Electrification and dual-carbon, chip supply failure and parts power
Author | Chen Qingtai Editor | Jane Produced | Bangning Studio (gbngzs) | Editor’s Note
“In the process of global automobile electrification, China’s automobile industry has taken the first step and achieved some first-mover effect.
New energy vehicles are moving from the primary stage of development to the middle and advanced stage, that is, from the era of electric 1.0 to the era of 2.0 characterized by networking and intelligence. ”
On October 11, 2021, at the Global New Energy and Smart Vehicle Supply Chain Innovation Conference, Chen Qingtai, chairman of the China Electric Vehicle Hundred People’s Association, delivered a keynote speech on “Thinking about the direction of China’s automobile industry in the next stage”.
His speech involves three aspects: electrification and dual-carbon issues; Challenges and opportunities brought by chip supply failure; The bottom of the automobile power is the power of parts.
He believes that, first, China’s car ownership is still growing rapidly. Compared with developed countries, the clean transformation of road traffic faces greater pressure. Therefore, China’s automobile electrification process must be faster than other countries.
Second, the second half of the automobile revolution is based on the networking, intelligence and digitalization of high and new technologies, in which chips and operating systems, as the basis of digitalization, are the focus of future competition. China must seize the opportunity of the chip crisis and break into the global chip supply chain.
Third, the future automobile will subvert the traditional automobile, making more than 70% of the traditional parts system face reconstruction. China needs to support the automobile power with a strong component power and rewrite the history of hollowing out technology. The following is the summary of his keynote speech, which is sorted out by Boning Studio according to the recording and has not been checked by me.
・ About electrification and double carbon
Carbon peak and carbon neutrality have become the global consensus, and become the goals to be achieved by all countries according to their respective timetables and regions. Compared with developed countries, China’s road traffic cleaner transformation is facing greater pressure, mainly because the car ownership in developed countries has stabilized, while China’s car ownership is still in the growth period for a long time in the future.
In China, road traffic is the third largest source of carbon emissions, accounting for about 10% of the total carbon emissions. But the problem is that most of the other energy-intensive industries have reached or are close to reaching the peak of carbon emissions, while the car ownership is still growing rapidly.
A survey report of China International Finance Corporation pointed out that from 2008 to 2018, China’s traffic carbon dioxide emissions increased by 580 million tons, of which 510 million tons came from road traffic, accounting for 88% of the total increase. The reason is that China’s passenger car ownership has increased by 557% (more than five times) in the past decade, which is the main driving force for the growth of carbon emissions. In the foreseeable future, China’s car ownership is still in the growth period, increasing the pressure of emission reduction.
China’s road traffic development is at an important crossroads. In 2020, China’s car ownership has reached 270 million, but the number of 1000 people is only 192. The United States ranks first in the world, with 837 vehicles per 1000 people. The population density of Japan is 519. Malaysia has 433 cars, Russia 373 cars and Brazil 350 cars, which are equivalent to China’s per capita GDP, that is, US $10000.
From the perspective of global development, with the growth of per capita GDP, the consumption trend of personal mobility is highly similar. China’s per capita GDP is still growing year after year, and the total number of cars still has the prospect of doubling.
If the new population is still dominated by fuel vehicles, it will cause a huge disaster. If the new part is zero-emission or ultra-low emission vehicles, and the stock of vehicles are gradually turned to electric when they are updated, then the road traffic emission target can be achieved.
To this end, China’s automobile electrification process must be faster than that of other countries. We must formulate a two-carbon schedule for road traffic according to the national carbon peak and carbon neutral schedule, and take corresponding measures to promote the realization.
Another important issue is that vehicle electrification must be based on green energy. At present, China’s wind, light and other renewable energies are in a good state of development, but to complement and match these intermittent renewable energies, electric vehicles involve the docking of the energy system and the transportation system, the support of technological innovation, the guarantee of infrastructure, and the specifications of standards and regulations. This is a huge system engineering. We need the government to take precautions, plan, deploy and coordinate in accordance with the time node of achieving carbon peak and carbon neutralization in China.
