Chinese tech giants bet $ 19 billion on global electric car frenzy
China shapes until to be the first real test of Big Tech’s ambitions in the automotive world, with giants of Huawei Technologies Co. to Baidu Inc. is investing nearly $ 19 billion in electric and autonomous vehicle companies widely regarded as the future of transportation.
While Apple Inc. has long had plans for its own car and Alphabet Inc. has Waymo, its autonomous driving unit, the size – and speed – of movement of Chinese tech titans puts them at the forefront of this wider thrust. The allure is an industry that becomes increasingly high-tech as it moves away from the combustion engine, with sensors and operating systems making cars more computers, and the prospect of autonomy. re-imagining how people will use them.
As the world’s largest market for new energy cars, China is a key battleground. Car manufacturers established as Volkswagen AG and General Motors Co. is already doing this with local upstarts such as Market Darling Nio Inc. and Xpeng Inc. In the past three months, smartphone giant Huawei Xiaomi Corp., Baidu – which runs China’s leading search engine and mapping app – and even Apple’s Taiwanese manufacturing partner Foxconn has joined the fray, forging bonds and unveiling its own auto-building plans.
Nowhere has this been more exposed than last month Shanghai Auto Show, which has become one of the most important events in the world to showcase the hottest new trends in the automotive industry. Visitors lined up for hours to access the Huawei and Baidu pavilions, filling their screens and taking photos of sensor systems, high-tech dashboards and model vehicles. But despite the intense interest, the era of the new car is hyper-competitive in China, and the tech giants have a lot to prove.
“There is a great element of trust in betting tech companies,” said Stephen Dyer, chief executive of the board. AlixPartners in Shanghai and a former Ford Motor Co. executive. “It’s about creating something new that doesn’t exist now. This is where the element of faith comes into play. ”
|Huawei||$ 1 billion this year||Invest in R&D in the development of smart car components, with particular emphasis on autonomous driving|
|Baidu||$ 7.7 billion over five years||First investor and partner of WM Motor; internal Apollo robotaxi project; Set up an auto Jidu unit with partners. Software development for Evergrande NEV|
|Xiaomi||$ 10 billion over the next decade||Commits to making smart electric vehicles|
|Ali Baba||Not disclosed||First investor in XPeng; Partnership with SAIC in Banma project and owns Zhiji smart vehicle brand|
|Tencent||Not disclosed||First investor in Nio, listed in the United States. Software development for Evergrande NEV|
|Qihoo 360||Not disclosed||Led the latest fundraising for the startup EV Hozon Automobile|
|DJI||Not disclosed||Aims to provide autonomous driving hardware and software technologies|
Huawei has been at the forefront, recently announcing investment plans $ 1 billion in electric vehicles and its own autonomous driving technology, which it says has “already overtaken” the pioneer of the electric car Tesla Inc. in certain respects.
The Shenzhen-based company, best known for its mobile phone networks and the subject of crippling US sanctions, unveiled its first car developed with BAIC BluePark Mew Energy Technology Co. Arcfox S midsize sedan uses HI, or Huawei Inside, intelligent automotive software that allows it to operate in autonomous driving mode in urban areas for over 1,000 kilometers (620 miles) without intervention human. . Delivery is expected to begin in the fourth quarter.
Huawei’s auto show display drew larger crowds than nearby China Evergrande New Energy Vehicle Group Ltd., an upstart EV who took one of the the largest stands to present nine models despite the fact that he did not sell a car under his own brand. In addition to the Arcfox S sedan, a Seres SF5 coupe equipped with Huawei Inside was on display, along with Huawei’s HiFin smart antenna solution, a next-generation on-board communication system and 4D imaging radar used to monitor roads and traffic.
One of the biggest challenges for new entrants to the automotive industry is the amount of capital and resources required to manufacture cars. How tech companies negotiate this will be critical and potentially provide opportunities for established players in the industry, with Huawei repeatedly saying its plan is not to produce its own vehicles. Rather, it is a partnership with three Chinese car manufacturers – BAIC Motor Corp., Chongqing Changan Automobile Co., and Guangzhou Automobile Group Co. – to manufacture self-driving cars which will bear its name as a sub-brand.
Guangzhou Auto will jointly build a “truly unmanned car” to be produced in 2024, President Feng Xingya said last month. The automaker will also cooperate with Huawei on big data, smart cockpits, hardware and microchips, Feng said.
“China adds 30 million cars each year and the number is growing,” Huawei vice president Eric Xu said in April. “Even if we don’t tap the market outside of China, if we can earn an average of 10,000 yuan ($ 1,550) for every car sold in China, that’s already a very big deal.”
Apple appears to be considering a similar path, at one point in talks with automakers, including Hyundai Motor Co., ahead of the talks. sparkled. Unlike the Chinese tech giants, Apple is keeping its plans largely under wraps. The company lost a key manager overseeing its self-driving car program in February, and it’s unclear what impact this may have had on Apple’s progress in delivering a commercially viable car.
The rise of intelligent vehicles and autonomous driving is opening up a multitude of possibilities for tech companies, including access to data such as real-time information on popular destinations and the routes taken to get there. On top of that, for some it is possible to charge for technological additions and system improvements, essentially treating the vehicle as computer hardware with constantly updated software.
“They will definitely focus on intelligence,” said Yale Zhang, managing director of Shanghai-based consultancy Autoforesight Co.. ‘That’s what these tech giants are doing. Their main income will not come from selling the car, but from finding other ways to make after-sales money, like over-the-air system upgrades or software subscriptions. “
Big Chinese tech is considering electric vehicles for a reason: Hyperdrive Daily
Baidu – which started investing in robot taxi technology in 2013 and funded a Chinese electric vehicle start-up WM Motors – now plans to spend $ 7.7 billion over the next five years to develop smart car technology through its new Jidu Auto unit. The division aims to launch its first model in three years, followed by new versions every 12 to 18 months, CEO Xia Yiping said.
“The core value of cars in the future will be their intelligence,” Xia said, echoing a familiar refrain. “The earlier a company plans, the more control it acquires over the technologies developed itself, the more advanced technologies it has, the more power it will have in the market.”
Jidu has a core team of around 100 employees, and will expand to 3,000 people by the end of next year, including until 500 software engineers, he said. The first batch of cars will be based on Zhejiang Geely Holding Group Co.’s pure electric vehicle manufacturing structure, while Jidu will collaborate with Baidu’s Apollo autonomous driving unit, with special emphasis on intelligent cars and mass production of autonomous driving features. The unit will begin its next fundraising soon, with additional investments expected from Baidu and external investors.
Chinese smartphone maker Xiaomi has also announced plans to invest in $ 10 billion over the next decade to make electric cars, but haven’t revealed many details or given a timeline for deliveries. Billionaire co-founder Lei Jun announced in March his intention to lead a new autonomous division and lead the transition to electric vehicles, in what he called his latest big startup.
“We have big pockets for this project,” Lei, who is also the CEO of Xiaomi, said when unveiling the plan. “I am fully aware of the risks of the automotive industry. I am also aware that the project will take at least three to five years with tens of billions of investments. “
While Chinese tech giants may be behind the game and enter uncharted territory, it could work to their advantage, AlixPartners’ Dyer said.
“It’s not an industry where you have to be the first to win,” he said. “In fact, in the auto industry, the first comer usually never wins. It is always the follower who wins. Because when you are the first to come, you pay to learn through all the mistakes. “
– With the help of Charlie Zhu, Chunying Zhang and Ying Tian