Journey of One Hundred People’s Media Focus on the Evolution of the Automotive Industry Chain
Author: Zhou Changxian
“In the age of smartphones, Tencent did not make phones; in the age of smart cars, Tencent will not make cars.”
On April 26th of this year, at Tencent’s strategic cooperation conference with Peking University, Tang Daosheng, Senior Executive Vice President of Tencent, and President of Cloud and Smart Industries made a clear statement.
Coincidences do happen. On May 24th, Huawei issued a Declaration on Huawei’s Non-Automotive Manufacturing, stating that “this long-term strategy was clear as early as 2018, and there has been no change.”
Both companies insist on not making cars, but each has its own considerations and logics.
“Tencent’s positioning is a ‘connector’. We are well aware that if we engage in hardware, we may lose our positioning and value as a ‘connector’,” said Tang Daosheng.
Huawei believes that what the industry needs is not a Huawei-branded car, but Huawei’s ICT technology capabilities accumulated over more than 30 years, to help car companies build future-oriented cars and provide car parts based on Huawei’s ICT capabilities.
However, Tang Daosheng pointed out that although Tencent will not make cars, it will definitely enter the field of smart cars. At that time, he only briefly listed a few businesses without elaborating.
So, what will Tencent make if not cars?
More than half a year later, at the just-concluded 2021 Tencent Digital Ecology Conference, Tencent specifically launched a smart travel session and gave a clear and specific answer to this question.
Eco-chain
There are not many internet technology companies with a sense of boundaries, Tencent is one of them.
What is a boundary? Some say that in terms of attitude, it means knowing what to do and what not to do; in philosophy, it means knowing who you are; in marketing, it means having a clear positioning.
“Do what you have to do and don’t do what you don’t have to do.”
Tang Daosheng also said this sentence at that conference. He believes that any business needs to find its own positioning and have a clear strategy.
“Why doesn’t Tencent make cars? Is it because they can’t make them? I don’t think so,” Tang Daosheng said frankly. Making cars does not add value to Tencent’s established strategy and may even subtract points.
His words are spot-on.
However, in this era of major changes in the automotive industry, not everyone has such a clear understanding. There are many players entering into car manufacturing that either lack sufficient respect for the automotive industry, or are blindly confident in their resources and abilities and some even bet all in. In just a few years, they may fail or become mired in difficulties with no way out.The wisdom of Tencent lies in its insight into the transformation of the automotive industry, finding its value as a helper rather than a gold seeker, by making tools and selling water.
As we all know, with the advent of electrification and intelligence, the game rules and experience paths of the automotive industry have been completely broken.
In terms of product form, new forces represented by Tesla, NIO and XPeng have already achieved a leap in intelligent experience, shifting from the past focus on technology and function to the connection with users and the ultimate user experience.
User demand is truly being valued as well, and the relationship between car companies and users is being redefined. To become a user-based enterprise, it means being responsible for the full cycle experience of user purchase, usage, and maintenance by establishing a service and operation system that covers the entire user life cycle. A user-centric operating model will ultimately also impact business management and production manufacturing.
At the same time, the value chain of the automotive industry is also fundamentally changing, expanding from R&D, production, supply, and marketing to after-sales service, financial insurance, travel and life services.
In fact, some powerful car companies have already seen the above changes and have started to extend their upstream and downstream operations to construct their own ecological chains.
“In terms of the automotive industry transformation, the window for industry chain adjustment and ecological circle expansion has opened, a new track has been laid, and a new marathon race has begun,” said Li Shufu in a media interview in March of this year.
He believes that the automotive industry chain has undergone a comprehensive transformation, and the Chinese automotive industry and enterprises need to create revolutionary advantages in human-machine interaction, autonomous driving, central computing, power exchange and charging infrastructure, energy management, intelligent travel, industrial interconnection, and other aspects.
As the parent company of Geely Automobile, Geely Holding Group has launched many strategic investment businesses, such as Caocao Travel which is laying out “new energy vehicle sharing ecology” in the transportation sector, and Zhongjian Investment which is building an open and connected financial ecosystem in the financial sector.