▶ About chip supply failure
In the process of global automobile electrification, China’s automobile industry has made remarkable achievements with its first-mover advantage.
But this is only the first half of the automobile revolution, and the second half is based on high-tech networking, intelligence and digitalization. It is full of opportunities and challenges, and chips and operating systems, as the basis of digitalization, will be the focus of competition.
China’s chip companies, software companies, Internet companies and communication equipment companies should take this development trend seriously, go to the front stage and meet this rare opportunity for innovation and development. Cross-border integration, complementary advantages and joint forces with automobile enterprises to jointly achieve the grand goal of becoming a powerful country in automobile industry.
Under the impact of the COVID-19, our weakness in the vehicle chip supply chain was soon exposed, which is also a weakness in the global supply chain. Over the past 30 years, the global semiconductor industry has become increasingly concentrated. Its advantage is to achieve continuous leap in terms of improving product performance and reducing costs. However, this excessive concentration makes the global chip industry suffer from supply cuts of different scales and duration when natural disasters, infrastructure obstacles, or geopolitical frictions occur in a region or country.
This year’s epidemic concentrated on the risks brought by it.
China is the world’s largest auto producer and marketer. We should learn from our mistakes, take a long-term view, and have a proper arrangement and deployment. The design of automobile chips in China started relatively late, and the localization rate of key chips such as engine, chassis and body control, which are related to automobile safety, is only 3%. At the same time, the certification standard of vehicle specification level is not in our hands, and users have low confidence in domestic chips.
But on the other hand, China has the largest and most active smart car market, which is leading the innovation of smart car chips. Domestic auto companies, especially the new force of car manufacturing, have a fast speed of intelligent upgrading of their products and high requirements for chip iteration progress. The chips of major chip companies in the world are almost all Chinese brands that are first loaded and listed.
In recent years, China’s chip design enterprises have grown rapidly, and new breakthroughs have been made in automotive chip design. Under the situation of “stuck neck” in the traditional chip supply chain, domestic automobile enterprises have increased their willingness to choose domestic enterprises to develop and design chips.
Fortunately, after the domestic chips are loaded in batches, the verification effect is very good and can be loaded for use, which strengthens the confidence of both the supplier and the buyer in the domestic chips. In recent years, a number of domestic chip companies such as Huawei, Horizon and Black Sesame have laid a good foundation, and the speed of iteration is fast. Some experts say that the speed of chip iteration of Chinese enterprises is about two or three times that of foreign enterprises.
At the same time, domestic chip companies have the characteristics of fast response to the needs of auto companies and strong interaction ability with auto companies, which can well support the continuous and rapid pace of innovation of domestic smart cars. As a latecomer, Chinese chip enterprises have encountered a difficult barrier to break through in the innovation and development – the barrier to enter the market – how to break through the solidified supply and demand pattern of the chip market?
The chip crisis that began last year has two situations:
First, the supply of traditional chip supply system is insufficient;
The second is that the global industrial pattern of high-performance on-board computing chips has not been solidified. These two factors open a window of opportunity for China’s newly established car chip enterprises to rise in the competition.
We must seize this rare historical opportunity to break into the global chip supply chain. The economic and technological value of intelligent vehicle control system software can almost be compared with that of PC and later smart phone software systems.
China’s ICV is in the forefront of the world in terms of technical capacity, industrial scale and innovation activity. At present, all new energy vehicle enterprises are developing operating systems independently or in cooperation with professional software companies, and have accumulated some experience to lay the foundation for creating the Chinese version of intelligent vehicle operating systems.
In the future, smart cars will come in many forms, but the procedures and actions of the operating system should be similar or the same, that is, drivers with driving licenses can drive different brands of cars safely without further training.
Therefore, the basic software that can meet the needs of different scenarios, connect with diversified software and hardware, and adapt to the operating systems of various vehicle types is the research and development direction. The smart car operating system has not yet formed a unified pattern. In the process of operating system unification, all enterprises have the opportunity to compete and win.
