Bao Fan talks to Ji Yingcun: "Slow Simmering" Car Intelligent Feast | CRFamily+

From delusion to reality, autonomous driving is gradually drawing the outline of the era of new automobile civilization. Driven by the dual impetus of policy and market benefits, automotive automation has become one of the biggest outlets in the automotive industry and even the capital market with sharp fluctuations.

When the era of driverless driving comes, when deconstructing transportation travel becomes possible, the relationship between people, vehicles and roads will be elevated to a new stage, and structural opportunities will follow. In the field of automotive electronics, "Jingwei Hengrun" has now stood at the forefront of the "new four modernizations" of automobiles by virtue of nearly 20 years of deep industry cultivation.

China Renaissance Capital has had the honor of adding Jingwei Hengrun for two consecutive rounds, accompanying the company to grow together, and witnessing the company's successful landing on the capital market today. At the 2021 CRFamily+ closed-door event, Bao Fan, chairman of China Renaissance Capital Group, founding partner and chief investment officer of the fund, and Ji Yingcun, chairman of Matrix Partners Hengrun, discussed the key issues in the evolution path of automotive intelligent terminals. The following is a transcript of the dry goods content, hoping to bring you some gains.

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The future division of labor in the automotive industry will become more and more entangled and coupled

Any competitive pattern can be divided into leagues and cups: the traditional automotive industry is like a league, and the future automotive industry, from electrification to final intelligence, may be more like a cup, but in the end it may not only produce a champion

Compared with the new forces, the biggest gap between traditional car companies is in "ability" - especially the ability of leaders

Bao Fan:

We talk from near to far, what stage does Mr. Ji think the automotive industry is in at present? What kind of changes are likely to occur in the industry in the next three to five years?

Ji Yingcun:

I think the current situation of cars, especially smart car tracks, can be summed up as "surging and coming". Someone falls, someone else will go on, and everyone realizes that this is a track that can be competed and full of opportunities. So in my opinion, we are at a very big turning point.

As for what the car track will look like in the next few years, we can look at it from two aspects. First, the cliché of electrification. Second, from the perspective of intelligence, in the future, ADAS (that is, advanced driver assistance systems) will gradually become the standard and basic competitiveness of small cars.

We now have a manufacturer customer that produces 100,000 yuan A0 class cars (small cars), and they are also starting to require ADAS, which is a very obvious signal. In 2020, China's car sales exceeded 20 million units, and if all cars in the future are equipped with smart devices, there is no doubt that this will become a huge market.

Bao Fan:

Compared with foreign countries, what is the current position of domestic OEM (i.e. foundry suppliers) manufacturers in the direction of intelligence?

Ji Yingcun:

I think that the pace and pace of domestic OEMs in the direction of intelligence are relatively close to those of foreign countries, and intelligence will become an important starting point for these manufacturers to overtake in the future. Originally, when it comes to cars, basically everyone will think that the joint venture brand cars are very good, but now look at it, whether it is a traditional car factory or a new car-making force in China, their efforts in intelligence are no less than those of foreign manufacturers, and even more driven.

Bao Fan:

Domestic manufacturers, as catch-ups, will be more active in embracing some new opportunities. However, at present, the division of labor in the traditional automotive industry is still very clear, if the automotive industry develops in the direction of intelligence in the future, and the division of labor is carried out in Tier1 (that is, tier 1 suppliers) and Tier2 (that is, secondary suppliers), what kind of changes will occur in the industry?

Ji Yingcun:

The automotive industry will undergo very big changes, and the future division of labor will become more and more entangled and coupled. It is very likely that there is both cooperation between Tier1 and OEM, and there is competition in some markets, because different types of manufacturers will lay out intelligent driving in the future, but their characteristics are different.

For example, we have cooperated with some Tier1s, first of all, we will first determine a framework together, and then the application and integration of which are our division of labor to do, and finally form the function of the entire intelligent driving controller.

Bao Fan:

Now that driverless cars and intelligent driving have become hot topics, what do you think their commercialization path will be in the future?

