktop application today that can bring hundreds of thousands of mobile applications into the car system, which no other company in the world can achieve. You don’t have to worry about your personal privacy after leaving the car.
In addition, NIO has laid out its own mobile operating system and business, and officially registered “NIO Mobile Technology Co., Ltd.” with a registered capital of 100 million US dollars and Qin Lihong, co-founder of NIO, as its legal representative.
Li Bin, the founder of NIO, has also publicly stated that NIO wants to create a user-friendly smartphone, developing one every year, just like Apple, to perfectly match NIO cars.
Meanwhile, on August 2, Hezhong New Energy (the parent company of NIO’s competitor, NIO Automotive), and BlackBerry (BB.US) announced their partnership to accelerate the application of intelligent technology in car driving and cockpit scenes.
As the first landing project of the cooperation between the two sides, the NETA S will be equipped with BlackBerry’s QNX system.
After the gradual landing of intelligent hardware focused on the car itself, the next longer and more certain trend is the ecological interconnection, shifting the development mindset from simply strengthening the product entities to a user-centered, cloud-based, 5G communication base station, mobile-car interconnection systematic development path.
At the same time, from the perspective of economic benefits, true intelligence is based on data intelligence. The cost of transmitting data is substantial if considering only the car’s built-in machine. However, the transmission based on the WiFi channel of the mobile phone when returning home is a more cost-effective solution with no experiential loss.
The intelligentization of cars is undoubtedly a certain development direction, and each practitioner is integrating and sorting out their supply chain to gradually implement their own ideas. Of course, during this process, various problems will be encountered:
I will give five examples:
Firstly, intelligentization is a combination of software and hardware and is born for service experience.
At present, the first ecological standard has not been fully established, and each manufacturer has its own product definition and thinking, and the planning for intelligence is different, which makes it difficult to provide unified products, content, and derivative services for the car system through software development and service ports. This time requires gradual replacement and scale effect through the market.
Secondly, it is about functional attributes and experience based on the scene.
Currently, new cars from major manufacturers (brand sides) have installed LiDAR and high-performance chips in a similar embedded manner.
Over the next two years, continuous upgrading of specific functions and software, providing users with “system upgrades-new functional experience” interactive and experiential interfaces, will become a more important task to avoid the embarrassing situation of what happened during a previous He XPeng live broadcast.Thirdly, production and manufacturing capability. This includes the factory’s automation capability and the supply chain’s safety and predictive ability.
In the ecosystem of automotive semiconductors, many vehicles will use a large number of domain controllers and associated chips, which are still dominated by giants such as Qualcomm and Nvidia. The capriciousness of future supply chains can ensure that there will be goods available for use, and the assembly efficiency of manufacturing factories is also a constraint, especially for new forces with innate intelligent genes.
Fourthly, infrastructure and supporting capabilities.
In the functional attributes of intelligent automobiles, there is a word that frequently appears, that is, highly automated driving ability in a limited area or specific scene. For example, the car parking lot mentioned earlier is a limited scene where memory parking is also based on the situation learned from at least one experience.
In the future, the progress of upgrading basic configurations such as highways, urban roads, parking lots, charging facilities, etc. to address the challenges of environmental factors will be to some extent linked to the progress of hardware devices on the roadside and the technology of vehicle-road collaboration systems. Scenes of logistics company automation have been shown on CCTV13 programs before.
Fifthly, internal conflicts.
Among the players in the car-making industry, where 2 or 3 brands exist, strong alliances are formed. In the process of cooperation, consensus must be reached on how to allocate the rights and responsibilities of the cooperating party for the work style differences based on their respective corporate cultures and role recognition in the decision-making chain, in order to avoid internal conflicts, especially in the strong alliance environment where the issue of dominant power may arise.
The Iteration Path and Current Situation of LiDAR Systems
Let’s shift our focus back to the sensor intelligence in current automobile intelligence. The most talked-about topic is undoubtedly the on-board LiDAR – measuring physical information through optical methods for digitalization.
In the live broadcast on August 4th of CCTV Finance on the topic of “What is the Difference between Investing in Intelligent Industry Chains for Electric Cars and Mobile Phones?” Chen Hang, the assistant director of the Institute of Fangzheng Securities, summarized that LiDAR technology is a direction that has received considerable attention in the industry.
Searching for LiDAR on Baidu, we get the following results in terms of attention and information disclosure, which shows that LiDAR has already entered the views of investors, industries, and consumers.
Hamamatsu Group has been committed to solving problems in human life through photonic technology, continuously meeting the needs of the market and customers through technological innovation and product iteration. Currently, Hamamatsu’s products are used in automotive LiDAR, consumer electronics ranging radars, and scientific research atmospheric radars.
Hamamatsu produces lasers and detectors with the “In-House” technology model that have been widely used in different application scenarios and technical schemes as shown in the figure below:
From the perspective of the market of new energy vehicles (NEVs) and LiDAR technology, there have been several clear trends from the industry’s inception to the present:
First, the installation time of LiDAR on vehicles has been significantly accelerated, and the market potential is gradually emerging.
