What is “New” with New Generation Auto OEMs in China?
In 2020, NIO, Li Auto, Xpeng and WM Motor made the top 4 new generation OEMs in terms of sales volume. They have attracted massive amount of funding from various types of investors.
Moreover, investors bet on more than one player. For example, Sequoia invested in NIO, Xpeng and WM while Tencent invested in NIO, WM and Aiways. Local governments are also strong supporters of new generation OEM, like Hefei’s strategic investment in NIO and Guangzhou Development Zone’s funding to Xpeng.
Is it a “Wall Street” bubble? Certainly not a technology one.
Here are the 5 “news” with new generation OEMs.
Direct sales and digitized consumer lifetime operation
New generation OEMs have adopted a direct sales model with diversified strategies. They combine online and offline channels to manage consumers and potential buyers to create unique experience in both pre-sales and after-sales periods.
ADAS features backed by high-performance hardware and software capabilities
NIO’s recent launch, ET7, comes with NIO Autonomous Driving (NAD) technology. It is supposed to allow autonomous driving in selected urban roads and expressways, automated parking under certain scenarios, and meantime monitor drivers for a safer and more relaxing experience.
NAD is powered by 4 NVIDIA DRIVE Orin SoCs with a total computing power of 1,016 TOPS and 33 sensing units that generate 8GB data per second. NIO developed perception algorithm, localization, control strategy and platform software on top of that.
XPilot 3.0’s main features are Navigation Guided Pilot (NGP) for highways and memory parking. NGP is similar to Tesla’s Navigate on Autopilot (NOA) and memory parking solves the “last-mile” parking each time you go home. The 3.0 system uses NVIDIA DRIVE AGX Xavier and a perception suite of 14 cameras, 12 ultrasonic sensors, and 5 mm-wave radars.
WM Motor’s Living Pilot is developed together with Baidu Apollo. Li Auto wasn’t aggressive with smart driving until recently. In September 2020, it announced the plan to develop autonomous driving features in collaboration with tier 1 supplier Desay SV using NVIDIA DRIVE AGX Orin. Li has also been expanding the autonomous driving team this year.
Intelligent cockpit design with OTA capability
New generation OEMs offer diversified cockpit experience through features like voice control, remote control, smart key etc. Each has also built an app ecosystem for in-vehicle deployment. Most importantly, the new architecture of the intelligent cockpit platform tends to support frequent OTA (Over-the-Air) updates, allowing constant improvements according to market feedback. For instance, Nio has pushed 16 OTA upgrades from June 2018 to December 2020 to either optimize certain functions or add new features.
Premium software features as a new revenue stream
Tesla has been offering the Full Self Driving (FSD) feature as an option and probably soon to be a subscription service. New generation OEMs all got inspired. Nio introduced a “Selected Pack” with several core features at RMB15,000 and a “Complete Pack” with advanced features like Navigation on Pilot (NOP) at RMB 39,000.
Xpilot 3.0 took a slight different approach. When it’s purchased together with the vehicle, the price is RMB 20,000. When it’s added later on, the price is RMB 36,000. Consumers can also choose to subscribe for RMB 12,000 a year.
Dedication to R&D and software talents
In 2020, Nio had an R&D team of 3,400 people as 50% of the entire company. Xpeng had a total of 3,676 employees by June 2020 with 1,570 in R&D. Li Auto has built an R&D center in Shanghai with the plan to recruit 2,000 engineers. As Li powers up in autonomous driving capabilities, half of its R&D will be spent on it.
