It is inevitable for technology companies to enter the market to build cars

 The matter of building a car has changed.

Since 2014, building a car has become the most desirable thing for entrepreneurs. Not only are successful entrepreneurs working hard to start their second and third ventures, but countless "grassroots" teams have also begun to move around, as if the threshold of building a car was suddenly pulled to non-existent.

But facts have proved that there are indeed barriers to building cars, and it limits most players. Li Bin, the founder and chairman of Weilai Automobile , once said that an electric car company needs at least 20 billion yuan to reach mass production. Xiaopeng Motors Chairman He Xiaopeng also sighed: "It used to be an exaggeration to see others making cars. I jumped in and realized that 20 billion is not enough to spend.”

In the end, the new car-building forces ran out of three first-tier players, but at the same time it also made people realize how difficult it is for a new company to build cars. People's attitudes towards new players have gradually become indifferent, and large companies have only tried many times. Invest in companies in the industry and curve the layout of the automotive industry.

The situation is changing now. When the automobile industry undergoes major changes, the issue of car manufacturing is brought up again. It's just that the protagonist has changed from a startup company to an Internet technology giant.

Baidu has established a car company called "Jidu" and appointed former Mobike co-founder Xia Yiping as the CEO of the new company; Xiaomi was revealed to be determined to build a car, and the official response was rather ambiguous: "Wait and see, for the time being No"; even Apple, the king of the smartphone era, has begun to make preparations for making cars. It seems that overnight, car building has become the standard equipment of technology giants, and if this trend continues, more players will end up in the future and enter the big market of car building.

Why does this happen? Which part of the car does technology companies look at? These are all questions that Geek Park (ID: geekpark) wants to explore. More importantly, at the beginning of the second decade of the 21st century, everyone seems to be aiming at this point in time. What does time mean to them?

The cost of building cars is getting lower and lower

One big change in the environment is that the hardware cost of making cars seems to be getting lower and lower.

The cost mentioned here does not simply refer to the issue of funds. In fact, the cost of electric vehicles is higher than that of fuel vehicles. In the past automobile market, the core components of a fuel car were the engine and powertrain. Feng Rui Capital founding partner Li Feng said that the cost of engine and powertrain in a fuel car accounted for about 15~ 20%. In a new energy vehicle, the core components have become batteries, electronic controls and motors, which are the so-called "three powers", which account for more than 60% of the cost, of which the battery can account for 40% of the total vehicle cost. -50%.

"With these key technologies that account for the highest cost ratio of new energy vehicles, China has achieved good independent innovation and reached the world's advanced level." Li Feng said. Compared with fuel vehicles, after 30 years of hard work, the independent innovation of mid-to-high-end fuel engines has not yet reached the best international level. This is why new energy vehicles are considered as opportunities for China to "overtake on corners."

Returning to the reason why technology companies entered the market to build cars, in the process of transforming cars to electrification, the problems that new carmakers need to solve are not only money, but also "games" with component manufacturers.

An insider of a new car-building force once told Geek Park that on the one hand, the new car-building force is compared with traditional car companies, and the understanding of cars pays more attention to intelligence, such as human-computer interaction, smart cockpit, etc., so for a unique experience, The requirements for parts are also higher. Correspondingly, because the new car-making forces have little or no sales in the early stage, the development costs of component manufacturers are also higher.

For example, the chassis, interior and exterior key parts of electric vehicles need to be redesigned and developed, and the production volume will not be too high. A component manufacturer once revealed that in order to control investment risks, they will charge a certain amount of development costs to new car-building forces and share risks.

Bosch, one of the world's largest auto parts suppliers, is NIO's most important partner. In the early stage of NIO's car building process, it also gave a lot of support. Bosch Executive Vice President Xu Daquan once said in an interview with Geek Park that cooperation with new carmakers is indeed difficult to make profit, especially for parts customized by OEMs. It is more difficult to recover the initial investment costs. At this time, we must judge whether we are determined to continue cooperating with this company.

After experiencing the "labor pains" of the previous few years, new car-building forces have been recognized by the industry, and the supply chain behind them has also been further upgraded. With Tesla , for example, Tesla cars in Shanghai, led to a certain extent in the country's new energy automotive industry chain maturity. It is understood that the current localization rate of Tesla parts produced in the Shanghai factory has reached 100%, and it is only one year before the Tesla Shanghai factory starts to operate.

"Tesla and other companies are worthy of respect, because they have opened up an era of electrification and really promoted the popularization of electric vehicles. It is precisely because many hardware technologies and platform technologies have been standardized that they will become intelligent in the future. It's more reasonable." Xia Yiping, CEO of Baidu Automobile Company Jidu, said in an interview with Geek Park that new car-building forces such as Tesla and Weilai have completed the first stage, which promotes the standardization of the entire industry. "For example, when players like Baidu enter the market at this time, we will no longer encounter the early problems encountered by companies such as Tesla."

If the new car-making forces such as Weilai, Xiaopeng, and Ideal are regarded as "New Car 1.0", the resources they "compelled" in the early stage have resulted in significantly higher costs and manufacturing complexity than traditional car companies, then the supply chain will gradually At the time of maturity, the admission of technology companies such as Baidu, Apple, and Xiaomi is more reasonable, and it can even be regarded as "New Car 2.0."

Time to build a car, software defined

Another environmental change is that car companies have opened their arms to technology companies.