According to incomplete statistics, in the first half of 2022 alone, more than ten automakers have launched nearly 20 new models equipped with LiDAR technology, including brands such as XPeng, NIO, Li Auto, Jidu Auto, JiHu, GigaTech, Lotus, and IM.
At the same time, automotive groups such as BYD, FAW, and GAC have also released their future product plans, all of which include LiDAR technology. Based on the current situation, LiDAR is gradually becoming one of the core environmental perception sensors for autonomous driving, and the market recognition and application of LiDAR are showing explosive growth.
Second, Chinese LiDAR technology companies have emerged strongly, and the growth rate of domestic LiDAR solution providers has gradually caught up with and exceeded that of the United States.
Under the trend of intelligence, new energy vehicles are continuously iterating according to application feedback, and are leading the trend of LiDAR technology, becoming the leader and standard setter.
At the most recent Guangzhou Auto Show, almost all newly released LiDAR suppliers for cars are domestic products.
Third, LiDAR technology is beginning to serve as a “smart” functional carrier and is entering the public’s view.
At present, autonomous driving rental cars equipped with LiDAR technology have entered the public’s view in areas such as Beijing Economic-Technological Development Area and Huangpu District in Guangzhou. CCTV has also broadcasted the functions brought by LiDAR technology more than once on news programs.
Fourth, there is no unified “solution” for the development of technical solutions.
The “unified solution” here includes two levels:
The first level is that automakers do not have a unified location for installing LiDAR technology.
For details, refer to the article “The Best Location for LiDAR: A Battle Among Top Product Managers in the Automotive Industry” previously published by “Autohome”, which details the opinions and views of industry leaders.
The second level is that the technical teams of various LiDAR companies do not have a completely unified understanding and approach to technical routes.
The consensus that can currently be achieved is also based on the safety of cars, low cost and reliability, and the parameter-based demand derived from NGP applications based on high-speed urban areas. However, the implementation paths are not uniform.# Translation
The current forward-facing lidars are divided into 905nm and 1550nm bands and mechanically rotating mirror and MEMS-MIRROR types from an optical perspective.
There are also Line-Array and Area-Array types from the detector’s perspective.
Of course, my point of view is that technological iteration is continuous, and the theoretically optimal solution needs to be gradually put into use and meet the current user’s needs through several “examiner” questions, such as “technically feasible, cost expectations controllable, and scalable for mass production.”
Therefore, the path distinction should be viewed from both the perspective of theoretical values and actual values within a time range.
Fifth, the market has not yet entered a scaled stage, but the advantage of first-mover brands has already emerged.
Products from companies such as Velodyne Lidar and Innovusion mostly rely on open-data and have acquired a significant amount of designated projects for new energy vehicles (NEVs). Both companies have expressed to the media in terms of capacity planning that they want to establish a production capacity of over 1 million lidars by 2023. This makes both companies among the top lidar manufacturers in the industry.
According to some investors, the valuation of these two companies conservatively exceeds 10 billion yuan (approximately US$1.5 billion), with a neutral-optimistic point of view between 15 billion and 18 billion yuan (approximately US$2.3 billion and US$2.8 billion).
What does this concept mean?
Comparing these firms to Luminar, the highest-valued lidar manufacturer that went public in July, enthusiasts suggest that Innovusion and Velodyne Lidar are equivalent.
Since these two companies have not yet had an initial public offering (IPO), their market positions can only serve as a complementary viewpoint to understand the relative positions of China’s top lidar manufacturers and international manufacturers.
Let’s take a look at the products of these two companies and compare their public data, trying to find the common parameters and requirements for the next few cars.
Based on the publicly reported data and the data on the official websites of Velodyne Lidar and Innovusion, we have summarized the comparison parameters in the following chart:
With these constraints, we can see that the current lidars installed on cars by automobile manufacturers have common parameters, such as detetection range, resolution, size, and Field Of View (FOV).
The question is, what is the next development direction if we define the current parameters of the front-installed lidar as the elements in the figure?
From the perspective of Hamamatsu, we can roughly summarize a development trajectory as follows:
Currently, the industry is in the second stage and transitioning towards the third stage.
In the near future, the focus of technical competition in the industry will likely be on the maturity and scale delivery of products released in the second stage, while also initiating the commercialization of blind spot radar technology.
At the device’s underlying technology level, this falls on the high-power Vcsel light-emitting chip and high-resolution SPAD detector technology.
As a representative case, on August 5th, Changzhou Zonghui Technology (a Vcsel supplier) announced that it had received increased capital from LiDAR companies such as Hesai Technology and Suteng Juchuang.
At the same time, the image sensor giant Sony released its IMX-459 series of car-grade SPAD-2D chips in March 2022, along with a DEMO module, making a high-profile announcement to enter the carborne laser radar chip field.
The development of the laser radar technology is progressing by leaps and bounds. Every technology upgrade and product update in the perception technology supply chain it represents, and every better adaptation to the automotive industry, can bring new opportunities and inspiration to the direction of new energy vehicle intelligence.
I believe that future product technology will continue to upgrade, and that there is still a lot of room for imaginative attributes. I look forward to all of us fully leveraging our functions and values on the value chain in this wave of intelligent transformation, fulfilling our mission, and worthy of ourselves.
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.