The ADAS Wave in China

China’s ADAS revolution began since 2018. As technologies mature and cost fall together with a strong regulatory stimulus, it could be the time for mass adoption.

ADAS by Sub-system

ADAS, Advanced Driver Assistance System, is defined as collecting environmental data of inside/outside the vehicle through onboard sensors, detecting and monitoring static/dynamic objects for potential dangers, and warning drivers even controlling the vehicle to avoid accidents.

The sub-systems of ADAS can be categorized as warning or assisting. For example:

Warning
Lane Departure Warning (LDW)
360-Degree Surround View
Forward Collision Warning (FCW)
Night Vision System (NVS)
Traffic Sign Recognition (TSR)
Blind Spot Detection (BSD)
Driver Monitoring Systems (DMS)
Hands Off Detection (HOD)

Assisting
Lane Keeping Assist (LKA)
Adaptive Driving Beam (ADB)
Assisted Parking System (APS)
Down-hill Assist Control (DAC)
Hill-start Assist Control (HAC)
Automatic Emergency Braking (AEB)
Adaptive Cruise Control (ACC)
Traffic Jam Assist (TJA)

According to a report on 2019 China ADAS applications, the features equipped on new vehicles were in parallel with the sales price, where the high-end models (RMB 500,000–1,000,000) came with more functionalities. Among 7,364 models listed on the market, 360-Degree Surround View, AEB and FCW were the most prevalent.

Policy

The ADAS market is fueled largely by regulatory interest in safety applications that protect drivers and mitigate road accidents. The European Union and the United States have been ahead with policies and standards while China is catching up.

Since the Ministry of Industry and Information Technology issued very first document dedicated to the intelligent and connected vehicles industry in 2018, ADAS penetration plan has been detailed every year. The rating agency C-NCAP’s 2018 version included pedestrian protect and AEB, and in the upcoming 2020 version, features like BSD and LKA will be added.

The Ministry of Transport has also placed rules concerning safety with the earliest one in 2017 mandating that commercial vehicles longer than 9 meters be equipped with LDW and FCW, followed by DMS and AEB becoming mandatory in 2018 and 2019. As for new vehicles, they shall come with the relevant compulsory features by February 2021.

Industry Chain

Upper stream: sensing components, chips, algorism/software
Middle stream: control systems
Downstream: Tier 1s, OEMs
Aftermarket: TSPs, 4s shops

Except the chip market being dominated by Intel, Nvidia and Qualcomm for now, the upper stream is where the emerging opportunities are. A new landscape will be formed in a few years time.

For the rest of industry players, challenge remains on better incorporating innovative technologies into existing products and business lines. It has been a trend for these traditional companies acquiring startups on the upper stream.

Opportunities

Aftermarket for commercial vehicles
Aftermarket ADAS is usually warning-only systems like LDW, FCW and DMS that can be retrofitted onto any existing vehicle through installing a front camera. With vehicle sales slowing down since 2018, ADAS has been eyeing the existing volume.

Compared to passenger cars, commercial vehicles are at an advantage for the following reasons:

  • Longer driving time and larger sized vehicles make safety more challenging and damage worse.
  • Commercial fleets usually maximize the vehicles lifetime for better profits.
  • Fleet companies are receptive to ADAS expense in comparison to the cost of potential accidents.
  • Authorities are enforcing more ADAS features on especially heavyweight commercial vehicles to enhance the public road safety.

Competition in this field is intense. Generally speaking, international vendors own relatively mature and standard technology but are not well localized for China road conditions. Local startups approached with price advantage and they have the next 3–5 years to get ahead with concrete technologies and iterated algorism.

Pre-equipped commercial vehicles
By February 2021, AEB is mandatory on new commercial vehicles of certain type. This is just the beginning of regulations spotted on pre-equipped market, where ADAS products are delivered through integration with auto OEMs.

Last year, the total production of commercial vehicles was 4.36 million in China, most of which were local brands, like Yutong buses and Jiefang trucks. This means they would adopt local supply chain. We have seen this trend through two recent investments. In Q1 of 2020, Maxieye received strategic investment from SORL, an auto parts supplier for commercial vehicles. Weichai, one of the trucks OEM, acquired Tsingtel technology. Maxieye and Tsingtel are both local ADAS startups.

Pre-equipped passenger cars
ADAS features have been adopted by consumer brands to differentiate their models as well as to keep up with C-NCAP standards. According to registered insurance data on new sold passenger cars during January and February 2020, 28.15% had ADAS installed (local and JV brands excluding imported ones), among which L1 features represented 14.98% while L2 was 6.31%. The ratios are expected to grow and more features to be carried.

For ADAS suppliers to passenger cars, international Tier 1s have been dominating the market. From the same report, Bosch, Continental and Denso were the top 3 respectively. But Hirain, Freetech, Nio, and Yihang made to top 10, brewing a coming competition between local and international suppliers.

This is an exciting time, in which new unicorns could be created and the traditional landscape be disrupted.

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Shuai Chen

Shuai Chen

China | Autonomous Vehicles | Autonomous Driving | Electric Vehicles | Future Mobility (schen583@gmail.com)