Building a car on the Internet is a false proposition

In recent time, many Internet giants, without exception, have been involved in the torrent of cross-border car building. On January 13, 2021, the high-end intelligent pure electric car jointly created by Ali, SAIC and Zhangjiang Hi-Tech was officially released ; On January 19, Geely Automobile Group announced the signing of a strategic cooperation agreement with Tencent in Hangzhou; Coincidentally, on February 18, Baidu also announced that it will enter the automotive industry as a vehicle manufacturer and will work with its strategic partner Geely Holding Group Form a new car company; on February 19, news came out: Xiaomi decided to build a car, or led by Lei Jun himself, and regarded it as a strategic decision… Even Apple has always maintained a relationship with the car manufacturing field. “Ambiguous” attitude.

What’s interesting is that the share price of car-making and Internet companies is like taking a dose of “stimulant”-on February 20, the US stock market opened, Baidu’s share price reached a new high, reaching 346 US dollars per share. Xiaomi Hong Kong stocks rose 6.42%, and Xiaomi concept stocks rose 2.8%.

Obviously, the new energy vehicle market, which has been dormant for many years, will be completely detonated in 2020, and this boom will continue into 2021.

It is not only a “wind mouth”, but also a game of capital
The history of Internet companies building cars can be traced back to 2014. Tesla from Silicon Valley in the United States detonated the Chinese electric car market. Subsequently, local companies and their products that built cars based on Internet thinking have sprung up.

Internet companies headed by Weilai, Xiaopeng, and Ideal have set a precedent for manufacturing electric vehicles in China, and they were once sought after by capital. Between 2014 and 2020, Weilai Automobile’s financing exceeded US$5 billion; Xiaopeng Automobile financing Nearly 35 billion yuan; ideal car financing exceeds 22 billion yuan.

Although due to the lack of vehicle manufacturing technology and production qualifications, the journey of Internet companies to build a car is not smooth, but it will eventually usher in an explosion in 2020.

Data show that global new energy vehicle sales in 2020 will increase by 36% over the same period in 2019, and domestic new energy vehicle sales will reach 1.36 million, an increase of 13% from 1.2 million in 2019, setting a record high. Immediately after January 2021, the production and sales of new energy vehicles were 194,000 and 179,000 respectively, an increase of 285.8% and 238.5% year-on-year, respectively, and continued to maintain rapid growth, setting a record for seven consecutive months.

At the same time, with the strong support of domestic policies such as new energy and smart cars, the scale of China’s automotive market equipped with Internet of Vehicles functions is expected to continue to grow in the future, and will exceed 75% in 2025.

The “hot market increment” has made the capital market’s sentiment on smart electric vehicles high.

According to incomplete statistics, in January 2021, the global financing of electric vehicles exceeded US$12 billion, setting a single-month financing record in the history of the automotive industry.

Under the frantic pursuit of capital, smart electric vehicles seem to usher in a golden age.

All of this, are we familiar with each other?

“Standing on the wind, pigs can fly.” Lei Jun said such a sentence in a speech at Xiaomi in 2014. Recall carefully that more than ten years ago, China had just entered the era of mobile Internet. Internet giants that smelled business opportunities, grasping the absolute advantage of software development, began to regard mobile terminals as the entrance to the mobile Internet and began to enter the game.

It is understood that at that time, nearly 100 Internet companies proposed plans to manufacture mobile phones.

However, after a long time, many mobile phone manufacturers did not resist the “cruel and ruthless” of the market and capital after all, and became a dust after the market “fighting”. The first wave of Internet machine creation basically ended in failure.

Now, we are standing at the starting point of the next decade, and we can see how the current wave of smart car building is similar to the wave of machine building in the past-the pursuit of mobile phone intelligence in the past has transformed communication tools into mobile Internet terminals; and At this time, the intelligentization of automobiles is also to transform a traditional travel tool into an intelligent mobile terminal.

It is foreseeable that, with the crazy influx of capital, a “fishy storm” related to capital and Internet car building is about to begin.

Software redefines the automotive industry
Jobs once said, “Those who really take software seriously should make their own hardware.” Since Tesla, the traditional car-making logic has been subverted. Software-defined cars are making the penetration rate of intelligent driving and the improvement of intelligent driving capabilities a trend, and the proportion of software in the value of the entire vehicle and the entire automotive industry will continue to increase.