Ji Yingcun:

Neither is actually a generalization, and both are evolutionary processes. Driverless cars are also divided into advanced driverless cars and closed park driverless cars. At present, the low-speed commercial driverless technology in the closed area is the first to mature, but the open road is more complicated, each city is different, and it needs to be re-learned, such as Robotaxi can be successful in one city, does not mean that it can replicate success in another city, which requires a lot of learning and testing process.

Similarly, intelligent driving is also divided into part of intelligent driving and completely intelligent driving, to achieve completely without human intervention of intelligent driving This road will be relatively long, but if in the case of safety can be guaranteed, part of the intelligent driving technology can actually meet our convenient driving needs and fun.

Bao Fan:

From a technical point of view, what are the signs of the maturity of autonomous driving technology?

Ji Yingcun:

Take the IT technology and Internet technology we have talked about, for example, when these technologies are slowly adopted by various market segments, it proves that it has matured, because this technology has value, and everyone will use it.

We can see that now the automatic driving technology is gradually being adopted in scenarios such as mines and ports, and transport cars, including some special vehicles, can also use it, which shows that this technology is gradually maturing in various subdivisions, especially the IGV (that is, intelligent guided transport vehicle) market will be replaced by automatic driving in the future, because it is more versatile and cheaper.

Bao Fan:

In the past, Jingwei Hengrun cooperated more with traditional car dealers, but in recent years, a number of new car-making forces have emerged. What do you think of these new car-making forces? Where are the advantages and disadvantages of traditional car companies competing with these new forces?

Ji Yingcun:

There will be a company that can survive in the new forces, if its motivation and ability are very strong, such as the company to maintain independence, and in the technology, capital, marketing, manufacturing, supply chain and other aspects of the performance can remain excellent. But some companies refer to the east and the west, obviously doing real estate, have to come to build cars, car to enclose land, including some joint ventures, their motives are often problematic, so I am not optimistic.

Compared with the new forces, I think the biggest gap between traditional car companies and new forces is in ability. Here is only one ability, the knowledge structure of traditional car company leaders is more traditional, but the knowledge structure of new forces leaders is more in line with the current consumer market demand, and the relationship with customers is closer.

This is a very critical point, just like many people in our industry are optimistic about Tesla, in fact, they are optimistic about Musk, because he will keep an eye on engineers, keep an eye on innovation, and every place must "innovate", which may open up a very big gap with other companies.

Bao Fan:

I think any competitive landscape can be divided into leagues and cups. The traditional automotive industry is like a league, and the future automotive industry, from electrification to final intelligence, may be more like a cup, but in the end it may not only produce a champion.

Now what we see is the group race in the cup race, traditional cars, foreign joint ventures, new forces, and Internet giants are each in a group, and who can rush out of the group stage to compete for the championship in the end, we will wait and see. I would also like to ask Ji Zong, in the process of intelligent competition in the automotive industry, will software-driven enterprises like Jingwei Hengrun usher in greater development opportunities?

Ji Yingcun:

We will indeed have greater opportunities for development. Many people think that OEMs are also laying out software work, so we will be affected by it, in fact, not necessarily, because the demand for the industry will only increase, and it is impossible for everyone to "cover the world". Now that mobile apps have become very popular, there will also be a variety of service projects and Car Apps in the automotive application field in the future, which need to be developed by companies, so there are great opportunities for development.

While full of opportunities, it doesn't mean that software companies can sell products directly to OEMs, because there are still very high security thresholds to be crossed. Therefore, more needs of software companies should be able to form an ecosystem with car manufacturers and Tier1, rather than just writing applications, but also providing some services.

Bao Fan:

What type of big winner do you think will be the day you really get to smart driving? Or what kind of background did it come out of?

Ji Yingcun:

Like the mobile Internet, mobile phone manufacturers are definitely the winners, but Google, which has done Android, is also a winner, including Foxconn and so on, because it is a huge industrial chain and ecosystem, and every chain in the industrial chain, if it is done strongly, will be the winner. The same is true of the automotive industry, and when it comes to truly realizing intelligent driving, everyone will have benefits in every key link, and the amount of benefits will not be small.

Questions:

As a leading enterprise in China's automotive electronics industry, Jingwei Hengrun occupies a key card position in the field of assisted driving, what breakthroughs do you think can be made in the context of the trend of intelligent driving, and what breakthroughs can be made in assisted driving system technology?