Baidu's entry into car manufacturing is the establishment of a joint venture with Geely. Apple is discussing cooperation with many automakers including Kia... If you count the previous Didi Chuxing leading design and launching in the field of online car-hailing D1, behind it was also completed by BYD's OEM.

If only "foundries" are used to describe these car companies, I am afraid it is not completely accurate. Because in the cooperation between car companies and technology companies, possible models are full of imagination.

The clear case is the cooperation between Baidu and Geely. Xia Yiping said that Baidu is the actual leader of Jidu, and Geely is positioned as a strategic partner and investor. But the important point for choosing Geely is that in the domestic automobile market, Geely may be the first company to provide an open pure electric platform for electric vehicles.

This platform is called "SEA Haohan Architecture". The first model equipped with the SEA platform is the Lynk & Co brand's pure electric model ZERO concept. In Geely's official statement, this architecture represents "an upgrade from a car manufacturer to a smart travel service provider."

As the basic structure of the car, the SEA platform realizes pluggable hardware and upgradeable software. In the words of an industry insider, it is like a motherboard. Car companies can define vehicles on this motherboard according to their needs, including the electronic system architecture and the opening of the vehicle bus to the vehicle control authority interface.

Geely officially announced that the SEA platform is a product made by Geely over 4 years and an investment of more than 18 billion yuan. "This is a relatively mature platform that Geely has spent a lot of tuition to make, and truly undertakes electrification and intelligence." A product manager in the automotive industry told Geek Park. Generally speaking, car companies will not use their own The platform is open, and Geely maintains an open attitude towards the outside world, and hopes to push SEA horizontally to other brands or models.

On the other hand, Geely itself is also seeking to transform to electric and intelligent. "From 2015 to now, Geely has been seeking transformation, but the past attempts have failed to achieve real success. Baidu's advantages in intelligent driving and digital experience are what Geely itself needs to learn." The product The manager analyzes that the cooperation between the two parties is focused on what the other party needs to make up for. This is also the reason why car companies cannot simply be regarded as foundries.

For technology companies, the manpower, financial resources, and time spent building a car from zero are too great. Take Wei as an example. The development cycle of its first-generation platform is three years. And cooperation with car companies can greatly shorten the car manufacturing process from 4-5 years to 2-3 years, which is attractive enough from a time perspective.

Yes, in the final analysis, time has become a very important part of the reason why technology companies enter the game to build cars. The gradual maturity of the supply chain and the opening of the underlying platform have further reduced the hardware cost and time cost of car building. Correspondingly, the proportion of software in it has further increased, which is the so-called "software-defined car."

Technology companies that are already focusing on software have seen great opportunities in it.

Time window brought by business model

After seeing the opportunity, where does the "sense of urgency" brought to technology companies to build cars come from?

"LatePost" reported on Xiaomi's car manufacturing that in the third quarter of 2019, Xiaomi's decision-making makers proposed to build the car on the board of directors, saying that the end of 2019 to the beginning of 2020 is the time for Xiaomi to enter the company to build a car.

It can be guessed that the judgment of the future has made technology companies see a great possibility, and the opening of the window period is a key factor for many technology companies to have or are about to end.

The first is the huge market for automobiles. Geek Park has repeatedly mentioned that after the mobile phone, the car is likely to have the largest volume and change, and it is also the most potential market. After the mobile phone market touches the ceiling, the dividends of the auto industry have just begun, attracting mobile phone manufacturers. Including many technology companies.

Secondly, after the "software-defined car" has become a consensus among people, the imagination brought by software is even more compelling.

Paying for car software is likely to become a "necessity" in the future|NIO

Geek Park once introduced a business model based on autonomous driving , and Tesla CEO Elon Musk confirmed this statement in a recent interview. He said that Tesla will launch a subscription service for autonomous driving (FSD) in the second quarter of 2021.

In addition to the NAD (NIO Autonomous Driving) system released by NIO along with ET7, the service subscription model is adopted on the standard hardware, and the monthly service fee is 680 yuan; plus the 9.9 yuan premium car entertainment service package launched by Tesla, The software payment model built on the hardware foundation has already taken shape.

It is not difficult to imagine that, similar to smart phones, paid subscription car software can become a large part of the profit source for future car companies. This has fundamentally changed from the "one-shot deal" of car sales in the past.

Imagine that if you enter the era of paid subscriptions for autonomous driving, the marginal cost of software subscriptions is very low, excluding hardware and some labor costs, and the corresponding car companies can achieve high profit margins in software. Some people in the industry have calculated an account. According to Tesla's investment in FSD in the past three years, if the subscription rate of Tesla's FSD software is 50%, the net profit of a car can reach 20,000 yuan; if special Sla sells 1 million cars a year, and its profit on self-driving software is 20 billion yuan.

According to this standard calculation, a Tesla car company can achieve a market of tens of billions, and there is more room for bargaining, because the bargaining power of the self-driving software package is completely in the hands of the car company. With the increasing sales volume, more and more data are acquired by vehicles, and the experience is getting better and better, which means that more people are willing to pay for the product experience. Like Internet products, the snowball will get bigger and bigger.

With the window period already open, technology companies should have seen the possible achievements of software in future cars, and the resulting considerable profit margins. The moment when some companies started to take action in the early stage may be one of the thinking about technology companies deciding to enter the game. If we don't catch up, the future opportunities will become smaller and smaller.

Regardless of the ending, "New Car 2.0" may officially kick off at this time.


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