When Tesla surpassed Toyota on June 10 last year, it became the world’s largest car company by market value. Many people interpret it: the end of an era, the birth of another era.
Maybe this is not the case: today’s traditional OEMs are using electrification as a shield and intelligence as a spear to open a mighty road of change.
We can’t rest on our laurels, but we can’t completely overthrow it. All car companies associated with future technology should be given hope.
The transformation of traditional OEMs seems to be more and more urgent.
According to media statistics, in the first 20 days of this year, there were no less than 4 car companies that conveyed the signal of transformation by releasing new logos, such as domestic BYD and Geely, and foreign Kia and General Motors.
In addition, although the brand symbol has not been substantially adjusted, Volkswagen also made a joke of “official name change” on April Fool’s Day this year-Volkswagen America briefly launched a statement on its official website, announcing that the company The name “Volkswagen of America” will be changed to “Voltswagen of America”.
Interestingly, two months later, SAIC, one of Volkswagen’s partners in China, came to a real event.
Recently, SAIC Motor released a brand-new logo, corporate vision, mission and values, and expressed its intention to transform into a “user-oriented high-tech company”. Today, we will explore the thinking behind SAIC’s various transformation actions through the conversations of Chen Hong, Chairman of SAIC Group, Wang Xiaoqiu, President of SAIC Group, and Zu Sijie, Vice President and Chief Engineer of SAIC Group.
User-centric, change to To C
Citing media reports, data from China Automobile Dealers Association and Roland Berger show that in 2014, the post-90s generation accounted for 17% of the auto consumer market, and in 2016 this proportion increased to 25%. As of the first half of 2019, this proportion has reached 42.4%. Rejuvenation of users is becoming one of the mainstream trends in the automotive industry.
Regarding the changes in this market trend, Wang Xiaoqiu holds a similar view:
Now the main force of car purchase and replacement has become the post-85s and post-90s, and the first-time buyers have gradually become post-95s.
The rejuvenation and stratification of consumer groups correspond to the individualization and diversification of user needs.
Reflecting on SAIC, although it started early and invested heavily in new energy and intelligent networked vehicles, in contrast, research on changes in market and user needs is still lacking.
Take Wuling Macro MINI as an example. Wang Xiaoqiu said frankly that it is actually difficult for the engineering team to imagine building a car with a cruising range of only 180 kilometers. Although the team in the group center talks about user needs every day, no engineer or product manager dares to say that an electric vehicle with a cruising range of 180 kilometers can set a monthly order sales of 40,000 units.
The Wuling Hongguang team is located in a fourth-tier city like Liuzhou, which is closer to the target consumers and has a better understanding of the surrounding users. It is this experience from consumers’ living environment that allows Wuling’s team to define and design products based on the usage scenarios of users’ short-distance travel.
At the same time, due to the stratification of consumer groups, user needs are gradually becoming more diversified, which means that products will also be diversified and segmented.
SAIC has made a lot of attempts on new energy vehicles.
Chen Hong mentioned that the independence of the R car is a new attempt. “We have made the R standard independent so that it can target more subdivided user groups.”
He believes that there is a huge market space for cars with more than 200,000 yuan, and there is basically no segmentation, especially the new energy vehicle market.
The R car and Zhiji have different targets and can better seize market opportunities: the R standard is basically positioned in technology fashion, with a price between 200,000 and 300,000; Zhiji is positioned in high-end luxury, with a price of three More than 100,000; as for Roewe, which belonged to the R brand before its independence, it took the national tide route. From this point of view, SAIC seems to have a clearer plan for establishing the differentiated advantages of the brand.
In addition, as the market becomes more and more subdivided and the marketing requirements become more and more precise, the reach mechanism and marketing model using traditional television, newspapers, outdoor advertisements, etc. as media are gradually failing.
SAIC realizes that in this changing trend, its technological advantages can no longer be transformed into market advantages. OEMs must also speed up the construction of To C capabilities on the sales side and publicity side, and strive to allow products to effectively and directly reach the user side.
