E-mo­bil­ity al­ters auto in­dus­try dy­nam­ics

China Daily European Weekly - - Cover Story - Ed­ward Tse is founder and CEO and Bill Russo is man­ag­ing di­rec­tor of Gao Feng Ad­vi­sory, a global strat­egy and man­age­ment con­sult­ing com­pany with roots in China. The views do not nec­es­sar­ily re­flect those of China Daily.

Com­pet­ing no longer just about phys­i­cal hard­ware, but also the ca­pa­bil­ity to build a dig­i­tal ecosys­tem re­la­tion­ship with con­sumers

EV poli­cies and large mar­ket scale to se­cure a place of strength as th­ese en­ter­prises strive to be­come global elec­tric car­mak­ers.

For th­ese rea­sons, the Chi­nese gov­ern­ment is us­ing a va­ri­ety of in­cen­tives to pro­mote and sup­port devel­op­ment of the EV in­dus­try. Th­ese in­clude pur­chase sub­si­dies as well as tax and li­cense plate ex­emp­tions. In Septem­ber, China an­nounced its in­ten­tion to ban the sale of fos­sil-fuel-pow­ered ve­hi­cles, and reg­u­la­tors are work­ing on an im­ple­men­ta­tion timetable. There is also a strong cor­re­la­tion be­tween li­cense plate re­stric­tions and EV pen­e­tra­tion for ci­ties that have im­ple­mented such mea­sures. By sim­ply mak­ing it eas­ier and cheaper to get a li­cense plate, China has sig­nif­i­cantly ex­panded the elec­tric car pop­u­la­tion in th­ese ci­ties. A car­bon trad­ing pro­gram will be phased in start­ing in 2019, and this will push au­tomak­ers to add more EVs to their prod­uct mix in or­der to avoid a tax penalty.

Fac­ing th­ese dy­namic changes, local and for­eign orig­i­nal equip­ment mak­ers are ac­cel­er­at­ing their in­vest­ments in EV prod­uct devel­op­ment. Emerg­ing dis­rup­tors (Nio, By­ton), hard­ware in­no­va­tors (Tesla, BYD) and tra­di­tional ex­per­i­menters (VW, Ford) are now seek­ing a place in China’s EV com­pet­i­tive land­scape. They are com­pet­ing with, as well as col­lab­o­rat­ing with, each other, as the orig­i­nal com­pet­i­tive ad­van­tages of tra­di­tional car­mak­ers can no longer guar­an­tee suc­cess in the new “e-mo­bil­ity” busi­ness model.

Com­pet­ing in this new busi­ness model is no longer just about the engi­neer­ing of phys­i­cal hard­ware, but also in­cludes the ca­pa­bil­ity of build­ing a dig­i­tal ecosys­tem re­la­tion­ship with con­sumers, es­pe­cially in a mar­ket like China where com­pa­nies like Baidu, Alibaba and Ten­cent are ac­tively in­vest­ing in future mo­bil­ity tech­nolo­gies around con­nected, elec­tric and au­ton­o­mous cars.

NIO, a Chi­nese EV startup backed by Ten­cent, has raised more than $1 bil­lion (849 mil­lion eu­ros; £746 mil­lion) and will re­lease its first mass-pro­duc­tion EV, the ES8, early next year. Tesla, a global pioneer in the elec­tri­fi­ca­tion of trans­porta­tion, is plan­ning to build a wholly owned fac­tory in Shanghai’s Pi­lot Free Trade Zone. Ten­cent, which now owns 5 per­cent of Tesla, is also in­vest­ing in NIO and By­ton in the race to dom­i­nate the future of mo­bil­ity.

Ten­cent is a co-founder (with Alibaba) of Didi Chux­ing, China’s top mo­bil­ity ser­vice provider, and is also the lead in­vestor in Mo­bike, a lead­ing bike-shar­ing mo­bil­ity plat­form. The in­ter­net com­pa­nies be­lieve that con­nected, elec­tric and shared mo­bil­ity is an in­te­gral part of Chi­nese con­sumers’ con­nected life­style. By lever­ag­ing its vast in­sight and big data re­la­tion­ship with its users, Ten­cent aims to pro­vide more-tai­lored mo­bil­ity so­lu­tions to the mar­ket. E-mo­bil­ity is not just about the ve­hi­cle hard­ware, but also about the broader dig­i­tal ecosys­tem re­la­tion­ship with the ev­ery­day users of the mo­bil­ity ser­vices plat­form.

There is al­ready a strong in­di­ca­tion that the rise of con­nected, on-de­mand mo­bil­ity is ac­cel­er­at­ing EV adop­tion in mo­bil­ity ser­vices fleets. In a sus­tain­able en­ergy sum­mit spon­sored by the United Na­tions and the Global En­ergy In­ter­con­nec­tion Devel­op­ment and Co­op­er­a­tion Or­ga­ni­za­tion, Didi CEO Cheng Wei said the future of trans­porta­tion “is new en­ergy ve­hi­cles, and ride shar­ing will be a key link in pro­mot­ing new en­ergy on the road.” He aims to have 1 mil­lion EVs on Didi’s plat­form by the end of the decade, which will ac­count for around 20 per­cent of the to­tal num­ber of EVs in China by 2020. Didi has also part­nered with NEVS, a Sino-Swedish ven­ture that will man­u­fac­ture elec­tric ve­hi­cles in Tian­jin for the ride­hail­ing gi­ant.

EV tech­nol­ogy de­vel­op­ments are pav­ing the way for large-scale elec­tri­fi­ca­tion of trans­porta­tion. An­tic­i­pat­ing this, Chi­nese en­ter­prises are de­ploy­ing a mas­sive num­ber of charg­ing fa­cil­i­ties, with a gov­ern­ment tar­get of a 1:1 EV-to-EV charger ra­tio by 2020. Im­prove­ments in bat­tery chem­istry and other po­ten­tial dis­rup­tive tech­nolo­gies like wire­less charg­ing are also an­tic­i­pated, which will fur­ther ac­cel­er­ate the tran­si­tion.

For more than 30 years, China’s auto pol­icy has re­quired for­eign orig­i­nal equip­ment man­u­fac­tur­ers to es­tab­lish joint ven­tures with local part­ners in or­der to ac­cess the mar­ket. How­ever, in the age of e-mo­bil­ity, in­dus­try dy­nam­ics are be­ing fun­da­men­tally al­tered. In­creas­ingly, Chi­nese com­pa­nies are cre­at­ing prod­uct and dig­i­tal ser­vice brands that shift the fo­cus from the hard­ware to the ecosys­tem of ser­vices that are de­rived from the hard­ware. In this new dig­i­tally en­abled busi­ness model, Chi­nese com­pa­nies are no longer fol­low­ing, but rather lead­ing, the auto mo­bil­ity rev­o­lu­tion.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.