“Every year is the ‘Year of the Internet of Vehicles’ in China.”
Upon seeing reports about the Internet of Vehicles, one cannot help but feel this way. This is certainly not a good evaluation. Because it means starting over every year. Since the concept of the Internet of Vehicles was first mentioned in China in 2008, and major car manufacturers began launching in-car systems after 2010, every year we can see grand forums, salons, and press conferences about the Internet of Vehicles, along with various impressive new concepts.
From 3G to 4G, from small screens to large screens, from voice recognition to artificial intelligence, from new energy to autonomous driving, almost every new technology has injected a shot of adrenaline into the Internet of Vehicles in China. In fact, rather than saying that new technologies have promoted the development of the Internet of Vehicles, it is more accurate to say that the so-called Internet of Vehicles is ‘leaning on’ new technology terms to boost visibility for various products. Developing a complete in-car system is extremely difficult; its complexity far exceeds that of mobile phones, and the challenge lies in resource integration rather than breakthroughs in individual technologies. Here are some core issues:
The in-car system must be compatible with the vehicle, and the production and lifecycle of automotive electronics differ significantly from those of the electronics industry (especially the mobile phone industry). In terms of electronic component procurement, in-car systems cannot match the procurement volume and update speed of mobile phones. Huawei and Xiaomi have sales in the tens of millions or even hundreds of millions, while LeEco, which just started making mobile phones, managed to reach 4 million sales overnight; this scale is completely unimaginable in the automotive industry.
The hardware requirements for in-car systems are completely different from those for mobile phones, including startup time, temperature tolerance, shock resistance, signal reception stability, etc. Can you imagine a vehicle having traveled half a kilometer while the in-car screen is still stuck on ‘starting up’ and the navigation is still locating? In-car systems also need to be compatible with the vehicle itself, connecting to the CAN bus, power supply, etc., and must be an integral part of the vehicle.
The software requirements for in-car systems differ greatly from those for mobile phones. The most obvious difference is in the interaction methods. Mobile phone users may feel they can glance at the screen anytime and easily reply to a WeChat message, but during driving, the screen is on the driver’s right side, allowing for at most one-handed operation. A half-second distraction could cause a traffic accident, so at most one tap is allowed. However, replying to an emoji on WeChat requires three steps. From this perspective, a large screen may not necessarily provide a safer operating interface.
Why is the Internet of Vehicles facing difficulties in China? Before 2010, the Internet of Vehicles, as a new concept, was seen as a tool for the Chinese automotive industry to overtake Europe, America, and Japan. However, many years have passed, and only a small amount of popularization work has been done, evident in the few frames of in-car screen footage in automotive advertisements. In the car purchasing process, traditional factors such as brand, price, power, and fuel consumption remain the primary considerations, while the in-car system is merely a superficial decoration.
Why do these difficulties arise?
The external factor is the real competitor of in-car systems: mobile phones. As mentioned above, mobile phones have advantages in both price and performance. Moreover, unlike users in other countries, the Chinese market has a culture of mobile phones first, followed by cars. The younger generation first encounters mobile phones and then car systems. Users view car systems through the lens of their experiences and price perceptions of mobile phone systems; thus, mobile phones not only defeat pre-installed in-car systems but also pose a significant threat to aftermarket navigation devices. While automotive sales continue to rise, the market share of aftermarket products is steadily declining.
Faced with the external strong competitor, manufacturers typically adopt one of three strategies.
The first is the conservative approach.
This is mainly seen in joint venture brands, such as OnStar. They emphasize the differences between in-car systems and mobile phones, segmenting the two and stressing safety and reliability. This approach seems reasonable, but if followed through, the core functions would be safety-oriented, such as collision warnings and tracking, while infotainment is neglected or weakened, even navigation is not a core function. This results in significantly reduced usage and coverage of such in-car systems. Low usage is because safety functions are not often perceived by users; in Chinese road conditions, excessive false alarms could lead to owner dissatisfaction. Low coverage is because such functions are costly and can only be installed in high-end luxury models; unless there are major breakthroughs in technology, widespread adoption is very difficult. Additionally, the core technology is controlled by foreign brands’ local R&D centers, and implementation in China requires multiple processes; even operational adaptations after installation need coordination, let alone customization for the Chinese market.
The second is the imitation approach.
