Smart cockpit penetration rate increases, industry competition landscape analysis report

Source: Orient Securities Research Institute

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The penetration rate of smart cockpits will increase significantly in the future, mainly because electric vehicles and traditional fuel vehicles are increasingly equipped with corresponding smart cockpit products, gradually turning to intelligent development.

In the process of electric vehicle intelligence, there are two main driving forces: new car manufacturers and traditional car companies. The leading new car manufacturers are represented by Tesla, Ideal, Xiaopeng, Weilai, etc., and they continue to launch new products equipped with smart cockpits;

At the same time, traditional car companies such as Volkswagen, Geely, SAIC, and BYD have also launched a number of electric vehicles equipped with smart cockpits, jointly promoting the development of the electric vehicle industry towards intelligence and increasing the penetration rate of smart cockpits. In the process of traditional fuel vehicles becoming intelligent, typical representatives include Great Wall Motors, Geely Automobile, Changan Automobile, and SAIC. These companies have gradually equipped smart cockpits on the traditional fuel vehicles they launched, driving up the penetration rate.

As both electric vehicles and traditional fuel vehicles are moving towards intelligence, the overall penetration rate of smart cockpits will increase significantly in the future, and the industry will usher in new development opportunities.

Judging from the latest products launched by new car manufacturers, their products are all equipped with some or all of the smart cockpit components. Tesla Model Y, NIO ET7, Xiaopeng P7, and Ideal ONE are used as representatives for analysis. From a hardware perspective, except for Tesla Model Y, all new car models are equipped with full LCD instrument panels.

From a software perspective, voice recognition systems have become standard. Multimedia, navigation, telephone, air conditioning and other equipment can already be controlled by voice recognition on models of new car-making forces. The newly launched Xiaopeng P7 model can even perform facial recognition.

The smart cockpits of new car manufacturers have introduced many new features to enhance the consumer experience, such as heated steering wheels, heated front and rear seats, ventilation, massage, etc., which continuously enhance the consumer experience; Xiaopeng P7 also installed Dynaudio speakers in the smart cockpit to bring users an immersive sound experience.

Traditional car companies are gradually building electric vehicles equipped with smart cockpits and transforming towards intelligentization.

In January 2021, Shanghai, the United States and the United Kingdom simultaneously released Zhiji Auto, which was jointly created by SAIC Group, Zhangjiang Hi-Tech Park and Alibaba Group. In terms of hardware, the ICM smart cockpit center in the domain fusion central computing digital architecture adopted by Zhiji Auto uses Qualcomm 8155 chip with a computing power of 3Tops. It is also equipped with a 39-inch giant scene screen and a 12.8-inch curved smart control center screen. In terms of software, the world's first borderless interactive IMOS intelligent operating system is used to achieve borderless multi-screen interaction, and the underlying system uses the OS system independently developed by Zebra Zhixing.

SAIC Volkswagen ID.4 X is the first MEB medium-sized pure electric SUV. Its smart cockpit includes HUD, LCD instrument panel, massage chair, voice control and other hardware and software equipment. The hardware is equipped with a 5.3-inch LCD digital instrument panel, and a floating 12-inch infotainment display is integrated on the central control. It is also equipped with AR-HUD augmented reality head-up display function, which can integrate the external scene with the display screen.

In terms of software, ID.Light can emit different colors of light according to the changes in each scene, thereby better improving the user experience. In addition, ID.4 also proposed a new concept of human-computer interaction, that is, to control various components such as the steering wheel through touch.

Traditional fuel vehicles are gradually transforming into intelligent ones. The products are equipped with components related to smart cockpits. As the degree of intelligence increases, the penetration rate of smart cockpits will be further promoted. Geely Auto and Changan Automobile are representative companies that equip traditional fuel vehicles with smart cockpits.

Geely Auto's Xingrui flagship version is a traditional fuel vehicle. From a hardware perspective, the 12.3-inch floating design high-definition central control display can provide daily audio and video entertainment and related controls. The 12.3-inch high-definition full LCD display displays daily vehicle speed, navigation, communication, driving status and other information, while providing multiple modes such as comfort, sports, and economy. The 7.5-inch high-definition full-color HUD can integrate and display driving information such as safety warnings. The software also has a corresponding intelligent voice interaction system, and voice interaction can be used for multimedia, navigation, telephone, air conditioning and sunroof.

The smart cockpit of Changan Automobile UNI-T flagship version integrates the "Zhengcheng II" automotive-grade AI chip and AI vision UNI Life in-vehicle intelligent interaction system, which can identify the scenario needs of car owners and provide services, such as fatigue driving detection;

The facial recognition technology configured in the car can directly log into various audio and video entertainment accounts after startup. The cockpit itself is also equipped with a 10.3-inch high-definition central control screen and a 10.3-inch high-definition instrument panel to meet consumers' daily entertainment and vehicle control needs.

Based on domestic passenger car sales, penetration rate and unit price of smart cockpit components, we estimate the market space for major components of smart cockpit systems, including central control screens, LCD instrument panels, HUDs and streaming media rearview mirrors.

In 2019, the domestic sales volume of narrow passenger cars was 21.03 million units. Assuming that the sales volume in 2020 will decrease by about 6% year-on-year, the industry sales volume in 2021 will increase by about 10% year-on-year, and will increase by about 3% annually thereafter.

As for the central control screen, the penetration rate in passenger cars is already high, approaching 70% in 2018, and it is assumed that it will gradually increase thereafter. The value of a central control screen per vehicle is around RMB 2,000. Considering price factors, it is estimated that the market space for central control screens will reach around RMB 40.4 billion in 2025.

