"With the acceleration of new energy vehicles, the competition in China's fuel vehicle market will become more intense, and there are 85 brands in the traditional fuel vehicle market in 2021, of which 34 brands have monthly sales of less than 1,000 units, and 9 brands have died."
At an automotive industry forum at the end of March, Zhu Huarong, secretary of the party committee and chairman of Changan Automobile, predicted that 80% of China's fuel vehicle brands will be "shut down and turned" (that is, closed, stopped, merged and transformed) in the next 3-5 years.
Southeast Automobile, Haima Automobile, Qoros Automobile... One car brand after another fell in 2021, and FAW-Volkswagen, SAIC-Volkswagen, Dongfeng Nissan and other car giants in 2021, although the retail sales of passenger cars are still at the forefront, they all ushered in a year-on-year decline.
In stark contrast, a number of new energy vehicle companies such as Tesla, BYD, Weilai, Xiaopeng, Ideal, and Nezha Automobile have achieved a substantial year-on-year increase in sales of 3 digits in 2021, and their performance is quite eye-catching.
"The biggest crisis in business comes from within. At the moment of the new round of auto industry pattern reconstruction, Changan Automobile will face life and death if the transformation is not successful. Zhu Huarong's speech in 2020 revealed the anxiety of Changan Automobile, and also said the crisis and pressure of Taishan that are felt by many traditional car companies nowadays.
The reshuffle of the automotive industry has begun, and more and more car companies have found that if they do not want to be "revolutionized" and reduced to a "soulless" foundry, only by digitalizing themselves from all aspects such as design, production, consumer experience, management model, etc., can they gain a firm foothold in this round of change.
The window of the smart car revolution will not be too long
"Smart cars are disrupting functional cars, and it has a greater impact than smartphones disrupting feature phones. In this automobile revolution, the mainland automobile industry has changed lanes first, achieved some first-mover effects, and provided opportunities for the mainland to change from a big automobile country to an automobile power. On March 26, Chen Qingtai, chairman of the China Electric Vehicle 100 Association, said so in the high-level forum of the 2022 China Electric Vehicle 100 Forum.
But Chen Qingtai also pointed out that this time the window of opportunity will not be too long.
At this stage, China's passenger car market has generally entered the stage of competition in the stock market, while the proportion of new energy vehicle market penetration has increased rapidly.
According to the data of the Association of Passenger Vehicles, in 2021, the cumulative retail sales of domestic passenger cars reached 20.146 million units, an increase of 4.4% year-on-year, it is worth noting that the overall increase in retail sales of passenger cars in 2021 is mainly due to the rise of new energy vehicles, and the trend of new energy vehicles and fuel vehicles is in strong contrast.
In 2021, the retail sales of domestic passenger cars increased by 860,000 units year-on-year, but the number of traditional fuel vehicles decreased by 1.02 million, down 6% year-on-year, while new energy vehicles increased sales by 1.88 million units year-on-year, an increase of 169% year-on-year, and new energy vehicles contributed 9 percentage points to the year-on-year growth rate of passenger cars.
At the same time, in the past year, new energy passenger cars have listed more than 80 new cars, with a market penetration rate of 15.7%, and there is no doubt that 2021 has become the first year of the rise of domestic new energy vehicle consumption.
Next, new energy vehicles will continue to develop rapidly, and the Association predicts that the wholesale demand for new energy vehicles will be about 5.5 million in 2022, and the penetration rate of new energy passenger vehicles is expected to reach about 25%.
Electrification is sweeping the automotive industry with an unstoppable attitude, on the other hand, the intelligence of the domestic automotive industry is rapidly moving towards a new stage, and the industry generally expects that 2023-2025 will be a key node in the development of the entire intelligent automotive industry.
On the one hand, new car-making forces such as Xiaopeng Automobile and Ideal Automobile have begun to launch third- or even fourth-generation products, and many traditional car companies will also take 2025 as the time point for accepting the results of their own transformation, and the industry will be extremely competitive.
On the other hand, after the market cultivation in previous years, consumers have gradually accepted electric vehicles, and at present, new car manufacturers have begun to strive for intelligent functions such as intelligent cockpits, automatic parking, and high-speed/urban pilot assistance systems.
"Today's intelligence is still the initial intelligence, the second step of intelligence I think will gradually begin in the second half of this year, represented by high-level intelligent auxiliary driving capabilities, by the end of 2025 will end, and 2026, smart cars will enter the third stage of unmanned driving." He Xiaopeng, chairman of Xiaopeng Motors, said so in a previous interview with the media.
When automobile intelligence enters a new stage, the transformation of traditional automobile manufacturers will be more urgent.
The vehicle development cycle needs to be shorter
In this context, the definition and properties of the car have long since changed. "Software-defined car" has gradually become the consensus of the automotive industry, changing or even reconstructing the vehicle's software and hardware architecture design, development organizational framework, talent construction, product definition perspective, and the business and service model of automotive companies has begun to change from "product-centric" to "user-centric".