It is very difficult to develop such an operating system. China is the country with the most active innovation and the most urgent demand for diversity of users of intelligent connected vehicles. It is also the country with the largest industrial scale and relatively complete industrial chain. It is not lagging behind in terms of Internet, Internet of Things, big data, cloud computing, voice recognition and other related aspects of basic software. If we grasp it well, both the demand side and the supply side have the conditions to develop the autonomous and controllable Chinese version of intelligent vehicle operating system that is more suitable for our needs.
About the power of parts and components
From the perspective of automobile development history, every important breakthrough in automobile technology is the result of close cooperation between automobile and parts enterprises. Generally speaking, vehicle enterprises have made great contributions to technology integration, but most of the core technologies and key components are from parts companies, such as gasoline injection, turbocharging, anti-lock brakes, airbags, radial tires, etc.
In the era of fuel vehicles, our government and enterprises pay more attention to the whole vehicle and production scale, and pay less attention to research and development and spare parts, and invest less. This has caused the scale of the automobile industry to increase, but left a heart disease of hollowing out technology, which has not turned over yet.
New energy vehicles are a new beginning, and they are rewriting history. The industrialization of electric vehicles in China is a step ahead. In the absence of foreign mature technologies for reference and mature parts for purchase, major enterprises attach importance to R&D and parts, and invest unprecedented human, financial and material resources.
Cross-border industries and enterprises see opportunities and enter on a large scale. Cooperate with vehicle enterprises to build new energy automobile industry chain quickly. In the field of battery, motor, charging pile and other parts, a number of specialized companies have grown up, such as Ningde Times, Guoxuan, Funeng, etc. in battery enterprises. The traditional system of electric motor has advanced power, and the hybrid system has Keliyuan. The IGBT developed by CRRC, the charging system developed by Telnet, and the wireless charging system developed by ZTE.
The rapid establishment of the supply chain and the rapid improvement of the level, especially the energy density of the battery has doubled in several years, the cost has decreased year by year, and the safety has increased year by year, ensuring that China’s new energy vehicles have made new breakthroughs year by year. Consumer satisfaction has increased year by year, enabling us to successfully pass the incubation period of the new energy vehicle industry.
The development of electric vehicles in China for more than 10 years tells us that the bottom of the automobile power is the power of parts. If there is no awesome supply chain established soon in China, China’s electric vehicle industry will never be today. The future automobile industry chain has not been solidified and is still in the process of improvement. The subversion of the future automobile to the traditional automobile will make more than 70% of the traditional parts system face reconstruction. In the future, the new species of automobile will change the concept and category of automobile parts.
From the energy storage battery of the power system, hydrogen fuel cell, electric motor, electric control, power semiconductor, to the chips, computing platforms, sensors, laser radars, controllers, and actuator hardware involved in networking, intelligent driving, and intelligent cockpit, to the components and software of the vehicle control system, high-definition map, networking communication, cloud control platform, AI algorithm, voice recognition, etc., all have become an important part of the industrial chain.
The value chain is also changing rapidly, and software will become the foundation and core competitiveness of the future automobile. According to the agency’s prediction, the proportion of software in the vehicle cost system will increase from 15% to 60%. At present, the technical barriers to new parts have not yet been formed, and there is a lot of room for innovation, which brings historical opportunities to the development of China’s parts enterprises, especially small and medium-sized technology-based enterprises.
Fortunately, in recent years, China has been developing well in the fields of informatization, networking, artificial intelligence, etc. involved in the new industrial chain. We should seize the opportunity and make great efforts to break through the “neck” links one by one.
In this process, a number of powerful new parts companies have grown, and more small giants have been cultivated to achieve independent control under open conditions and lay a solid foundation for new parts in China’s automobile industry. The software and hardware systems involved in the future automobile will never be an industry, let alone an enterprise. Therefore, cross-border integration and enterprise cooperation are the key to success. Only by establishing a stable and efficient supply chain and industrial ecology can we consolidate the foundation and strengthen the foundation. We should support the automobile power with a strong component power and make continuous efforts to rewrite the history of technology hollowing out.
Electrification and dual-carbon, chip supply failure and parts power