What will the future be? The answer is being revealed.
On Sept. 17, 2018, the 2018 World Artificial Intelligence Conference was opened in Shanghai.
This world class conference had gathered the most influential scientists and entrepreneurs in the global AI field as well as government leaders to hold a high level conversation on the theme of “A New Era Empowered by Artificial Intelligence”. Through more than 30 thematic forums, 150+ cutting-edge enterprises and 200+ heavyweight guests joined hands to depict the rudiment of the following 5 – 7 years for humankind.
Do you still remember the story about the mobile phone era?
In 1955, a baby was born in San Francisco, the US, and 55 years later, the world was changed by a product invented by this baby – on Jun. 8 that year, the fourth-generation mobile phone product of Apple Inc., iPhone 4, created a sales boom across the whole world. Even today, people are still talking about the innovation-leading and trendsetting product with great relish.
The then mobile phone era was nothing different from today’s automotive era. What they have in common is: innovation and change. This world always needs something new to keep the whole world’s blood pumping.
In the year of 2009, Ken (Yilun) Ying from China did one thing: founded an Internet of Vehicles (IoV) company, and one year later, SAIC inkaNet was created by him. The automotive industry has since ushered in the 3G era, which also marked the beginning of the IoV era.
But, it never occurred to anyone that eight years later, the automobile would have turned into an industry that has to ditch its previous 130-year experience. It would be almost nothing short of a suicide if an automaker produces new vehicle models that have nothing to do with intelligence. Now in the intelligent vehicle (IV) era, PATEO, who led the automotive industry into the 3G era, has grown into an intelligent IoV giant that has applied for 1,637 patents, ranking number one in China and number five in the world.
At 2018 World Artificial Intelligence Conference, Ken, known as a “geek in the automotive circle”, put forward his point of view on the topic of “Impact of AI Technologies on the Automotive Industry”:
“The new hasn’t arrived yet, and the old is about to die out. The automotive industry will be revolutionized by intelligence in the five years to come.”
What Kind of an Era Have We Been through?
Nowadays, speaking of Internet of Vehicles, we believe it is nothing new to you. If I interpret it as the connectivity between the vehicle and the internet, it would probably be as feeble and futile as the then Nokia who launched Symbian 9.0 with the vain hope to compete against Android and Apple iOS.
Recount the Development History of China’s IoV
2009 – 2010: The IoV was focused on security. What China’s IoV industry needed to do was to create something from nothing. On a global scale, the main competitors included Tier 1 companies as well as IoV companies like OnStar and Toyota G-Book;
2010 – 2012: An aftermarket trend was reflected in the IoV industry. However, each player winded it up hastily due to the limited market size;
2012 – 2014: The IoV followed the mainstream trend towards mobile phone connectivity. Since it was relatively easier to make the chip, and the mobile phone chip came out three years earlier than the automotive chip, while it’s been three years after vehicle R&D, so the situation that new mobile phones were equipped on old vehicle models was brought about;
2014 – 2016: Two well-known companies cut in the IoV sector through speech and map. At this point, OEMs came to their senses and started to pay attention to this business area, but suffered from a lack of self-capability. Of course, this was the product of the old era. That is to say, OEMs had found new suppliers to meet their service needs, who were the same as the suppliers of vehicle’s tire, steering wheel and glass;
2016 – 2018: The IoV industry has started to explode – BAT (Baidu, Alibaba and Tencent) has successively joined the competition, and more and more OEMs are getting involved.
With regard to the automotive intelligentization era, in a manner of speaking, it is still adopting the model of a traditional OEM building a traditional vehicle equipped with a large screen in the traditional way, just like the brief development model of the smart phone.
“There will be neither Nokia nor Apple emerging in the intelligent vehicle era”. Ken, one of the creators of China’s IoV industry, would like to interpret the future in his eyes to all in such a way.
If we still design, research, develop and manufacture vehicles in the traditional way, the final product would still be traditional vehicles, which is exactly like Nokia who finally failed when trying to survive on the Symbian system and Apple who faded quietly after the launch of iPhone 6.
Ken explicitly expressed his point of view that “the future of the intelligent vehicle is almost definite: if the core of traditional vehicles lies in the engine, transmission and steering, then the core should be refined as iOS, ID, cloud, ecosystem, Siri and map on its way to real intelligentization. Regarding development model, the core should continue to diffuse, so as to turn the traditional user-based vehicle sales, accessories and finance models into the one that’s based on user ID and software / data services.” This will also become the focal point for the development of Chinese intelligent vehicles in the next five-year period from 2018 to 2022.