This is the current mainstream, mainly among mid-range self-owned brands and aftermarket manufacturers. They look at what is new in mobile phones and immediately try to transplant it into in-car systems, making some adaptive developments. For example, moving the 4G module to the in-car system, bringing voice assistants to the in-car system, and transferring large screens to the in-car system. However, as mentioned before, adapting to the in-car environment is not straightforward. Objectively speaking, the imitation approach has made the greatest contribution to the infotainment of current in-car systems. However, they can only create systems that are ‘more fun’ than other in-car systems but cannot truly defeat mobile phones. In fact, many of these system suppliers are also suppliers of mobile phone and tablet systems, merely adding another production line or branch version. This also determines that no matter how the upper levels think of making efforts, the foundation remains weak.
The third is the surrender approach.
The surrender approach suggests that since they cannot compete with mobile phones, they might as well let mobile phones into cars. A typical example is Baidu CarLife, which mirrors the mobile phone screen onto the in-car screen. This means the in-car system only needs to do one thing: provide a large screen.
This is not only the idea of Baidu and other internet companies but also the thought of automotive engineers. They are indeed frustrated by the complex human-machine interaction requirements of in-car systems. By adopting a mirroring solution, automotive engineers can focus on their own tasks while leaving infotainment to mobile apps. However, the problems will not resolve themselves. To illustrate a few UI examples, as mentioned earlier, the in-car screen is on the center console (HUDs are not yet mainstream), and the screen is actually on the driver’s right side. If this app design has a menu bar or buttons on the left side, they will be difficult to see. The in-car screen will be exposed to sunlight during the day, so in addition to the screen glass needing to be anti-reflective, the interface background color must have a significant color difference for easy distinction; at night, it must prevent the screen from being too glaring. In-car operations should be minimized, so drag-and-drop scrolling should be replaced with clicks, and there should be clear click buttons. These differences mean that to create an app suitable for in-car systems, the interface almost needs to be reconstructed! So, how many apps will make such modifications for a niche market?
The internal cause of the Internet of Vehicles’ difficulties is the inability to establish an effective ecosystem.
The traditional Internet of Vehicles ecosystem includes car manufacturers, parts suppliers, aftermarket manufacturers, telecom operators, map suppliers, service providers, etc. In recent years, internet companies have started trying to take the lead role from the service provider role, such as Alibaba and Baidu.
Technically speaking, for in-car systems to operate effectively independently from mobile systems, they must provide services that mobile phones cannot offer, such as security, while also lowering costs to make them acceptable to users, ensuring that services can genuinely cover the market. From this perspective, the core of the Internet of Vehicles still lies with the OEMs. This not only refers to high-tech technologies like ADAS but also means that without OEMs providing basic services, the efforts of other companies will be in vain. For instance, Ximalaya has been trying to expand its automotive user market, but if the in-car system cannot solve traffic issues, and the mobile phone’s performance is not ideal, they will attempt to push in-car hardware. Then they encounter the common problem of all in-car hardware: various models have different cigarette lighter sockets; how do they connect power? How do they install? UBI for car insurance is also a recent hot topic, leading to many OBD products. But can OBD truly record driving behavior and collision records accurately? If only considering speed and trajectory, Baidu Maps has done very well; however, if strict determination of collision direction, angle, and intensity is required, it may still need TBox to solve. A poorly designed OBD could easily detach on bumpy roads.
Models and value orientation influence the development of the Internet of Vehicles industry.
Now let’s discuss models. The traditional industry model is led by car manufacturers or Tier 1 suppliers, organizing others as Tier 2 and Tier 3 suppliers, forming a supply chain, with each level charging the upper level, and the car manufacturers ultimately charging users. For car manufacturers, selling cars is their core, and automotive sales are the performance metrics that each level of management bears. The Internet of Vehicles is essentially a gimmick for selling cars.
For car manufacturers, investing tens of millions in developing a chassis or transmission may yield no results even after 2-3 years, while the leadership’s term is already halfway through. However, the Internet of Vehicles is a shortcut; they can simply add an app, and today they can discuss strategic cooperation with this internet giant, and tomorrow with that international brand for joint development, at least gaining sufficient media exposure. But in reality, when it comes to integrating the supply chain, OEMs not only lack understanding but, more importantly, lack true determination and vision. What does true determination mean? It means setting unified standards for the Internet of Vehicles, from hardware interfaces to data formats, achieving openness. However, OEMs treat the Internet of Vehicles as a gimmick, competing with each other, making their systems representatives of their respective brands, further causing lower-tier suppliers to stand in their own camps, not only failing to unify but exacerbating fragmentation.