Morgan Stanley mentioned in a report on the autonomous driving industry that in traditional automobile production, hardware accounts for 90% of the value of the vehicle, and software only accounts for 10%. However, in the future value of the whole vehicle, the proportion of software will increase to 40%, and the proportion of hardware will drop to 40%.

In addition, McKinsey had predicted that by 2030, the automotive market in terms of software and electrical and electronic architecture will reach more than 400 billion US dollars. Among them, the automotive software market will grow at an annual rate of 9%, and the entire market will reach 84 billion U.S. dollars by 2030.

At this time, the business model of smart cars has also undergone a fundamental change-from the traditional one-time purchase and delivery of money delivery, to a three-in-one integration of software, data, and services, maintaining a sustainable and high-level relationship with customers. Sticky Internet thinking.

As the most typical practitioner of “software-defined cars”, Tesla became the first person to eat “crabs”.

It is understood that Tesla’s software revenue is mainly composed of FSD software optional packages, OTA paid upgrades, and advanced car networking subscription services. In 2020, Tesla’s FSD-centric software revenue soared to $1.9 billion, accounting for 7% of total sales. And in June, the market value surpassed the traditional car company Toyota, becoming the world’s first car company by market value.

The “spear and shield” of new car companies, the Internet and traditional car companies
Investment, technological empowerment, and car building have become the current three mainstream strategies for Internet giants to penetrate the automotive industry. Under the catfish effect, traditional OEMs have to step out of the comfort zone and face the wave of electrification and intelligence of automobiles.

Zhu Huarong, president of Changan Automobile, once publicly stated: “Traditional auto companies will die if they don’t accelerate their transformation, and state-owned auto companies will die if they don’t reform.” Under the attack of the rising of new automakers and the end of the Internet giants, the intelligent transformation seems to have become the current situation. An important option for traditional car companies to take precautions.

However, the primary problem facing traditional car companies is to solve the shortcomings of emerging technologies. With the maturity of technologies such as artificial intelligence, the Internet of Things, and 5G, driverless driving is gradually moving from theoretical ideas to applications. For traditional automobile manufacturing, engine, transmission and other technologies are the core components; but for new energy driverless cars, the core technology is the intelligent control system.

In terms of intelligent control systems, traditional enterprises do not have enough advantages. In contrast, Internet companies have a certain amount of technology accumulation in this area. This is also one of the reasons why Internet companies have joined the “new energy” fast lane in a short period of time.

For Internet companies, the final port of traffic is the basis for Internet companies to maintain traffic. Mobile phones, TVs, and even automobiles that have extremely high customer stickiness are the golden hills that big manufacturers rob.

Car building is a “gimmick”, and the embedded vehicle network system platform is the focus. After all, building a car is not a small project, and professional things are still left to professional people.

Of course, by binding and cooperating with Internet companies, traditional car companies are not passive. They can not only revitalize idle production capacity, but also obtain benefits from foundry cooperation and new business opportunities. According to incomplete statistics, the capacity utilization rate of most Chinese auto companies is between 60% and 80%.

In addition to integrating production lines and industrial chain resources, it can also effectively enhance the growth of traditional car companies in intelligent R&D and ecosystem construction-technology giants are responsible for software and intelligent driving level research and development, while traditional car companies are responsible for vehicle manufacturing, supply chain, Provide professional support in quality control and other aspects, which is also the “strongest shield” of traditional car companies under the trend of new energy vehicles.

Write at the end
The promotion of new energy vehicles has gradually shifted the attributes of vehicles from hardware to software. When it comes to software, people always subconsciously think that Internet companies are definitely better than traditional OEMs. This gives rise to the view that the future new energy market is the Internet age, but is this really the case?

From an objective point of view, traditional OEMs have an absolute advantage when it comes to making cars. The strength of Internet companies is not to build cars, but to fast iteration and user experience.

The level of Internet companies in the field of autonomous driving is undoubted, and the speed of responding to customer needs and solving problems is very fast. However, its products often fail to achieve actual results due to lack of sufficient industry experience. These have also been confirmed in the cases of Internet car companies such as Weilai and Ideal.

Therefore, considering the huge cost and the uncertainty of the market, Internet companies do not need to build their own cars. On the contrary, cooperation with traditional car companies is the best win-win solution-which can reduce unnecessary repeated investment. If you can make use of your respective strengths to provide users with better products, why not do it?

Finally, I have to sigh that in the Internet age where traffic is king, the cost and difficulty of acquiring traffic are getting higher and higher! And many Internet giants will never let go of any business opportunities to “drain” for themselves!