There Is Still A Long Way To Go For Internet Giants In The Chinese New Energy Vehicle Market
摘要： Alibaba, Tencent, Baidu, LeTV and Uber’s attempts in the new energy vehicle market are all strongly based on their own advantages. The road ahead is still far away, and those who seize the opportunity will ultimately stand out.
Recently, GAIG Automobile officially announced that it had landed strategic investment towards Uber China, and that it would team up with Uber in areas such as EVs, automobile marketing, second-hand cars, automobile finance, etc.
Although I’m not optimistic about the cooperation between traditional automobile manufacturers and Internet, Chinese Internet companies such as Baidu, Alibaba, Tencent, LeTV and even Uber China are all eyeing on the new energy vehicle market, some among whom even take great efforts in order to play a role in the market, whether by establishing factories abroad and teaming up with traditional automobile makers at home.
Nobody can tell for sure if they will succeed, but at least for now, this market seems to be burgeoning.
1. What are Chinese Internet giants busy doing?
(1) Tencent & Foxconn
Last March, Tencent allied with Foxconn and Hexie Auto and announced that it would develop a smart and Internet-based vehicle model in Zhengzhou, Henan province. According to Foxconn, they would build a special group made up with experts from all the parties: while Tencent would focus its attention on building an open Internet platform, Foxconn would best utilize its advantages and integrate advanced technologies to smart vehicles. Together, they would develop a car model that is energy-efficient, environment-friendly safe and reliable. My guess is that the car model they finally develop will be pretty much affordable and more suitable for home use.
(2) Alibaba Group & SAIG
Alibaba also announced that it would set up a 1 billion RMB Internet Vehicle Fund with the hope of nurturing talents, exploring users’ needs and becoming the first one to develop an Internet car model in China. Besides the cooperation with SAIC MOTOR, Alibaba also teamed up with Lifan Group and invested 5.2 billion RMB to support its establishment of an entire industry chain: from battery to power engine, from electric control system to charging equipment, etc. When everybody seems to be rushing to this market, Alibaba, a giant e-tailer, must be seeking for a piece of the pie.
(3) Uber & Tesla
Regardless of the series of protests against Uber around the world, Uber’s CEO Travis Kalanick promised that Uber would buy 500,000 Tesla’s unmanned EV. As a matter of fact, Uber collaborated with Tesla and carried out test drive service as early as last June in Shanghai. Although Tesla and Uber are burgeoning in overseas market, the bold truth is that they might be facing the same situation here in China. In this case, it is probable that they will further their cooperation with each other in the near future.
(4) Baidu & Uber
Baidu is the strategic partner of Uber China, so it follows that Baidu allows users of its map and navigation service to hail Uber’s cars within the app. Recently, Baidu successfully carried out a test drive of its unmanned car model, which is a great step for Baidu to enter the smart vehicle market. With the spread of new energy vehicles, unmanned driving technology has also grown mature. Under this circumstances, it is likely that Baidu will team up with Uber, known for its eye-catching marketing campaigns, and provide unmanned car-hailing service one day.
(5) LeTV Superauto & Aston Martin
LeTV Superauto is also quite ambitious: it aims to become the first Internet company to manufacture automobiles. Besides it cooperation with BAIG, LeTV also cooperated with Aston Martin to carry out its own automobile manufacturing plan. Recently, Fu Zhenxing, an expert in EVs, joined LeTV Superauto as vice president, and will certainly give us more surprise in the near future.
(6) NextEV & Various investors
The investors of NextEV varies from Sequoia Capital to Hillhouse Capital, from JD to Tencent, from Yiche.com to AutoHome, etc. SuperCar, a great rival of Tesla and whose performance can be compared to LaFerrai and McLaren P1, is expected to be the first car model of NextEV. However, the SUV model, to be priced at 200,000 USD, is the first mass-manufactured car model of NextEV. To be honest, I really look forward to the quality and performance of the SUV model.
2. Why is everyone eyeing on the new energy vehicle market?
If you look closer, you might find that these players in the new energy vehicle market can be roughly divided into two groups: Internet companies and ride-sharing platforms, and that players of different groups also have different considerations.
