Tech giants zoom into carmakers' ring as digital era sinks roots deeper

 

From Huawei to Xiaomi, China's largest technology companies are swarming into the electric car business.

 

Conviction among them is growing that their tech expertise will prove instrumental in unlocking the vast potential of the e-car sector against a global backdrop of vehicles virtually becoming computers on wheels.

 

Tech firms' influx into the e-car sector is thus further heating up the already red-hot market where traditional auto giants such as Volkswagen as well as startups such as Tesla and China's Nio are locked in fierce competition.

 

Globally, e-cars are changing the auto industry that had stayed basically unchanged since German engineer Karl Benz invented the vehicle in 1885.

 

Now even affordable e-cars can greet the drivers when they get in, take their voice commands and even alert them when they get sleepy.

 

Many can have their software updated wirelessly, and some e-cars can park themselves when drivers alight and return later to pick them up at a tap on the phone screen.

 

It is these new features that have enticed the internet and technology companies to jump on the e-car bandwagon in the hope of picking their slice of the pie in return for their expertise in computing abilities, software and content.

 

"For a good smart car, the hardware is the body and the software is the soul. Without the help of the internet, car manufacturers would still follow traditional ways of thinking by replacing fuel tanks with batteries," said Zhou Hongyi, founder and CEO of Qihoo 360, a Beijing-based company that makes antivirus software.

 

Zhou made the remarks in May, when Qihoo 360 announced its partnership with Chinese startup Nezha. It would lead Nezha's latest financing round, and become its second-largest shareholder.

 

"Smart cars are expected to become one of the largest players in the field of smart technology. So network security, as well as the cybersecurity of connected vehicles, will inevitably become an important aspect of 360's future strategy," said Zhou.

 

The logic is shared by many household product companies jumping on the gold rush of carmaking, and sometimes even personal emulation plays a part as well.

 

" (Xiaomi CEO) Lei Jun is now 52 years old, one year older than me, and he is having a shot at the electric car industry. So why shan't I?" said Zhou.

 

Xiaomi, China's largest smartphone maker by shipments, unveiled its carmaking plan in March. Co-founder and CEO Lei called it his final startup project, saying he would lead the standalone division and the first vehicle, which can be a sedan or an SUV, is expected to hit the market in three years.

 

"From smartphones to smart home appliances, and smart vehicles, we would like to offer our customers better experience enabled by our technology," said Lei.

 

Baidu is another dotcom firm that will produce electric vehicles. It made public its plan in January, two months earlier than Xiaomi.

 

The Beijing-based internet giant will build a joint venture with Volvo owner Geely, and the first vehicle will hit the market in three years, followed by new vehicles every 12 to 18 months, said the joint venture's CEO Xia Yiping.

 

Baidu's decision to build cars was partly because it wants to demonstrate its autonomous driving technology, which it started to develop back in 2013, believing its own vehicles will help convince carmakers to buy its solutions as well as its maps and infotainment content.

 

"The core value of cars in the future will be how intelligent they are," Xia said. "The earlier a company plans, the more control on self-developed technologies it gains, the more advanced technology it has, the more power it will own in the market."

 

At this year's Shanghai auto show, held in late April, Baidu was among the 100-plus technology companies that stole the limelight of the biennial event for vehicle makers and car aficionados.

 

The company said its autonomous driving Apollo system will come preinstalled with at least one mass-produced car model each month in the second half of this year. It expects Apollo's solutions will be preinstalled on 1 million vehicles over the next three to five years.

 

"Apollo will continue to increase its investment in fields such as autonomous driving and automobile intelligence," said Li Zhenyu, Baidu's senior corporate vice-president.

 

Also at the Shanghai auto show, the first-ever vehicle featuring Huawei's operating system and autonomous driving solution made its premiere.

 

A video clip showed that the vehicle can navigate itself through busy urban traffic without a driver. The company said that its vehicles can drive themselves for 1,000 kilometers without human intervention.

 

"Our goal is to bring digital technology into every car in the world," said Wang Jun, head of Huawei's smart car business unit.

 

While Huawei vows to become the Bosch of the smart vehicle era, German suppliers including Bosch and Continental are keenly aware of the changes that are reshaping the auto industry and have taken action.

 

As early as 2015, Continental acquired the automotive business of Finnish software company Elektrobit Corporation and later bought Israeli cybersecurity company Argus in a 2017 deal to improve its software capabilities.

 

Carmakers are bracing themselves for the transformation as well. "We (traditional carmakers) may be a little slow, but we are not stupid," said Andy Palmer, former CEO of Aston Martin and former COO of Nissan.

 

Volkswagen Group established its software division last year, and the German carmaker expects the software developed in-house will account for 60 percent of all the software it needs.

 

To that end, it has doubled the investment plan to 27 billion euros ($33 billion) by the middle of the decade, said Volkswagen Group CEO Herbert Diess.

 

"In the coming years, it will be crucial to also reach a leading position in car software in order to meet people's needs for individual, sustainable and fully connected mobility in the future," said Diess.

 

Autonomous driving, the much-hyped selling point of new entrants, is another field that traditional carmakers are investing in heavily.

 

Earlier this year, Japan's Toyota invested $400 million in autonomous driving startup Pony.ai, which is rolling out its robotaxi fleet in China and the United States. Toyota is an investor in Uber's self-driving technology.

 

Another Japanese carmaker Honda has long partnered with GM in its autonomous driving unit Cruise, which started to test fully driverless vehicles back in late 2020.

 

Analysts and executives said the biggest barrier to new entrants are the safety standards in the car industry that are much stricter than in the consumer electronics industry.

 

"Prototypes are easy, production is hard," said Tesla founder Elon Musk in a tweet in May, in response to a user tweet seeking his comment on the new players including Xiaomi.

 

Tesla's first model, the Roadster, came out in 2008. But even today, inconsistent product quality is something customers complain most about.

 

As vehicles are becoming mobile computers, product consistency, which is something that traditional carmakers excel at, will be as crucial as－if not more than－it was in the past 100 plus years.

 

"The zero defect concept is very difficult for electronics companies to comprehend," Yancey Hai, chairman of electric car powertrain maker Delta Electronics. "It is OK to crash this computer－you can reboot it. For cars, no way."