Ken: Make First Move to Get Involved and Empower Auto Industry for New Round of Development
"Today, all carmakers, tech and internet companies, including industry practitioners, are burning cash. They have all slashed their own wrists to see who bleed more and who bleed faster. Those with sluggish flow of blood will be knocked out."
"We’ve seen many successful and outstanding enterprises, but underneath our feet, there are more companies that have bitten the dust. Often, the media won’t tell these stories, but actually, they’re very respectable, and also very pathetic."
— On Jun. 10th, the outspoken founder and Chairman of PATEO CONNECT+, Ken (Yilun) YING said at the 13th China Auto Bluebook Forum.
On that day, he delivered a speech titled Make First Move to Get Involved and Empower Auto Industry for A New Round of Development, of which the excerpts are as follows:
From 2007 till today, the mobile Internet has undergone development for over a decade. I think, a clearer orientation for the next round is the Internet of Everything (IoE).
Undeniably, the vehicle is a very important mobile terminal, the mobile phone is an extension of human organs, the vehicle is a mobile cell — we are just a core in it. This is a very great era.
In this great era, everything will undergo changes, and the technologies of almost all industries will be equipped on the vehicle. In the past, there was a saying that referred to the vehicle as a "computer on four wheels".
Now there is the saying that it is in fact nothing more than a place where all the core technologies and AI related stuff are put together, with four wheels added. So the essence has changed. It has become a product with technology as the core. Mobility is no longer its core, but only an attribute.
The “CASE” (Connected, Autonomous, Shared, and Electric) Vehicles trend of today is on the left side, related to the intelligentization of a single vehicle.
In the next 10 years, on the right side, the intelligentization of the entire city is bound to come, which will definitely encounter many obstacles. I believe, the changes on the right side will be much greater than those on the left. When radical changes take place on the right, the intelligence level of vehicles on the left will be redefined.
Just like today, we are already very familiar with the application of search engines and the mobile Internet. However, back then, all computations relied on the intelligence of a single device, and were performed within a single one, which wouldn’t bring us such a convenient life as today’s Internet does.
Now, if we run away from the network and solely rely on a single device to calculate for you, this would simply be unbelievable. You wouldn’t even dare to imagine, without network, how weak the intelligence of all devices will become.
Today's vehicles are still at this stage. Intelligent vehicles (IVs) will be redefined by the advent of smart roads and smart cities, though we haven't seen any signs yet, since many of them are still in pilot and demonstration areas.
Just like the construction of high-speed rail (HSR) which has changed transportation in just a few years, the construction of 5G and 4G network has been rolled out very quickly. It's a bit like when we were little, or now when we go to the mall to watch the mini race cars played by kids. A bunch of kids put the cars into the track, then they drive away.
The vehicle has another attribute. As a digital terminal and digital space, it will undergo great changes. What is particularly worth anticipating is what it will look like if Apple launches its car in the future. If it is still what it is today, the vehicle may still need another evolutionary process of 10-20 years.
This morning, He Xiaopeng said he focused more on how to keep people in the car; he believed that people could stay in the car for up to 23 hours by doing something else, not just driving.
I think this is identical with the completely disruptive idea brought by Apple.
Similarly, despite so many racetracks, there is an argument that there will be only three smartphone manufacturers in the future, and it is also said that there will be three in each of the domestic and the international markets.
Some people say that there will be a dozen to twenty companies still in existence, but their shares will be replaced by new-coming makers of intelligent vehicles (IVs) and electric vehicles (EVs).
Also some say that when Didi comes out, as long as the monthly rent is paid, the user can still use the car to make money when it is unoccupied. Our company's mission is to "Lead the Ultimate Intelligent Vehicle Experience, and Reconstruct the Lifestyle in Mobile Space" — changes to the mobile space will bring a lot. You will find that over the past three decades, no wave has succeeded in rushing all walks of life into one industry.
This industry actually presents big challenges.
Automobile used to be the second largest GDP contributor, only next to real estate, but its utilization rate is still relatively low. When the rate reaches 40%-50%, theoretically, we won’t need so many vehicles.
Assume that there are 2 trillion vehicles in the future, I think that within a few years, it’ll be very common for the proportion of NEVs (new energy vehicles) to reach 40% in tier 1 cities, and refueling will also decrease a lot, because it’s less efficient than charging.
Today, it’s no longer necessary to drive for trips over 150 kilometers, because the high-speed train is too convenient. In the past, trips within 500 kilometers were covered by driving, so I reckon the market will drop by two to three hundred billion yuan.
Again, let’s take a look at insurance: Today, no car ever needs the anti-theft insurance. When it comes to the stage of autonomous driving, some insurances will be further eliminated. In the future, it may be enough for carmakers to buy only the autonomous driving insurance, then you’ll find that the whole market will shrink from a dozen trillion to 6-7 trillion, or to 4-5 trillion in extreme cases.
However, intelligent and connected vehicles will bring about an industry that is dozens of times larger than the current one. What is it? Unknown yet at the moment.