On the road from being traditional to being intelligent, the previous property of a vehicle as a simple conveyance should be abandoned. Instead, it should integrate into the internet age and become an important part of everyone’s smart life.
This means automakers need to completely transform the vehicle building philosophy, gradually get rid of the chief constraint of the internal combustion engine, and discard the current over-focus on driving quality, comfort and acceleration. This way, the changes in the IoV and intelligence fields will take place immediately.
The Five-year Transformation in the Eye of the “No. 1 IoV Company in China”
From 2009 when the 3G vehicle era commenced, till today when three years is considered as a time node, the development direction in the IoV field is becoming clearer and clearer, and the five-year transformation also becomes imperative.
Today, the IoV industry has entered the deep-water zone; what’s left for the practitioners is IoV business layout + channel expansion + creation of ultimate products + resource integration - the critical factors that determine the success in the next era.
This means the participation and engagement of all industries. Also, both the IoV development model and OEM business model need a change.
Changes in the IoV Development Model:
PATEO, the holder of the most technical patents in China’s IoV industry, is not only the torchbearer and frontrunner of the entire industry, but also the only giant across the whole industry that possesses a clear strategic layout and fundamental implementation capabilities. Therefore, its attitude is of great importance to this five-year transformation.
Ken holds the view that “there would be no future for IoV if every link in the whole system is not connected”. We should first of all start with across-the-scenario de-application. If we follow the traditional model and indiscriminately copy Apps from mobile phone to the vehicle, two of the prerequisites of intelligence, i.e. OS ID and cloud as well as related ecosystem capabilities, would be literally denied, and there would be no new business model for the future.
Another point of view of Ken is that “OEMs need to buy in the Fifth Plant concept and practice”.
In the traditional automotive manufacturing field, each automaker is equipped with four plants, i.e. welding, stamping, coating and assembly, which fulfill different functional tasks by category and in a progressive relationship, while the Fifth Plant is a workshop that empowers the OEM.
Firstly, we can see that the development of autonomous driving and IoV technologies now involves tremendous complex areas, including binoculars cameras, radar sensors, map algorithm and computer self-judgment.
Secondly, “communication telematics or “traditional telematics” is dedicated to addressing the issues concerning in-vehicle entertainment experience effect, features, as well as data traffic communication and data uploading, etc.
Thirdly, “telematics of the complete vehicle” is responsible for vehicle control, including processing of supplier data, such as battery, electric motor, electronic control, TCU, ECU and BCM, as well as the data of OEMs themselves.
Fourthly, “automotive electronics telematics” is similar to the smart phone mode.
Fifthly, “software telematics” is to connect all the data that enable App functions, and finally get the chains of the whole system connected.
The “Fifth Plant” of the OEM is to empower products, break through the difficult points, and ultimately offer the vehicle owner a human-like good companion: after getting in the car, you don’t have to say “start” or touch a lot of buttons, but just tell it your schedule, then it will properly arrange everything as per your regular habits.
Changes in OEM Business Model:
Nowadays, the era in which industrial development was merely driven by vehicle sales has already slipped away. If the automaker is able to make the same level of profit in other areas, it would not care about whether the market growth rate is diving.
To realize this, what we need to rely on is exactly the development of the IoV industry: highway toll, refueling, charging, car wash, repair & maintenance, RSA, air ticket booking, hotel reservation, online shopping, and the previous automotive finance, etc. will finally form a closed loop to generate a considerable amount of transactions.
The business model of the OEM needs to be changed to the multiple new business models generated on basis of OS, cloud and user ID, instead of a simple new retail model, but the car company will still play a leading role.
Since the beginning of the 21th century, we’ve been through too many changes, from the fall of traditional cell phones to the rise of smart ones, and from the position of traditional vehicles being challenged by NEVs to the brief decade-long fast transformation of IoV.
Similarly, the industry that we are in will embrace a further breakthrough in five years. Automobiles will no longer be a simple conveyance, and AI city, autonomous driving, the IoV and the Internet of Everything (IoE) may all come into existence.
As the leader of the industry, PATEO would like to co-create value with its partners, and share with them the value it creates in the fields of internet, communications, technology, automobile, finance, retail and insurance, etc. — rather than establishing cooperation through competition — so as to drive the growth of the whole industry. Just as its self-positioning indicates, as an intermediate, PATEO will integrate various interaction products and provide one-stop IoV services to empower OEMs.