Lenovo makes cars, hard lever Huawei

Original production by | "Visitor Travel" under "Frontier of Entrepreneurship"

Author | Liao Hongjie

Edit the | Egg total

American editor | Qianqian

At the beginning of 2023, the domestic auto industry has become more lively, existing manufacturers are fighting hard, new players trying to enter the market are running forward, and some poorly managed manufacturers are facing the "darkest moment". For example, WM, which has been plagued by the recent crisis, has made a "last-ditch effort" and intends to use APOLLO to go public in Hong Kong.

Huawei, which once claimed not to build cars, has joined forces with at least three car company brands to sell more than 5 models in showrooms across the country. Now, it has a new adversary.

Lenovo, which was previously rumored to build a car, finally surfaced again at the end of 2022 after experiencing the "refuting rumors" of the head Yang Yuanqing.

Lenovo "build a car", what are the odds? "Visitor Travel" has contacted relevant people in Lenovo, and although it has not received a positive answer about its "car building", it can be found from several "car manufacturing materials" provided by Lenovo that Lenovo's involvement in the automotive industry has become an established fact.

As for what form Lenovo will participate in car manufacturing, it depends on the importance Lenovo attaches to the car manufacturing business. Is it like Baidu giving everything it has, like Xiaomi in person, or is it a backwater battle like Huawei? If the official does not make further statements, the outside world can only speculate and wait and see for the time being.

However, in the current situation of the strong people in the automotive industry and many rising stars, Lenovo chose to build a car at this time, what is the calculation? What are the differentiated strengths and weaknesses of Lenovo's car manufacturing? Once it enters the automotive supply chain system, will Lenovo's real opponent be Huawei?

1. Do you really want to build a car?

In the past six months, the news about "Lenovo car" has long been widely circulated, but it has not waited for the official public statement. Until the end of December 2022, Lenovo once again responded to the layout of the automotive industry in a "semi-public" form.

In July 2022, Lenovo Group's official WeChat public account "Lenovo Recruitment" released a recruitment information about "car manufacturing", openly recruiting R&D management positions including autonomous driving, in-vehicle entertainment, and automotive software and hardware, and giving million-level annual salaries for car manufacturing talents.

On this job posting, Lenovo also clearly mentioned: "Lenovo is actively exploring core technologies in the fields of intelligent cockpit, autonomous driving, and central computing platform." ”

Photo / Lenovo recruitment official WeChat public account under Lenovo Group

At that time, from the perspective of Lenovo's external caliber, entering the car manufacturing industry seemed to be a matter of course, "The development of intelligent vehicles and new energy vehicle technologies coincides with Lenovo's new IT architecture, and Lenovo's intelligent transformation will also empower the automotive industry." ”

However, on August 10, 2022, at Lenovo Group's first fiscal quarter 2022/2023 financial results meeting, Yang Yuanqing, chairman and CEO of Lenovo Group, responded to rumors related to the recruitment of automotive R&D management positions: "Lenovo has no car manufacturing plan, and the recruitment personnel is to do forward-looking research. ”

Although Yang Yuanqing claims that "there are no plans to build cars", Lenovo is already paving the way for entering the automotive industry.

"Visitor Travel" learned from Lenovo Group that in early December 2022, Tang Xinyue, vice president and head of vehicle computing business of Lenovo Group, publicly said in a live broadcast that Lenovo's own research and development of on-board equipment is relatively short, but it has been deeply cultivated in the automotive industry for many years, and the vast majority of domestic car companies are Lenovo's customers, from the office to the cloud to the manufacturing system, many car companies are using Lenovo products, and have many years of investment experience in the automotive industry.

Until December 23, 2022, Lenovo Group's WeChat public account released the "Lenovo Group Automotive Industry Chain Layout Manual", saying: Recently, Lenovo Research Institute released the medium- and long-term strategic planning and development vision of vehicle computing for the first time.

He also said that Lenovo's car computing team will rely on the advantages of computing power, technology, supply chain and talent, focusing on the layout of intelligent cockpit, intelligent driving and central computing platform to promote the intelligent development of the automotive industry.

Photo / Lenovo Group's official WeChat public account

From the open recruitment of automobile R&D personnel in July, to the disclosure of the layout of the automotive industry chain in December. After half a year, Lenovo once again pressed the accelerator button on the road to "build a car".