Because of sales orientation and marketing orientation, the leading departments of OEM in the Internet of Vehicles systems are often the marketing departments, who care more about the topics of annual A-level auto shows than about resource integration. The weaker the OEM is, the more they hope to play tricks and pull stunts on the in-car system, while those with brand and technical advantages, who do not worry about users, tend to be conservative, aiming only not to fall behind. This is also the reason why the Internet of Vehicles is popular but not widely adopted, seemingly bustling yet with low penetration.
For aftermarket manufacturers, they genuinely wish to provide products for a unified market, but core interfaces and protocols are in the hands of car manufacturers. Solutions provided by Shenzhen manufacturers through cracking methods can either only be customized for specific models or only offer simple services, and their comprehensive capabilities still fall short of mobile phones. Although the aftermarket seems to have volume, its segmentation is even more severe than that of the pre-installed market. Because the aftermarket requires vehicle modifications, channels become key factors; most of the profits of aftermarket manufacturers are also taken by 4S stores and beauty shops. The higher the system cost, the higher the channel markup, the lower the user acceptance, and the longer the capital turnover cycle, therefore aftermarket manufacturers are more willing to provide simple low-cost solutions, and the technical completeness of their products is relatively low.
For telecom operators and map suppliers, the automotive market is still a relatively small share of the overall market; they are happy to participate but will not invest significant efforts to lead integration.
Internet companies, on the other hand, are confused; they initially thought they had opened up a vast blue ocean, only to find that the so-called blue ocean is divided into fragmented small pieces. For example, Alibaba’s cooperation with SAIC is indeed with the largest automotive group in China, but it is further divided into SAIC Volkswagen, SAIC General Motors, and SAIC self-owned brands, and the relationships between these three are much more complex than those between Taobao, Tmall, and Alipay. They then realize that the so-called small pieces are not ponds but swamps; the development models of internet people do not align with those of the automotive industry. For instance, not just one car manufacturer wants to cooperate with WeChat to integrate WeChat applications into the in-car screen. But upon careful consideration, achieving safe and convenient operation is not that simple. The best method is not through touch screens but through steering wheel buttons. This involves signaling from the steering wheel buttons. From the WeChat team’s perspective, the entire automotive market is just one of many looking to cooperate with them; however, from the car manufacturers’ perspective, they all want to feature WeChat in their cars as a unique highlight of their brands. The WeChat team cannot possibly negotiate cooperation with each car manufacturer separately, and even the largest SAIC Group has a user base much smaller than that of China Merchants Bank or Wanda, making the development complexity much higher.
The True Future
So, how can we solve the difficulties of the Internet of Vehicles in China, and what is the true path for the Internet of Vehicles?
To answer this question, we must first set aside technical details and the current relationships in the industry chain to look at the true user needs. The difficulties of the Internet of Vehicles cannot be resolved by any one new technology, such as voice recognition. Autonomous driving will certainly change driving habits drastically, but that day is still far away; for now, it is merely a concept. The problems of the Internet of Vehicles stem from the bad habits of the industry chain itself, and we cannot expect them to change on their own.
For car owners, an ideal in-car system is not just a navigation system, a large screen, or a rescue phone. A true in-car system is the brain of the car and a customer service center; users do not need to become automotive maintenance experts; the system can proactively arrange maintenance plans and repair solutions; users do not need to be expert drivers; the system can suggest suitable routes based on road conditions and the owner’s itinerary; users do not need to be DIY experts or hackers; the system can actively supply vast amounts of music, chat programs, travel suggestions, etc. This ideal in-car system is not only powerful but also appropriate. Appropriate means it can provide customized and personalized service items and content, and the price users pay is also reasonable. If a user drives 10 hours a day, they pay for 10 hours; if they only drive for 1 hour, they only pay for 1 hour. Pay as you go, just like using gasoline.
The in-car system is different from the engine or tires. Once a new car is sold, the mission of the car manufacturer is basically completed. Once a new car is on the road, its price immediately drops by 20%. However, the value of the in-car system lies in its usage; only when it is used can it serve better; the more it is used, the greater its service value. Therefore, the charging model for in-car systems must extend backward, and we cannot expect car owners to pay for features they may not use in the future at the time of purchase. For the currently sales-oriented automotive industry, this ideal in-car system is unattainable, not due to technology, but due to business logic.