(1) Internet giants
a. The larger picture
Internet companies are inclined to enter every burgeoning market once they see opportunities out there. Previously, Tencent has already gathered a fair amount of resource by investing in NavInfo, Yiche.com and even developing a driver assistant product called Tencent Interliride Link. As a matter of fact, Alibaba set up the 1 billion RMB fund more as a signature. However, we shall not neglect the potentials of Internet companies, since one they find real opportunities, they will do everything they can to grab this market. To give you an example, whenInternet giants saw opportunities in the car-hailing market, they cashed in to dominate the market.
b. The game changer
With the development of unmanned driving technologies these years, huge potentials are released in developing smart vehicles and new energy vehicles. Baidu just finished testing its unmanned driving technologies last November, while Google has also been developing unmanned driving technology. However, it seems that there is still a long way to go to win consumers’ trust. Statistics suggest that 50% of respondents are worried if unmanned driving technology is really safe enough.
(2) Ride-sharing platforms
Ride-sharing platforms, however, are more suitable to enter this market. Last May, Yiche.com carried out an “E-car plan” and vowed to develop hundreds of new energy cars along with BAIG. Yiche.com’s CEO Zhou Hang even predicted that half of vehicles manufactured by Yiche.com will be new energy vehicles in three years. Last June, Didi Chuxing also teamed up with BAIG, SAIG and other car-rental companies and carried out a “100,000 EV plan”. Uber China was a little bit late and didn’t have any moves until last December.
Why are ride-sharing platforms all rushing to the new energy vehicle market?
a. Responding to the government call and fighting against smog
During last year’s two sessions, Chinese premier Li Keqiang reiterated in his government report, saying that the government is going to continue to “promote new energy vehicles, put an end to car pollution and improve the quality of automobile oil”. While the government is upholding new energy vehicles, ride-sharing platforms will give a very good impression to the government if they take the lead and encourage passengers to travel by new energy vehicles.
b. Reducing operation cost and diversifying their library of automobiles
Traveling by new energy vehicles will both cost driver less money but also lower the travel fees of passengers. Besides, there are no limits for new energy vehicles, so drivers of new energy vehicles can avoid the bother to wait and 100% get their cars licensed.
c. Getting rid of the impression as “unlicensed”
Although Didi Chuxing managed to be the first one get cars on its platform licensed, most other platforms failed to do so. As a matter of fact, most local government are actually tightening their control over cars on their platform, and therefore these cars remain unlicensed makeshift cabs. New energy vehicles, however, might provide ride-sharing platforms a wager when negotiating with the government.
d. Diversifying their revenue models and expanding the industry chain
Moreover, potential new energy vehicles buyers will have the opportunity to drive a new energy vehicle via ride-sharing platforms and then make the final decision. As long as they are satisfied with the ride, they will be quite convinced to buy one of their own. Such logic might be applied also to other areas, such as automobile finance, second-hand cars, etc.
3. The tortuous road ahead
Despite the huge number of advantages of new energy vehicles, there are two major obstacles:
(1) The lack of charging stations
This is the most fundamaental shortnesses of new energy vehicles. At present, charging stations are build mainly by enterprises who adopted different standards. Tesla has its own charging stations, while BAIG also has its own charging stations. As a result, most new energy car drivers find it hard to get their cars charged.
(2) The lack of public awareness
It takes time for consumers to get accustomed to the idea of green energy and encironmental protection when travelling, just as it takes time for Chinese to get use to green light bulbs instead of incandescent light bulbs. Besides government's incentives, those who have already realized its importance should get these ideas across to their friends and relatives.
In conclusion, Alibaba, Tencent, Baidu, LeTV and Uber’s attempts in the new energy vehicle market are all strongly based on their own advantages. The road ahead is still far away, and those who seize the opportunity will ultimately stand out.
[The article is published and edited with authorization from the author @ThingsAboutAutomobiles, please note source and hyperlink when reproduce.]
Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.