Ji Yingcun:

Taking Jingwei Hengrun as an example, we hope to make the entire general technology related to automatic driving solid. For technical requirements such as OTA (i.e. over-the-air download), information security, functional safety, and data closed-loop, we have developed corresponding solutions for various driving scenarios.

On the other hand, the original company is relying on OEMs to promote technological progress, now we are both competition, but also a cooperative relationship, if in some areas rely on OEM will be slower, Jingwei Hengrun will come up with independent technology, to the front.

Questions:

As a leading automotive electronics company and a key node in the automotive industry chain, what is our localization strategy in ensuring the safety of the supply chain?

Ji Yingcun:

At present, our company will be hardware, software, functional safety and information security department director assembled to form a special group, report directly to me, in order to quickly promote the localization of automotive chips, as soon as possible to promote the consolidation of our product line, a product of two points, both localization platform, but also an international platform, so that the proportion of domestic production can reach half or 2/3, even if any situation occurs, the company can quickly switch to our independent platform.

Questions:

In the medium and long term, will there be a pattern of operating vehicles replacing C-end self-sustaining vehicles, and what kind of impact will such a pattern have on the entire industrial chain?

Ji Yingcun:

As the fourth of the "new four modernizations" of automobiles, whether from the perspective of shared bicycles or rental companies, its asset penetration rate, including the development of business formats, I think is rising. But the pattern of every family, especially the relatively wealthy, with at least one car, will not change much, because Chinese will still feel more convenient to have a car.

Bao Fan:

This is a relatively distant thing, and if it really happens one day, I think different scenarios may require different tools to meet. There is a high probability that each family will still have a car in the future, but the efficiency of the use of the car may not be so high, and some of the usual travel needs can be met by public transportation, but if you want to solve some personalized problems, you may still achieve it through your own car.

Questions:

Under the general trend of "new four modernizations" of automobiles, how should investment institutions view the investment opportunities of the entire automobile industry chain?

Bao Fan:

Our investment strategy will be laid out around the future development of Tier1.

First of all, although the hot spot in the automotive industry is electrification and electrification, I think the revolution of the power system is not the most fundamental, and it is intelligent that can subvert the development of the industry. On that day, the positioning and model of the entire industry will change dramatically.

Secondly, today's Tier1 suppliers are basically monopolized by international big names, because they have established a relatively mature upstream and downstream division of labor, including a strong OEM relationship network, but I believe that this pattern will change a lot in the next 5-10 years, one change is the change in upstream and downstream relationships, and the other is the change in hardware or software driving force.

In this process, Chinese car companies will have many opportunities, and we are more inclined to invest in a business like Jingwei Hengrun that really originates from local innovation - in the huge Chinese market, actively embrace new technologies and seize the opportunity to overtake in curves.

Questions:

As the founder of the company, Ji always feels that what are the key issues in the development of the company?

Ji Yingcun:

Fundamentally, the essence of my consideration of the problem has not changed, the first must be to think about how the company can survive, because the market environment, technology trends, and even customer preferences are constantly changing, in this case, you must find out the law to continue to go on, at any time can not stop thinking, to see the essence of things, especially the nature of business, which is the most critical in my opinion.

At the same time, I am also grateful that in this process, Huaxing has provided us with many new perspectives and resources. On the one hand, Huaxing has invested in a large number of outstanding enterprises in the field of innovation economy, and has mastered some core laws of enterprises becoming bigger and stronger, which are very valuable to the invested companies; secondly, Huaxing, with its strong relationship network, has docked with many excellent entrepreneurial resources and capital assistance, providing real help for the further development of our business.

Disclaimer: This article represents the position of the Guest only and does not represent the opinion of China Renaissance Capital Group ("China Renaissance Capital"). China Renaissance Capital does not warrant the accuracy or completeness of the articles and is for your reference only. If any person suffers direct, indirect or consequential losses as a result of the use of the materials contained herein, China Renaissance Capital shall not be liable for such losses.

CRFamily+ is a post-investment activity opened by Huaxing Investment Business, which means that Huaxing has built a home for the invested enterprises, and also symbolizes empowerment, innovation and development. We hope that through a series of online and offline sharing activities, we will gather industry elites to work together to escort the invested enterprises.