Although it has not been officially announced, it is close to an official announcement. This semi-public foray into the automotive industry, Lenovo seems to no longer be obsessed with "whether to build a car", but has taken this opportunity to move from behind the scenes to the foreground, preparing for the rhythmic disclosure of the progress of the automotive business in the future.

However, since it is ready to grab the "cake" of the automobile industry, how many chips and odds does Lenovo have?

2. What are the odds?

For Volkswagen, whether Lenovo "builds cars" is no longer the point, after all, its involvement in the automotive industry is already a certainty. The biggest controversy at the moment is: will Lenovo personally launch Lenovo brand cars or its sub-brand cars?

As the saying goes, don't do porcelain work without diamonds. What are the differentiated advantages of Lenovo's "car manufacturing"? This is the focus of attention from the outside world.

Let's first objectively explore Lenovo's car manufacturing advantages. "Exploring Travel" sorted out Lenovo's "Automotive Industry Layout Manual" released this time, and Lenovo's ability to build cars can be simply summarized as "three advantages" and "one layout".

These three advantages can also be regarded as Lenovo's three major directions on the road of car manufacturing:

The first is the smart cockpit: Lenovo, as the world's leading manufacturer of personal computers and computing power company, also has more than a decade of experience in communication equipment. Leveraging its existing product experience, it can provide intelligent interactive experience for future in-vehicle products and drivers.

The second is intelligent driving: Lenovo's accumulation in intelligent hardware and mobile communication is conducive to its construction of full-stack intelligent driving and research and development in the field of advanced assisted driving and autonomous driving.

The third is the computing platform: Lenovo is integrating technology accumulation in the field of flexible electronics and algorithms into the manufacturing field of automotive intelligence, and strengthening the application of technologies such as cloud computing, cloud storage and edge computing in automotive products.

It is not difficult to see that from hardware foundation to software algorithms, Lenovo tries to promote the transformation of the automotive industry from digital to intelligent to automation based on its own technical experience through intelligent communication equipment and digital infrastructure.

From the "Automotive Industry Layout Manual", Lenovo Venture Capital, a subsidiary of Lenovo Group, has invested in 17 automotive industry chain enterprises in recent years. Including NIO, which manufactures vehicles, lithium battery leader CATL, as well as many star companies such as Cambrian and BYD Semiconductor, which are vehicle computing platforms.

As the parent company behind Lenovo Group, Lenovo Holdings has invested in more than 20 automotive industry chain enterprises, including Pony.ai and.

Photo / Lenovo Group official WeChat account

In short, Lenovo's "car manufacturing" seems to start from scratch, but it actually has enough underlying advantages in software and hardware, digitalization, intelligence, and industrialization. Combined with the resources and brand influence of Lenovo Group and Lenovo Holdings, it is better than most of the start-ups and established car companies in the automotive industry, both in terms of the progress of the automotive business and the competitiveness of the products.

In addition, in terms of intelligent vehicle networking services, there are more than ten car companies that have cooperative relations with Lenovo. This includes, but is not limited to, new automakers such as NIO, Xpeng, Nezha and Leap, as well as traditional car companies such as BYD, Ford, Jeep and Maserati.

If Lenovo does not have the accumulation of electronic terminals, communication Internet of Things and digital services, "building a car" may be a "joke" of rushing to the hospital. But nowadays, people's focus on Lenovo's car manufacturing is not on jokes, but on what different freshness Lenovo's involvement in the car track will bring to the entire market.

Compared with Lenovo's three major advantages and industrial layout, Huawei, which has a large business intersection, will be Lenovo's biggest competitor after entering the automotive industry. Whether it is a landing model or a technical advantage, Huawei is obviously better than Lenovo. If Lenovo cannot take the "one-trick to defeat the enemy" car building results and achieve "corner overtaking" against competitors, it may face another embarrassing catch-up.

3. Double pressure

Lenovo "does not build cars" may be the same as Huawei, but will not launch its own brand of "Lenovo cars".

In the view of "Exploring Travel", it will be a very high probability event to enter the automotive supply chain system with Lenovo's technology accumulation and brand image and help other car brands "build good cars".