One of the survey results of the “2021 McKinsey Auto Consumer Insights” shows that 25%-40% of consumers prefer to communicate directly with car companies in various communication links such as consultation, order placement, and after-sales.
The “OEM-dealer-consumer” B2B model on the sales side is in urgent need of change.
However, in SAIC’s consideration, the change to the B2B model does not mean that the role of dealers should be completely stripped, but how to do To C with dealers.
After realizing this, SAIC is speeding up the transformation, and trying to drive the transformation of the entire business model, organizational structure, operation mechanism, etc. from the marketing side, so that SAIC will truly turn to be user-centric.
Electric and intelligent networking technologies build a new track
“New technologies represented by electric and intelligent networking are building a new track.” – SAIC has integrated its thinking on this technological trend into the design concept of the new Logo.
In Zu Sijie’s introduction, the change of SAIC’s old and new logos can actually be summarized as the evolution of “from blue steering wheel to blue planet”: in terms of pattern changes, “In the past, we had a steering wheel in our logo, and now we remove the steering wheel. Because the steering wheel may not be needed for driving in the future,” which highlights SAIC’s focus on autonomous driving technology; and the “blue planet, rising sun” in the Logo design concept represents SAIC’s emphasis on the field of new energy,” looking forward to A greener, smarter future for the blue planet.”
In fact, as early as 2014, when the wave of electrification, intelligence, and networking was gradually rising, SAIC had already fallen to the first player in the chess game.
In August of that year, Chairman Chen Hong realized that SAIC must seize technologies and market trends such as new energy and the Internet, and proposed that SAIC should not be a follower of the industry, but a leader in the industry.
At present, SAIC has formed a super-strong matrix including subsidiaries such as Zero Beam, Zhonghaiting, and Jiehydro in terms of intelligent network connection, and its tentacles have extended to various core technology links such as software, high-precision maps, and hydrogen fuel cells.
Anyone who sees it can’t help but guess that SAIC is trying to build a whole industry chain of smart electric vehicles.
However, Wang Xiaoqiu said,
An enterprise cannot do everything, it should do something and not do something. “But at the same time, he also stressed that “software capabilities are at the heart of full-stack solutions and must make a difference.”
Therefore, SAIC, which “does something, doesn’t do something”, chose the over-coded software to realize the self-development of the global core software. It was built to be the Android of the automotive industry.
Wang Xiaoqiu introduced that the SAIC Zero Beam SOA software platform, on the one hand, can abstract the hardware into a callable public atomic service by decoupling the software and hardware of the vehicle, and realize the individualized and free combination of software service functions like Lego. On the other hand, the SOA developer platform can provide developers of different levels with exclusive development tools, has a large number of application software, and provides users with thousands of user experiences.
Zu Sijie revealed that SAIC’s SOA platform has opened more than 680 vehicle-end services, 980 cloud services and 260 artificial intelligence frameworks, and it is still being iterated.
In the era of “software-defined cars”, leaders like Tesla are already cashing in on the Autopilot FSD fully autonomous driving option, paid OTA upgrades, and premium connected car subscription services. Essence Securities has calculated that the cumulative cash income from FSD, one of Tesla’s software businesses, has reached $1.26 billion.
At the same time, with the gradual deepening of the understanding of market trends, SAIC is also trying to integrate its user concepts in technological innovation, trying to reshape its competitive advantage by truly focusing on user needs.
In terms of new energy, SAIC is focusing on strengthening the new-generation electric vehicle platform and actively deploying the battery technology field to solve the key pain points of electric vehicle users;
In terms of intelligent network connection, SAIC has built five centers of software development, big data, artificial intelligence, cloud computing and network security to effectively improve the digital experience of users and create products with strong user perception and high stickiness.
“In the process of facing the new track, SAIC’s biggest change is not only the change in product technology, but also the change in market awareness and user thinking.” Wang Xiaoqiu said.