Geely Technology Group is deeply cultivating four core fields of material technology, new energy technology, aviation and tourism culture, and has strategically invested in AICT space-time Aero-info infrastructure and application solution provider, and also jointly established a joint venture with Daimler Mobility to hold a 50% stake in the high-end mobility services provider YAOCHU Xing which operates in several cities in China.In addition, Li Shufu and Shenziyu established Ecarx Technology, focusing on core technology products such as automotive chips, intelligent cabins, and intelligent driving. On September 28th, Li Shufu’s Hubei Xingji Era Technology Co., Ltd. officially announced its entry into the mobile phone industry, positioning its products in the high-end smart phone market.
Geely stated that its mobile phone business will fully leverage the design, research and development, high-end intelligent manufacturing, and industrial chain management experience accumulated by Geely and Volvo’s ecosystem, as well as the global layout advantages of the time and space aviation low-orbit satellite network under construction. At the same time, they will mutually empower each other in the areas of automotive intelligence, software capability building, and technological transformation, to achieve super collaboration. The purpose goes without saying: to create a user ecological chain, and form a strong protective moat.
The transformation of the automotive industry has also attracted many internet technology companies to enter the field, among the companies that have already entered include Baidu, Xiaomi, 360, etc. The founder of Xiaomi, Lei Jun, even claimed that Xiaomi auto is the last major entrepreneurial project in his life, and he is willing to bet his entire reputation on it, personally leading the team to fight for Xiaomi auto.
It is worth noting that before and after Xiaomi announced its vehicle production plans, it made many investments in the automotive industry chain. According to statistics, as of September this year, Xiaomi has invested in 62 companies in the field of intelligent vehicles, including 17 in intelligent driving, 13 in intelligent electric, and 6 in intelligent cabin.
Undoubtedly, the future competition of the automotive industry is not only a competition of intelligent cabin and autonomous driving technologies, but also a deeper competition of ecology. Regardless of whether it is Geely launching satellites and building phones, or Xiaomi and Baidu producing cars, from the bottom-up logic, it is to enrich each of their ecological chains.
However, even giant companies have their own ability shortcomings and cannot be made up for by massive investments in the short term. Internally, it is necessary to carry out multidimensional transformation in thinking mode, organizational structure, and corporate management from top to bottom and inside out. Externally, it is necessary to expand the circle of friends, carry out ecological cooperation upstream and downstream in the industry chain, and even cross-industry cooperation.
Take Tencent as an example. In the early days, it was more focused on ToC business. After transforming to an open platform, it tried to open up payment capabilities, traffic, user account login, etc., and then opened up many underlying technology resources, gradually forming cloud services, attracting more and more B-side customers.
However, unlike the standardized approach in the C-end, B-side customers have a large number of customized needs, and there are also significant differences in business models and operations.
In response to these differences, on September 30, 2018, Tencent implemented the third organizational structure transformation, internally called the 930 transformation, and launched a new round of strategic upgrading: rooting in the consumer internet, embracing the industrial internet, and establishing the Cloud and Smart Industries Group (CSIG), to carry the Tencent flag in expanding the industrial internet.
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During this process, Tencent has also clarified its position. Tencent does not touch hardware or build cars, but focuses on its strengths, summarized as three things: providing “digital infrastructure” capabilities, promoting connectivity value, and promoting collaborative ecology.
Speaking of this, let’s go back to the question at the beginning of the article: what does Tencent build if it doesn’t build cars?
At the 2021 Tencent Digital Ecology Conference, Tencent Vice President and Head of Tencent Intelligent Transportation and Travel Zhong Xiangping responded with one sentence to outside concerns.
“I think the industry may not lack a new force in car building, but it needs a digital network.” He believes that Tencent has been committed to helping the industry build such a “network” – it can connect upstream and downstream partners in the travel industry chain, open a digital path across the entire industry chain, connect users’ full life cycle, and form a circulating and flexible “network”.
In fact, this circulating and flexible “network” is Tencent’s intelligent travel business map.
It includes intelligent cabins, autonomous driving, digital marketing, travel services, automobile cloud digital solution, and other products and solutions covering various links in the industry chain, while indicating Tencent’s ambition for core digital infrastructure based on “Cloud and Graph”.