The original added value characteristics of the automotive industry chain have also changed rapidly, and the added value of the R&D end and the service end is greatly improving.
For intelligent connected vehicles, users pay more attention to the experience of vehicle OTA, intelligent driving function, real-time online, etc., and software, platform, data, and services have become the key factors in enterprise value creation.
The business model of manufacturers is changing from "manufacturing" to "manufacturing + service", and the proportion of revenue from services is gradually increasing.
According to the "PwC Sliot 2020 Digital Vehicle Report", by 2030, software will account for 60% of consumer perceived value, and the development of new car ownership models driven by driverless technology will further increase this proportion, and in the next 10 years, with the improvement of user expectations and the emergence of new features, only software-driven car companies can continue to capture value in a complex and changeable market.
For example, tesla, the "first brother" of new energy vehicles, began to provide its fully automated driving system (FSD) charging service as early as the end of 2016, and Tesla's FSD subscription fee has risen from $8,000 to $12,000 today. Musk expects FSD to become Tesla's most important source of profit over time, and said FSD will likely become one of Tesla's most valuable assets.
Chen Qingtai believes that in the era of software-defined cars, manufacturers and users will transform from a one-time buying and selling relationship into a life cycle partnership, forming a virtuous circle of "users continue to provide data and manufacturers continue to expand services".
Therefore, in recent years, almost all domestic and foreign automakers have proposed to transform themselves from traditional car manufacturers to mobility service providers.
In the past, from the start of project pre-research to the approval of the program, from the project approval to the design freeze, product and process verification, and formal production, the development process of a luxury car took about 60 months, and the life cycle from listing to major overhaul was about 5 years, but looking at the present, under the current competitive landscape and customer needs, such a long research and development cycle has become difficult to be accepted by the market.
The life cycle of cars is constantly shortening, and the delivery cycle of new cars must be faster for traditional car companies, and one of the core key points is digitalization.
In Deloitte China's view, on the surface, "software-defined vehicles" are more numerous and valuable than mechanical hardware in the car software (including electronic hardware), and behind it is more reflected that the car is gradually transforming from a highly mechatronic mechanical terminal to an intelligent, scalable, and sustainable iterative mobile electronic terminal.
This means that from monitoring and controlling the temperature of the battery pack of electric vehicles, to running the application on the central control screen, to the human-computer interaction experience, to the realization of intelligent driving car perception, path planning and other functions, a large number of hardware devices and corresponding massive software development and data operation processing work will be introduced.
In fact, traditional car companies do not lack data, and have completed the information construction of enterprises very early, but at this stage, informatization is more of a management means, the informatization of business processes, and the way to enable internal personnel to understand the development status of the business, process progress and other information.
In this regard, there have long been management systems such as R&D platform based on PLM (Product Life Cycle Management), ERP (Enterprise Resource Planning) system for production and management, MES (Manufacturing Execution System), SCM (Supply Chain Management) system and DMS (Dealer Management System) for supplier management.
However, Tang Xiangmin, chief technical director of GAC Research Institute, believes that these commercial software systems are generally provided by multiple information system developers, using different technical routes, using different development languages, different technical architectures and platforms, and then through a complex SOA (service-oriented architecture) integration project to achieve system interconnection, "so that it will gradually form a chimney-style IT architecture, resulting in a large number of information islands."
"The company has developed rapidly, including overseas investment and construction of factories and the establishment of overseas research and development centers, etc., but we found that the business is getting bigger and bigger, the information is getting more and more lagging behind, the information needed by the boss is often not transmitted for a few days, some business departments are not on the way to processing data, the boss is not satisfied, and the middle leaders also complain." Dou Zhiling, director of the information department of Great Wall Motors, once said so.
Dou Zhiling revealed that through their internal industry research, they found that enterprises have reached a time when digital transformation is indispensable.
The second half is just beginning, and digital transformation is key
The concept of digitalization has actually existed for a long time, and originally it mainly referred to the three-dimensional design and three-dimensional simulation of the physical world through computer technology.
The digitization of car companies, such as three-dimensional design, three-dimensional simulation, three-dimensional process and other three-dimensional digital model-based digitization has long been widely used, such as car crash experiments can now be completely in the computer of the three-dimensional model of the car crash test business simulation, instead of physical experiments, thereby significantly reducing costs.
The current digitalization is more based on the digitization of data, such as the creation of user portraits in data marketing, the connection of orders and production to achieve digital management, and the connection of production and equipment to achieve intelligent manufacturing.
Tang Xiangmin once said in his book "Digital Transformation of Automobile Enterprises: Cognition and Realization" that in the information age, people's activities are carried out in the physical world, and information technology is used to improve efficiency. Informatization serves activities in the physical world, such as taxi management systems for taxi operations.
In the digital age, people map out the physical world by constructing the digital world, and activities are carried out in the digital world, and the things in the physical world serve the digital world.