Combination of internal and external boxing for industry change
The evolution of the consumer market and the development of electric and intelligent networking technologies are driving changes in the entire industry. The boundaries of the automotive industry have been broken, and new boundaries are becoming increasingly blurred. For SAIC, it is more like opening up new ground in a brand new industry.
Driven by this trend, Zu Sijie said that SAIC will communicate with more partners with an open mind and a cooperative attitude. The key step here is to expand a new circle of friends and reshape the industrial ecology.
SAIC is currently actively deploying next-generation lithium battery technology, and has successively participated in a number of solid-state lithium battery manufacturers, such as QuantumScape, SolidEnergy, Qingtao, etc.;
At the same time, they are also accelerating the industrial chain layout of automotive chips, investing in more than a dozen chip design companies such as Horizon, Black Sesame, Jingchen Semiconductor, and Zhixin Semiconductor;
Its subsidiary, Lianchuang Electronics, is also cooperating with Huawei, NVIDIA, Mobileye, TTTech, etc., trying to create system-level solutions from perception, decision-making to execution;
In addition, SAIC has also expanded Internet ecological cooperation with Alibaba and OPPO, and cooperated with Tencent in areas such as network information security and Internet content ecology.
In terms of autonomous driving, SAIC chose to cooperate with Momenta to build L4-level autonomous driving technology and became the largest shareholder other than the founding team. The two parties carried out comprehensive cooperation in the three aspects of cloud management and terminal, jointly developed intelligent driving algorithms and shared results.
SAIC has high hopes for the Robotaxi project.
“It is our goal to become the leading enterprise in intelligent driving in China,” said Chen Hong.
According to reports, SAIC’s Robotaxi will hit the road in October this year. It plans to land in Shanghai and Suzhou first, and will enter Shenzhen after July 1 next year. By 2025, SAIC plans to scale the Robotaxi fleet to tens of thousands, and the mileage of L4 Robotaxi will exceed 100,000 kilometers.
It can be seen that externally, SAIC has chosen to create an ecological circle of friends that integrates industry and finance. As for the group, SAIC is also stepping up reforms and embracing the market.
With years of planning and layout, SAIC Motor, which has deep roots and luxuriant roots, currently owns a number of scientific and technological innovation-oriented enterprises such as Zero Bunch, Zhonghaiting, JieHydrogen, and Lianchuang Electronics. In order to further stimulate its innovation power, SAIC is planning to let these enterprises enter the capital market. Among them, JieHydrogen Technology, which takes hydrogen fuel cells as its core business, is ready for spin-off and listing, and will give priority to the Science and Technology Innovation Board. In addition, Zhonghaiting, Lianchuang Electronics and other companies are also expected to complete the spin-off and listing within three years.
Zu Sijie believes that on the one hand, this move will help stimulate the creativity of the core employees of the science and technology company, and on the other hand, it can better realize the extension of technology and make better use of the capital market.
For the other five centers of software development, big data, artificial intelligence, cloud computing, and network security, SAIC also intends to implement corporatization and substantive operations, and promote market-based financing.
In SAIC’s view, the market-oriented mode of operation allows technological innovation to be rooted in the market from the very beginning, helping it to meet real user needs and market competition needs.
So far, SAIC has formed a complete set of combination punches for industry reform both inside and outside the group, with neat moves and great determination.
Epilogue
“The auto industry is undergoing a major change unseen in a century”, this has long been a cliché. But, how will this situation change in the end? How to deal with the challenges and opportunities that come with it? This is probably the problem facing all players.
SAIC focuses its observation on this “big change unseen in a century” on market, technology and industry changes, and its specific transformation ideas revolve around “data determines experience, software defines cars”, trying to start from user experience innovation , to promote the transformation of product form and business model. Wang Xiaoqiu described this process as playing chess, saying that SAIC’s emphasis is on “seeking things in the overall situation and making moves at key points”.
As one of the most responsive domestic traditional car manufacturers, it can be seen that SAIC has a systematic understanding of its “elephant turning” road.
At the end, can SAIC be the first to complete a gorgeous turnaround? let us wait and see.
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