A Network
Today, the automotive industry has entered the era of “software-defined cars”, which requires car companies to have cloud management and data-driven capabilities, rebuild the business system architecture based on the cloud, and achieve user-defined full-process transformation.
However, in the past few years, car companies have emphasized end-side construction in their practices and explorations, but have overlooked the cloud, only building their own IDCs or hybrid clouds. In fact, for car companies, the development of cloud and end should be parallel.
It is precisely under this background that at the 2021 Tencent Digital Ecology Conference, Tencent proposed to focus on the core digital foundation of “Cloud and Graph”, and build a network based on this ability foundation.
Zhong Xiangping believes that although car companies have achieved comprehensive cloud implementation, they need a more flexible, open, and growing cloud in the face of the new stage of digitalization in the industry.At present, Tencent provides multiple solutions that include basic cloud, hybrid cloud, and private cloud for the expansion of automobile business, supporting the full digitalization of the automobile industry and the full cycle digitalization of user services with four advantages of solid technology, native security, industry symbiosis, and flexible openness.
“We are based on Tencent Cloud and constantly perfect the IaaS, PaaS, and SaaS matrix to help car companies connect from enterprise management to product design, industrial manufacturing, digital marketing, and user services on the cloud, and can conduct dynamic iteration and continuous evolution with the changing needs of users,” said Zhong Xiangping.
On January 19 of this year, Geely Auto Group and Tencent signed a strategic cooperation agreement in Hangzhou to carry out comprehensive strategic cooperation in the fields of intelligent cockpit, autonomous driving, digital marketing, digital foundation, digital new business, and low-carbon development.
Among them, Tencent and Geely-affiliated Widomaker jointly built an industrial Internet platform to explore the C2M model and let a car be connected with consumers from car model definition, driving product innovation with user big data, and realized cloud-based collaboration in each link such as safety monitoring, energy consumption optimization, process improvement, and after-sales survey.
In the hottest field of autonomous driving, Tencent released the autonomous driving cloud platform, focusing on providing full-link services for autonomous driving technology research and development to support the industry’s more efficient autonomous driving research and development and operation.
“We will see that the biggest challenge facing autonomous driving is in data-driven and cloud-based capabilities. In the past year, Tencent has been strengthening the construction of autonomous driving cloud capabilities. How to help each automaker improve their own autonomous driving capabilities through cloud-based basic tools and product service capabilities,” said Tencent’s Smart Transportation Vice President, Zhong Xuedan.
According to Wang Zhipeng, the product director of Tencent’s autonomous driving cloud product, the Tencent autonomous driving cloud platform integrates industry-leading autonomous driving development tools and products, effectively connecting data collection, storage, labeling, algorithm training, simulation, evaluation, and production data feedback and operation in the full chain and full lifecycle of autonomous driving research and development.
He believes that massive data is the core element driving the rapid iteration of autonomous driving technology, but how to make good use of the data is a problem that autonomous driving developers are facing.
Daily PB-level data storage and massive road data annotation generate high costs
Daily PB-level data storage and massive road data annotation generate high costs, while the annotation process involves low accuracy, low automation, and other problems. In addition to data utilization, the existing simulation solutions cannot meet the rapid iteration needs of algorithms, which is a major challenge for developers. The industry is in urgent need of cloud simulation to improve efficiency and accelerate R&D progress.
It is worth noting that Tencent Cloud, based on a flexible SaaS subscription model and a closed-loop data core, helps partners improve the efficiency of autonomous driving R&D.
“If the cloud helps car companies connect the digital ‘Governor Vessels,” then maps are the bridge that connects the digital world and the physical world.” said Zhong Xiangping in the AutocarMax forum.
He believes that the explosive development of autonomous driving, intelligent transportation, and smart cities has put forward new demands on maps. To this end, Tencent has launched a new map product-Tencent Smart Driving Map-for the era of intelligent driving.
Zhong Xuedan admitted that although Tencent’s map business has been more than tens of years, compared with Baidu, Gaode, and other map vendors, Tencent has disadvantages in two aspects: it started later, and the path is different. “Previously, we were more committed to cloud-based services and capabilities. For example, map LBS (location service capability).”