Today, all carmakers, tech and internet companies, including industry practitioners, are burning cash. They have all slashed their own wrists to see who bleed more and who bleed faster. And, those with sluggish flow of blood will be knocked out. We see many successful and outstanding enterprises, but underneath our feet, there are more companies that have bitten the dust. Often, the media won’t tell these stories. Actually, they are very respectable, and also very pathetic.
This is going to be a big industry, but how to deal with it? We haven’t figured it out. The one thing we’re clear about is ecosystem. This morning, Wang Jun said that ecosystem was not a responsibility of OEMs. I cannot agree more with him on this point.
I think there will be only one, or at most two ecosystem service providers in the future, because it is particularly difficult.
The vehicle as a whole will also experience many changes when it comes to safety, autonomous driving, and city. Everyone says that “software defines a vehicle”, but many say that it should be "hardware and software jointly define a vehicle".
As for the understanding of this issue, I’d like to explain why auto companies say software defines a vehicle.
The automotive hardware they are talking about refers to the “solid metal” hardware: chassis, engine, gearbox, etc.
When many people say that "hardware + software define a vehicle", they are talking about the autonomous driving hardware, such as cockpit, domain controller, and MDC — One is the "metal" hardware of a vehicle, and the other is the smart hardware. They are two different things.
If we look at it from total quantity, the vehicle is defined by software. Today, among the R&D staff of many OEMs, the number of those working on software doesn’t exceed 3,000. For many companies, this number is only 1,000.
Many people would say that the “Software Defined Vehicle (SDV)” is nothing more than the self-driving module.
I totally agree with this idea. The future of autonomous driving is a zero-sum relationship. When it develops to this stage, there will be no such thing as Tesla charging 60,000 yuan for an upgrade to autonomous driving, by then it will become a basic module, very cheap. However, only one or two players are in a position to play the game, so most autonomous driving companies should integrate into the ecosystem at the earliest possible time.
For example, when a girl puts on makeup during a traffic jam on her way to work, the car will automatically take over and drive — this is a makeup scenario that satisfies the user's mobility needs. Girls like to match clothes. When they enter the car, the ambient lighting, HMI, and starlight headliner will adjust automatically.
When stuck in a traffic jam, you’ll find that all lighting and audio effects will be adjusted, making you feel more comfortable.
The vehicle we see today is produced in the metal age, but this will not be the case in the future. By then, every gear will be programmable, and all devices will be intelligent. Conversely, all unintelligent parts and components, I think, will all be eliminated.
This wave will come very soon. When the whole vehicle becomes intelligent, the development environment will change to what is totally different from our imagination, and the logic of “the user defines their vehicle through different series of intelligent parts + software” will prevail. As for this part, whoever gets there first, I believe, will truly hold the future in his hands.
Now, many vehicle manufacturers want to do it, but there are huge challenges in electronic architecture, parts, and openness.
Nowadays, cities are becoming smarter and smarter. We are piloting the “Smart Mobile Business” in Shanghai Xintiandi, Huaihai Road, Xuhui Binjiang and other places.
At its core, the first is supervision, e.g., a management system for Industry & Commerce, Urban Management, Food Safety and other regulatory authorities. We have already developed one.
The second is business form. The form of mobile business needs to be differentiated from that of the current commercial real estate.
Different business forms are suitable for different fields, which needs data support. The mobile coffee cart we’re now operating generates an income of 3,000 yuan a day, that is, around 1 million yuan a year, with a profit margin of 50%. With the government’s supervisory & regulatory system and category management in place and the best location acquired, autonomous driving will only require the replacement of a chassis, which is not difficult.
Besides, this autonomous driving is not yet full automation, so I think this space is very large. Of course, there is also room for the flying car mentioned by XPeng.
On the whole, it is a very clear path: obtain interfaces through smart cockpit, three electrical systems (VCU, BMS, MCU), autonomous driving, and vehicle control; establish deep cooperation with core technology providers, to build very good software and service capabilities on the middle layer; and carry out very in-depth development on the application layer with eco partners and automakers, to gain more commercial benefits.
Today, it’ll be out of date if we still stay at the cockpit featuring triple-screen-connectivity. This means the developers of autonomous driving, vehicle control, location, and cockpit all have to work on it.
Another racetrack is localization. HarmonyOS is a very good platform, and the key is how to do the application well. If you are interested, you are more than welcome to contact us. Let’s join hands to do a good job.
To sum up, in this era, from the mobile Internet to the IoE, all tech giants are on the racetrack; the core of the IV lies in the breakthrough in autonomous driving technologies, while that of business model lies in the reconstruction of the business model for mobile space. Smart road and smart transportation have not started yet.
Once the breakthrough is made, the intelligence level of vehicles will be greatly defined, and the mobile business as well as various other mobile scenarios will emerge. In this business territory, whoever owns the right to operate will be the real king.
At the same time, in the field of the IV cockpit, it is not the narrow minded concept of how many screens there are, but all the parts and components will be intelligent, and a complete ecosystem will be formed around intelligentization. In the end, one or two players will possess this ecosystem.
And, the job of third-party developers will be similar to cell phone app development today, which is completely open, but whoever owns the field of automotive development will own a gold mine.
The last gold mine is localization. In the next decade of the Internet, there will be a gold mine worth trillions waiting for us to exploit.
This is also some of the superficial insights PATEO has gained over the years.