The "Automotive Industry Layout Manual" released this time also clearly mentions: "Combine Lenovo Group's technology accumulation with automotive intelligence needs to help the high-quality development of the intelligent vehicle industry chain." ”

From new energy to intelligence, and then to automation, this has been a consensus in the development of the automotive industry. Looking at the current automotive market, the main players involved in the automotive industry can be roughly divided into the following categories: traditional automobile companies based on old brands and supply chains; Take "Wei Xiaoli" as a typical new force in car manufacturing; and technology-based enabling enterprises led by Huawei, Baidu, and NVIDIA.

Lenovo is involved in the automotive industry, and it can be seen from the current data available for reference that "Lenovo car" is neither traditional nor new, but more will be based on technology-based enterprises such as Huawei, Baidu and NVIDIA to make incremental supply in addition to the supply of traditional auto parts, providing intelligent solutions for traditional and new car companies.

In this case, Lenovo's competitors will be many technology-based companies such as communications giant Huawei, semiconductor giant Nvidia, and Baidu, which has been deeply engaged in autonomous driving and artificial intelligence for several years.

As Xu Zhijun, Huawei's rotating chairman, said, there is no shortage of "Huawei brand" cars in the market, but what is lacking is the technological innovation brought by Huawei to automobiles. Similarly, there will be no shortage of a "Lenovo brand" solution integrator in the market, but an incremental technology supplier with "unique skills".

Compared with technology-based competitors such as Huawei, Baidu and NVIDIA, Lenovo's advantages lie more in the integration of solutions. In the face of the increasingly serious "involution" of the automotive industry, how can Lenovo obtain the affirmation of vehicle manufacturers and consumers?

This is the external pressure that Lenovo has in building cars. In addition, Lenovo has more serious endogenous pressure, that is, Lenovo's corporate operation.

As we all know, in recent years, Lenovo's corporate image and brand reputation have been greatly affected in the guidance of various online public opinions in the technology circle.

In terms of personal computer market share, Lenovo is facing being encroached upon and caught up by new brands such as Huawei, Honor, and Xiaomi. As a veteran smartphone manufacturer, Lenovo's mobile phone business has gone from one of the four giants of the former "China Cool Alliance" to now ignored by various sales lists.

From the financial report released by Lenovo, Lenovo found that Lenovo's revenue in fiscal year 2021/22 exceeded HK $450 billion, and the inventory reached more than HK $50 billion, compared with eight years ago, the cumulative increase in revenue increased by 59.85%, the cumulative increase in inventory increased by 190.30%, and the proportion of inventory in revenue also increased from 6.36% eight years ago to 11.59% today.

With the expansion of revenue scale, the proportion of inventory has risen sharply, coupled with the acceleration of the replacement cycle of consumer electronics under Moore's Law, the rise in inventory will mean an increase in the risk of bad debts.

Combined with a debt ratio of up to 87%, Lenovo's operational risk and asset quality may become a double pressure on corporate operations.

Lenovo makes a car, neither Baidu has been planning for a long time, nor does it need Xiaomi's broken cauldron, let alone Huawei's PUBG. However, from the development potential of the automotive industry, Lenovo's own business accumulation, combined with the current business situation, participating in "car building" may not be the best choice for Lenovo, but it is definitely not the worst choice.

If the "main business" personal computer can sit back and relax, and the "side business" mobile communication can still carry the banner, why go to the troubled waters of the automotive industry? Lenovo, which participates in "car building", is nothing more than wanting to find a new growth curve for the company as soon as possible when there are difficulties in continuous business growth.

4. Conclusion

Today's talk of "car building" is no longer the "deep mountains and hidden two automobiles, hammers knocking red flags" 50 years ago.

Excessive low-key can not create a good car, especially an international brand like Lenovo, if you want to enter the automotive industry, you can't quietly enter the high-profile entry. If you mess out the car without saying a word, no one will necessarily pay for it.

Under the tide of younger consumer groups and consumption upgrading, automobiles have long been transformed from industrial products to consumer goods, and major manufacturers can not blindly bury their heads in scientific research to do key problems, but must face the market to make products that satisfy consumers, and polish and iterate in the complaining and supervision of consumers. This is the case with Tesla and BYD, as well as with Baidu and Huawei.

*The title image in the article is from: Photogram Network, based on VRF protocol.