But it is precisely because of this latecomer advantage that Tencent does not have historical baggage in the era of intelligent driving. In other words, unlike other map vendors such as Baidu and Gaode, Tencent’s Smart Driving Map achieves “one map” of high-precision maps, ADAS maps, and SD maps with data convergence. Through the collaboration of human flow, logistics, and road infrastructure IoT, it supports the “one map” from intelligent driving to traffic management.
So, what is the greatest value of the “three-in-one map”?
Zhong Xuedan believes that by combining Tencent’s rich ecological services and accurate geographical location matching with the smart driving map, and presenting them in an intuitive and visual way, and combined with the ability of the scene engine to perceive and predict user needs, it can provide scenario-based service recommendations, open up more usage scenarios for cars, and achieve a truly “personalized” cockpit experience.
“The evolution and development of the entire car are in a trend of integration. On the one hand, autonomous driving is to better serve the car, help the car complete driving, and improve the overall experience. On the other hand, the cockpit is more geared toward user interaction and interaction.”
In terms of scene linkage, the connection ability of Tencent’s ecological car networking TAI4.0, which was released this time, has been comprehensively upgraded.According to Wang Wanxin, general manager of Tencent Auto AI, users can easily share their vehicle location with friends through voice interaction via WeChat in-car version. In the future, WeChat in-car version will fully support WeChat mini programs. When a friend sends a restaurant mini program, for example, users can view it directly and initiate navigation on the car machine through WeChat in-car version.
In addition, the TAI4.0 upgrade includes a special customization of the National K Song in-car version, combined with the intelligent cabin system, to create an immersive in-car entertainment space for users. The new Tencent Meeting in-car version makes the car a stationary cloud gathering space, satisfying the needs of family video gatherings and business conferences.
Wang Wanxin introduced that TAI4.0 has more than 200 open interfaces that support multiple dimensions of integration with the intelligent cabin system, as well as customization of desktops, application lists, skins, and operations.
At the same time, the Tencent Xiao-Changjing in-car lightweight application platform has more than 100 boutique scenes tailored for the intelligent cabin environment, covering all aspects of travel and life. Based on scene recognition and user needs, personalized and proactive travel services are provided.
Zhong Xuedan revealed to the AutocarMax Travel 100 that Tencent is currently working with more than 40 automakers to promote digital transformation, and more than 10 are building digital platforms for marketing and operation integration in cooperation with Tencent.
Among them, Tencent’s Eco Internet of Vehicles (Eco IoV) has cooperated with 35 automakers, with a total of more than 7 million vehicles that can be integrated into the ecological system in as fast as two months.
Tencent’s efforts in the automotive industry aim to help build a network that connects partners throughout the industry chain, achieving a full life cycle connection with users and opening up new value spaces.
Of course, Tencent is also facing some challenges in this process, such as keeping up with the evolving software architecture and platform development as the automobile industry shifts toward electrification and intelligence. Tencent needs to be a digital transformation enabler that follows the iterative rhythm of automotive products while still being able to innovate. Additionally, as Tencent is not bound to few automakers like Huawei, it needs to provide differentiated digital solutions for diverse automakers and their products.
Lastly, Tencent should also carefully handle concerns such as the soul argument expressed by Chen Hong, Chairman of SAIC.
“腾讯并不是把所有的 OEM 都放到这张网上，而是帮助每个车企构建自己的一张网，以及跟互联网融合的一种能力。”
Zhong Xuedan made an appropriate analogy, just as any car manufacturer’s factory needs smart robots, Tencent provides a virtual, non-physical digital platform, which is also a kind of smart robot.
“We are mainly helping everyone understand how to get cheaper and better storage, how to make computing power more effective, and how to freely choose different simulation platforms, instead of binding or specifying a kind of service, and to give the initiative, the choice, and the formulation to the OEMs.”
He said that whether it’s pictures or clouds, Tencent has always adhered to an open concept that can be switched at any time. As for the OEMs’ concerns about data security, Tencent has also done a lot of compliance work and security protection measures.
“Once you use our products, you can understand the role and value of our products. Tencent will not bind or control the soul of the OEMs.” Zhong Xuedan smiled.
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.