For example, ride-hailing drivers are based on the activities of the digital world to provide services, in this business model, if the consumer wants to take a taxi to the airport, comes to an e-hailing car, the consumer tells the driver to go to the airport, the driver will say no, he has been asked. Even if no one asks out, he says no, you have to go to the App to request a ride, he can only respond to the App, grab an order on it.
He believes that making the physical world respond to the instructions of the digital world is a real digital transformation. Turning attention to car companies, the digital transformation of car companies can run through all aspects and processes from research and development to manufacturing, from marketing, service to management.
For example, car fuel consumption is the user is more concerned about the car performance indicators, in order to achieve the lowest fuel consumption, in addition to the car before mass production, you can carry out a large number of bench tests, actual road tests and other methods to determine the various parameters of the car, car companies can also through the Internet of Vehicles, collect the user's driving behavior, fuel consumption and power performance and other related data, carry out big data analysis, adjust the engine control parameters, and finally determine the optimal fuel consumption area.
In terms of digital transformation, in fact, there is a dark horse in the domestic car brand.
In 2017, Hongqi's annual sales were less than 5,000 units, but after 2018, Hongqi's annual sales began to rise rapidly, and by 2021, Hongqi's annual sales of the Brand had exceeded 300,000 vehicles, up 50.1% year-on-year, and the performance attracted the attention of the market.
The change began in 2017 when Xu Liuping was transferred to the chairman of FAW Group, as soon as he took office, in the face of the severe automobile market, Xu Liuping held a press conference in the Great Hall of the People, announcing that Hongqi would embrace "electrification, intelligent networking, sharing, and digitalization" to be China's first high-end brand, Xu Liuping also posted in the circle of friends in a broken boat, "Let us work hard to no longer work hard, innovate to innovate anymore!" If you don't reach your goal, you won't give up! Bow down, die and die! ”
For example, in terms of research and development, the Hongqi brand built a collaborative design and virtual simulation platform based on digital twin technology, created an agile development model for automobiles, and shortened the model product development cycle by about 6 months.
In terms of management, it has reconstructed the enterprise operation platform based on the middle office architecture, comprehensively promoted the digitization of management, and improved office efficiency by more than 30%.
One of the most eye-catching actions is the prosperous factory that Hongqi invested 7.8 billion yuan in Changchun and cooperated with Alibaba Cloud and the Ninth Academy of Machinery Industry.
Unlike the previous auto factories that were mainly based on automation, the Hongqi Prosperity Factory has established a data-based direction from the beginning. With data as the main line, Alibaba Cloud must first solve the data acquisition problem, industrial control is inseparable from the SCADA system (data acquisition and monitoring and control system), and the traditional SCADA products used by mainstream OEMs in China have always had the problem of software performance and access capacity.
Alibaba Cloud and The Ninth Institute of Machinery have built a self-developed SCADA system for FAW Hongqi's future smart factory, with more than one million access points and a frequency of 100 milliseconds.
Alibaba Cloud and Machinery Ninth Academy also jointly improved the AI platform and digital twin platform products for automotive factories. Shop floor workers and engineers can build a real-time 1:1 digital twin factory in the digital space through low-code "drag and drop", and can also quickly develop intelligent applications based on data to achieve quality prediction, predictive maintenance of equipment, and intelligent energy control.
Hongqi said that relying on this automotive industry Internet platform, it has realized the intelligent production of the whole process of the four major processes, the vehicle life cycle is compressed by about 6 months, and the order delivery cycle is shortened by about 25%.
There are many examples of digital transformation like Hongqi, such as Great Wall Motors, which has built a set of overall data middle office in recent years. The Chinese car company that has created a domestic light tank 300 and a new energy black horse Euler has six major brands, dozens of models, and complex brands and production matrices that are also a constraint on its development. The data center created by Alibaba Cloud has undoubtedly greatly improved efficiency.
In the face of the automobile market that has entered the stage of stock competition, the Boston Consulting Group, a world-renowned enterprise management consulting organization, has predicted that in the near future, the automotive industry will be divided into three types of car companies:
Service car companies, active transformation, service car companies with user contacts will dominate the terminal market;
OEM car companies, enterprises that have lost user contacts, are facing elimination or becoming foundries;
The new foundry, the third type of player outside the industry, will also actively attack and actively seek new roles in the foundry.
This means that car manufacturers that lose user stickiness and cannot quickly detect and respond to the latest needs of the market are likely to eventually have to be reduced to foundries or be merged or eliminated.
Therefore, for car companies, the all-round digital transformation from research and development, manufacturing to marketing, service and management is a necessary option for solving problems, and it is also a weapon that can be used to overtake. With the help of Chinese digital companies such as Alibaba, which have long cultivated the industry and served the real economy, it is obvious that the speed of Chinese car companies will accelerate the speed of overtaking in curves.
Under the tide of change, whether it is a new car-making force or a traditional car company, it is an important chess piece in the chess game, and although Tesla and other car companies currently have a first-mover advantage, the current chess game has not yet passed the half, which is better or worse, and the prospect is unclear.
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