Can Tesla Beat Didi and Xpeng?
►When technology has shown proven progress people will have more openness to the idea of taking a ride with a robotaxi.
►The future of autonomous driving is still unknown but is sure to lead to plenty of exciting milestones ahead.
On July 15th, EqualOcean and the Shanghai-based accelerator XNode held a live webinar on the topic of the auto industry. We invited corporate innovation expert, Bob Wang from XNode, and Joe Sun, who is the founder of XID Lab and a former Chief Experience Designer at Didi.
We see the launch of commercial ride-hailing service as a key step toward building a long-term disruptive business. Companies such as Waymo, Pony.ai, AutoX and DiDi, among other pioneers focusing on Robotaxi, have reached some milestones in 2020. What are the reasons they chose to enter the market? What are the advantages and challenges?
When asked this question, Joe summarized three kinds of group players who are interested in robotaxis: technology companies, leading carmakers and autonomous driving companies.
According to Joe, the robotaxi is coming, sooner or later, and all the players have foreseen great commercial value and social impact from the robotaxi businesses. Consumers will benefit from this as robotaxis become more accessible and efficient. When that day comes, a big part of today’s mobility demand will be fulfilled by robotaxi. It will be the future form of the ride-hailing we see now.
Bob’s answer offered outlined another way of thinking. He mentioned that one of Roland Berger’s recent reports showcased two key drivers in the current mobility market, namely technology progress, and consumer willingness.
Technology progress – this concerns the question of the right timing to start testing the robotaxi business and challenges being another crucial deciding factor.
The willingness of consumers – at the same time, mass consumers are generally not familiar with the concept of autonomous driving; but when technology has shown proven progress people will have more openness to the idea of taking a ride with a robotaxi.
How are autonomous driving companies building out their businesses and what are the ways they can monetize?
Bob talked to us regarding two scenarios in this area: one is a ‘determinative’ scenario, the other is an ‘open road’ scenario.
An example of a determinative scenario is that, for autonomous driving companies, questions of logistics for transportation or parking started much earlier compared to other functions. Some players in the industry have already found a way to attain monetization here.
On the other hand, an open road scenario needs testing and ample feedback from the market. One example being Didi, which recently started offering robotaxi in Shanghai but did not open it to the general public. Overall, it still a bit early to comment on this topic.
Joe presented us with a vivid picture of a possible interaction in the current taxi-taking scenario. It mimics the experience of taking a robotaxi if no one were to talk to the driver during a taxi ride. In the cost structure of taxi-taking, a big part of the fee goes to the taxi driver. If and when autonomous driving replaces the driver, that will mean the cost of autonomous driving will be significantly lower. Removing the cost of the driver (as uncomfortable as it may first seem) makes for a good deal.
Tesla Model 3, the killer product, has outstanding pricing and better performance compared to some leading ICE (Internal Combustion Engines) cars, not to mention its autopilot and Advanced Driver Assistance System (ADAS) features. Chinese EV markers like NIO and Xpeng are following suit, hoping to change how we think about cars. How do you see EV makers' efforts in autonomous driving? And why do you think many manufacturers are at L2-L3, and many tech/Internet companies are at L4-L5?
Joe offered his previous experience working at Xpeng as an example. He Xiaopeng, founder of Xpeng (and UC Web), who Joe refers to as “a typical product manager from a big Internet company,” believes that technology can change the whole industry.
According to Joe, ‘EV (electric vehicle) companies have a natural advantage in the autonomous driving application. Most important is many EV companies are new; they don’t have the historical burden. Some of these new tech companies, like Tesla, have strong DNA in technology development, which is more important than the technical proficiency per se. Under this logical rubric, the traditional car companies move at a slower pace. However, efficiency is often the key.
Bob gave us an example concerning Beijing Automotive Industry Corporation (BAIC)’s blueprint in 2017, to make mass production of L3 cars around 2019, with the plan that car manufacturers would be in L2-L3, and tech/Internet companies mostly in L4-L5 around 2021. However, just one year after, in 2018, they changed gears. They are currently focusing on L2 and L2.5, and aim to achieve mass production of L3 in 2022. It offers real-life scenarios from traditional carmakers and industry.
Furthermore, Bob suggested the reason behind technology companies’ current stages being L3-L5. Generally speaking, L3 and L4 attract more VCs to startups from an investment point of view.
Joe provided another point – which is that typical technology companies like Tesla and Waymo are much more attractive to the talents in the field. For example, Audi A8 and Tesla Model 3 both are under L3, model 3 is however seems smarter. Although tech companies are often ambitious – and sometimes too ambitious – the core values involved, and the autonomous driving team, etc. can drive them forward.
Special question for Joe: Can you introduce Didi’s autonomous driving strategy and practices a little more? What will this concept/business mean to Didi as a whole, regarding its valuation?
Joe’s extensive experiences at Didi offered a different outlook. Didi was low-profile regarding autonomous driving – until the recent news of its autonomous driving subsidiary emerged. Considering its platform and its drivers, it is still a sensitive issue all around. For the autonomous driving part, Didi is still in the stage of early commercialization. However, it is not far behind its counterparts. Due to Didi having the biggest data of mobility services in kilometers and in hours globally, Didi’s autonomous driving team will rise to the very top when the technology is ready for commercialization.
Moreover, the data belongs to Didi instead of its autonomous driving team. In all possible scenarios, if the subsidiary does not perform well – as Didi is considering shaping the subsidiary as one separate company – Didi would have to spend more money. It would have to invest in the subsidiary to support it or buy another autonomous driving company to ensure success. Hence, the market will need considerable time to see the real value of the company.
China's vibrant tech circles spawned dozens of billion-dollar enterprises in the past few years – and unavoidable failures. Companies like Drive.ai and roadstar.ai failed to deliver what they dreamed of. How do you see the challenges ahead, especially in the auto industry, and what's your advice to young startups?
On this topic, Joe and Bob offered us some carefully considered wisdom. From Joe, we learned that not every autonomous driving company is created equal. In other words, not every company in this sector is needed. Young startups should be thinking from the commercial point of view and making friends with industry players that can help with commercialization.
Bob suggested that everyone (all companies) in the ecosystem are in it together, for the time being, confronting the challenges out there. Insights from XNode’s close partner, NIO Capital, hold that “robotaxi and mobility services will be booming, and traditional OEM will keep losing profits.” In one way or another, huge opportunities for tech startups, and new players gather around three ways of being ready: stay focused, don’t directly compete with a giant, and get support from governmental organizations.
Special question for Bob: In connection with autonomous driving startups and PE/VC markets, what changes have you have been witnessing in the last few years? What would you expect from the rest of 2020 and the following years?
According to Bob, despite autonomous driving has become a hot topic among car companies, investors, and governmental organizations, there is currently a decreasing trend in fundraising based on a few reports. Some autonomous driving’s subdomains, such as AI chips and algorithm creation, are gaining more investments compared to the Advanced Driver Assistance System (ADAS). Nevertheless, the future is still unknown. With people’s needs around traveling and exploring likely to remain constant, the topic of autonomous driving will stay vibrant.
The two auto experts in this WIM webinar relayed ample knowledge and perspectives on the central topic. Yet, as both Bob and Joe mentioned, it is still too early to say anything concrete. The future of autonomous driving is still unknown but is sure to lead to plenty of exciting milestones ahead.