Lu Shengyun: Software monetization may become a new driving force for car companies

Our reporters Yin Limei and Tong Haihua report from Beijing

"At the 2024 Beijing Auto Show, 117 models will be launched in the world, including 30 models made by multinational companies. From the aspects of models and technology releases, it can be seen that foreign companies are gradually focusing on the Chinese market. This year's Beijing Auto Show can be called a feast, and many new car companies and foreign executives have appeared at the Beijing Auto Show. Recently, in an interview with the online theme salon of the Beijing Auto Show jointly organized by China Business News and China Economic Media Think Tank, Lu Shengyun, founder of Qianjue Shenzhi Consulting and former consulting project manager of Roland Berger, made the above statement.

For the word "feast", the reporter of "China Business Daily" has a personal experience at the scene of this year's Beijing Auto Show. The 2024 Beijing Auto Show is indeed the most popular and most popular auto exhibition in recent years, and it is also the auto exhibition with the most foreign faces.

It is worth noting that behind the appearance of "lively", the 2024 Beijing Auto Show, which has been restarted after 4 years, still plays the role of a vane for the development of domestic and global automotive technology.

"This year's Beijing Auto Show reflects a logic of the development of the global automotive industry: in terms of market size, China is a market that must not be abandoned for any car company that wants to operate globally. Lu Shengyun said that from a technical point of view, many car companies are paying close attention to the dynamics of China's new energy vehicle market, focusing on how to follow up the development of technology in the Chinese market to gain market share.

In Lu Shengyun's view, most car companies are gradually realizing that China is leading the world in some technologies, at least some technological innovations are taking place in China, including higher-level autonomous driving, intelligent car machines, or more generally, intelligent cockpits.

Another message revealed by the 2024 Beijing Auto Show is that foreign automakers, including luxury brands, are following the trend of electrification transformation. "Electrification of China's auto industry is betting on the right technical route, but electrification will certainly not be the only technical route, and there will be a situation where multiple technical routes will coexist in the future. Lu Shengyun said.

At present, with active investment in electrification and intelligent transformation, the voice of Chinese brand cars in the automotive industry has increased significantly, and China is in a leading position in the transformation of intelligent electric vehicles.

"In the release of electric vehicles, foreign companies have gradually switched the focus of the conference to intelligent cockpit and intelligent driving, such as the MBUX intelligent human-computer interaction system released by Mercedes-Benz and the 10th-generation BMW iDrive on-board system. Although traditional functional attributes such as torque and acceleration of 100 kilometers have also been mentioned, more and more attention is being paid to intelligence. Driven by China's new power car companies, everyone's perspective has completed the switch of intelligent transformation from point to surface. Lu Shengyun said.

The impact of Chinese auto companies on the global auto industry can be seen from the positive embrace of Chinese auto companies by multinational auto companies.

Take Volkswagen as an example, which has invested in Gotion Hi-Tech (002074. SZ) and Xpeng Motors (NYSE:XPEV), and formed a joint venture with Horizon.

On April 17, Volkswagen and Xpeng Motors jointly announced that they have signed a new technical cooperation framework agreement. The two companies will jointly develop an electrical and electronic architecture based on zone control and quasi-central computing, CEA (China Electrical Architecture), including functions such as zone controller, central computing platform, cloud platform and back-end interconnection. From 2026 onwards, the architecture will be applied to Volkswagen-branded electric models produced locally in China.

At the end of October last year, Stellantis Group also invested 1.5 billion euros to acquire about 20% of the equity of Leapmotor, and the two parties established a joint venture to export and sell and manufacture Leapmotor products outside of Greater China.

"The official announcement between Volkswagen and Xpeng Motors is the third cooperation between the two sides. The cooperation between Volkswagen and Xpeng Motors and the Stellantis Group's investment in Leapmotor show that multinational automakers recognize the technology of Chinese auto companies, and they also believe that Chinese companies are in the leading position in some technologies. Lu Shengyun said.

Lu Shengyun believes that some entrepreneurs in the West see the potential of the Chinese market and recognize the technology of the Chinese market. Next, they may convey the technology related to China's new energy vehicles seen at the Beijing Auto Show to Western politicians, and perhaps expect the business community to push the political circles to complete a change in thinking, avoid trade frictions, and better embrace cooperation. "After all, if everyone is in a state of separation, from the point of view of commercial value, it will be harmful to Western countries. ”

Cooperation will generate stronger momentum than going it alone. Lu Shengyun said: "He Xiaopeng, the founder of Xpeng Motors, recently mentioned on social media that the cooperation between Xpeng Motors and Volkswagen has enabled Xpeng Motors to learn two things from Volkswagen: the first is quality, and the second is supply chain management. I think his summary is very objective, Western countries have been manufacturing cars for about 100 years, and the experience in supply chain management and cost control is worth learning from Chinese car companies. ”

Lu Shengyun said that in the development of smart cars, Chinese auto companies are in a leading position, and if Chinese companies want to compete on a larger stage, they need to understand and learn from other people's business environment and competition methods, so as to better play our advantages.

At present, the competition in China's auto market is extremely fierce and the involution is serious. Lu Shengyun believes that for Chinese car companies, everyone should think about how to make profits from automotive software and the whole life cycle of consumers if they no longer make money by selling cars in the future.

"Tesla's (NASDAQ:TSLA) intelligent driving system FSD (Full-Self Driving) has recently ushered in an important update, Musk not only cut the price of FSD, but also pushed a one-month free trial. Musk's visit to China on April 28 also means that Tesla may usher in the landing of FSD in China. With the release of Tesla's high-level autonomous driving and the commercialization of autonomous driving, Chinese car companies can seek monetization on software, which may be a way out for car companies in the future. Lu Shengyun said.

In Lu Shengyun's view, the price war in the automotive industry will continue, and there is no sign of stopping. "We are still in the volume configuration, and there are many models on the market, but many brands do not have a clear differentiation and positioning. In the case of similar configurations, price is the only factor that can attract consumers. Building a car needs to be supported by quantity, and only when the volume is up can we obtain a cost advantage. ”

(Editor: Zhang Shuo Review: Tong Haihua Proofreader: Yan Jingning)