The answer is clear. To create an in-car system and Internet of Vehicles system that meets user needs, the key lies in changes within the automotive industry itself. Beyond sales and manufacturing, a new type of automotive operator must emerge. This new role will meet user needs, change business logic, and reconfigure the industry chain.
Among the existing industry chains, who is most likely to become a reliable automotive operator?
It could be Didi + Tencent, as Didi has expanded its business into designated driving, test driving, and maintenance. Didi can start from a driver-end mobile app and gradually extend to in-car systems; starting from test driving services that connect with car manufacturers, it can gradually evolve into a major customer for car manufacturers; it could be Yidao + LeEco, with Yidao insisting on dedicated vehicle services and continually strengthening its single point while gradually starting to produce customized models and seeking horizontal expansion; while LeEco provides funding and resource support behind it. It could also be Shenzhou Car Rental or large dealership giants…
However, it is more likely that none of the above will be the case; these are all pioneers, and the true automotive operator is still in the making. But it is certain that OEMs, still entangled in sales performance, will not be able to shift their mindset to become automotive operators. Meanwhile, aftermarket navigation device manufacturers will be integrated and digested, just like the small software companies that have been swallowed by BAT. Telecom operators and map suppliers will be pipeline-oriented; their key market will still be in the mobile phone field, but they will develop many special services for automotive operators.
Future-oriented Internet of Vehicles operating system
The Internet of Vehicles serving automotive operators requires the following three basic subsystems: vehicle management system, user management system, and service management system. The vehicle management system includes vehicle identity and parts library. Vehicle identity is not just the VIN code but integrates VIN code, driving computer number, and license plate number into a unique identifier. The vehicle identity number is actually the system number of the vehicle’s in-car system, which is also the unique number of that vehicle in the entire operating system. Each vehicle has two accounts: value points (Value) and balance points (Amount). Value points represent the vehicle’s value (residual value), while balance points represent the vehicle’s operational earnings. Value decreases with vehicle use and increases with maintenance and upgrades. Balance is earned through vehicle use from the user and decreases due to purchases of vehicle maintenance services and other consumables like fuel, parking, and insurance.
Clearly, the goal of automotive operators is to maintain the value points of the vehicle while continuously increasing the balance points.
The user management system includes user identity, similarly having two accounts for users: credit points (Credit) and balance points (Amount). User credit includes driving experience, driving style, violation history, etc.; balance points represent the user’s ability to purchase car wash services. If the user rents the vehicle, their better credit will lead to lower usage fees. The system calculates the usage fee for each use based on vehicle usage time (or mileage) * rate, transferring from the user’s balance to the vehicle’s balance, while adjusting the vehicle’s value points and the user’s credit points based on actual wear and tear. If user A rents a vehicle to provide dedicated car services for user B, the system deducts balance from user B’s account and allocates it to user A’s balance and the vehicle’s balance account. Similarly, the actual usage situation adjusts the vehicle’s value points and user A’s credit points.
Whether user A or B, they only need to pay for their driving services without worrying about the costs of fuel, parking, maintenance, repairs, or insurance. All these expenses are uniformly covered by the automotive operator from the vehicle’s balance system, which faces the third system: the service management system.
The service management system includes service provider management systems and service recommendation systems. All other roles in the original Internet of Vehicles ecosystem belong to service providers, including: automotive manufacturers, automotive maintenance chains, parts suppliers, insurance companies, gas stations, parking lots, music content providers, travel companies. Automotive operators conduct group procurement from service providers. Then, through data analysis from service recommendations, they arrange specific service plans for each vehicle. For instance, if the automotive operator wants a particular vehicle to have higher value, they can allocate funds from the balance account to provide an additional year of music service; once the service expires, this added value automatically returns to zero.
Since automotive operators have very clear goals: to maximize vehicle value and profit, they will naturally choose the most reasonable technical solutions. Whether it’s 4G networks, voice control, or ADAS, hybrid power, it will no longer be technology for the sake of technology. The user’s mobile phone is the user’s phone, part of the user’s system, which can cooperate with the in-car system, for example, by authorizing identity to unlock the door. However, the mobile phone can never replace the in-car system; this is not a technical issue but a model issue.
Here, the in-car system represents the vehicle’s value and the wealth it creates; automotive operators operate the vehicle through the in-car system, providing services. The in-car system is not hardware; hardware is merely a service provided by a certain service provider; the in-car system is the connection relationship and connection history between the car and people, the car and other cars, and the car and various services.
It is data.
Data is the future of the Internet of Vehicles.
– The End –
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