For LCD instrument panels, the penetration rate in passenger cars is still low, ranging from 6% to 7% in 2018, but the penetration rate has increased rapidly, reaching about 12% in 2019. Assuming that the penetration rate continues to increase at this rate in the next few years, it is expected to increase to about 60% in 2025. At present, the value of LCD instrument panels per vehicle is about 2,500 yuan. Assuming that it will decrease by about 2% each year in the future, the market space is expected to be about 31.9 billion yuan in 2025.

The penetration rate of HUD in passenger cars is currently low. According to the forecast of iResearch, it will increase to about 10% in 2021 and is expected to increase to 30% in 2025. The value of HUD per vehicle is about 1,500 yuan, and the market space is expected to be around 9.6 billion yuan in 2025.

Therefore, after calculation, we estimate that the domestic market space for major components of smart cockpit systems will reach about 48 billion yuan in 2020; it is expected to reach about 98.2 billion yuan in 2025, with an average annual growth rate of about 14% from 2019 to 2025.

3.1 Analysis of the industrial chain structure

The smart cockpit industry chain can be divided into three links: upstream, midstream and downstream. The upstream link can be divided into hardware and software. The hardware part mainly includes power plug-ins, display panels, PCBs and chips, etc. The software part includes the underlying operating system, based on which some intermediate software and other apps can be derived.

The midstream link can also be divided into hardware and software, which combine to form a complete control and display system. The midstream components are finally integrated into the downstream vehicle to form a complete smart cockpit system.

3.2 Chips are the core. Qualcomm cockpit chips have strong competitiveness, while Huawei, Horizon Robotics and others are catching up.

During the interaction between people and vehicles, the underlying chip in the smart cockpit will understand the current status of the vehicle based on the data feedback from each electronic and electrical control unit, and give corresponding adjustment and control solutions through calculation. The smart cockpit represented by central control multimedia and voice has already occupied a higher penetration rate in various functions of smart cars.

The chip is a key factor in determining the performance of the smart cockpit. Its computing power and structural design greatly affect the various functions of the smart cockpit. Taking the central control multimedia and voice as an example, the chip computing power will affect the response time of the central control multimedia to user needs, and at the same time affect the smart cockpit's recognition accuracy and recognition speed of user voice and other parameters.

The future trend of one chip with multiple screens places higher demands on chip computing power. According to HIS data, the number of LCD screens per bicycle in China continues to rise, and the number of LCD screens continues to grow and the growth rate accelerates.

In order to meet the requirements of reducing costs, improving convenience and safety, one-chip and multiple screens will become the mainstream development of future smart cockpits, posing greater challenges to the chip design capabilities, computing power, and performance of various smart car manufacturers.

Currently, smart cockpit chip providers mainly fall into two categories: traditional automotive electronics and consumer electronics companies. Traditional automotive electronics players include Texas Instruments, NXP, Renesas, etc., while consumer electronics players include Qualcomm, Intel, Google, Nvidia, etc. Companies in the consumer electronics field are actively expanding into the automotive field.

Qualcomm remains the leader in the global smart cockpit chip market, while Intel and SUNY are relatively high-end, and Texas Instruments, NXP, MediaTek, etc. are relatively low-end. Judging from the computing power of smart cockpit chips provided by various companies, Qualcomm has significantly surpassed other chip companies with a CPU computing power of up to 85k and a GPU computing power of 1142GFLOPS, and also has the most extensive partners. The computing power of chips from Intel, SUNY, etc. is still at a relatively high level, and other companies include Texas Instruments, NXP, etc.

There is a gap between domestic smart cockpit chips and global companies, and the layout efforts continue to increase. Compared with foreign chip companies, domestic companies' related R&D time is after 2010, and they started late. At the World Artificial Intelligence Conference in August 2019, the Journey 2 chip released by Horizon Robotics became the first automotive-grade AI chip in China. The first automotive-grade AI chip to be launched indicates that China has achieved a breakthrough in the mass production of automotive-grade AI chips.

3.3 Full LCD instrument panel and HUD: Global concentration is high, and there are opportunities

The global LCD instrument panel market share is highly concentrated and is basically occupied by leading component companies. The top five suppliers have a combined market share of 80%, among which Continental, Aisin Seiki, Denso, Visteon and Bosch have market shares of 25%, 17%, 15%, 15% and 8% respectively.

In the domestic LCD instrument panel market, the market share is still mainly occupied by joint ventures of brands such as Continental and Visteon. Among local suppliers, companies represented by Desay SV have gradually obtained orders from independent brand vehicle manufacturers including Geely Automobile, Great Wall Motor, Chery Automobile, GAC Passenger Vehicle, BYD, etc., driving the increase of market share.

Continental AG is the company with the largest market share in the world. Its overseas customers include Ford, GM, Audi, BMW, etc. It also supplies LCD instrument products to domestic customers such as BYD, Geely, Dongfeng Motor, etc. Companies such as Aisin Seiki and Denso mainly supply Japanese customers such as Toyota, Honda, Nissan, etc.

Domestic LCD instrument panel companies include Desay SV, Zhongke Linghang, Xintongda, etc. Compared with global well-known brands, they mainly provide support to domestic automakers and have fewer global automakers as customers. Desay SV has provided support for domestic automakers such as BYD and Geely on its smart instrument panels. The continuous growth of domestic companies will bring new opportunities for corresponding domestic LCD instrument panel suppliers.

The HUD system is also called the head-up display system. It can display information within the driver's field of vision during normal driving, so that the driver can see the corresponding information without lowering his head. According to the different display screens, HUD can be divided into three categories: C-HUD, W-HUD and AR-HUD. C-HUD is to place independent mirror optical glass above the instrument panel, and W-HUD is to unify the display screen and windshield to make an optical design.

Compared with the two, W-HUD is more expensive, but has better display effects. The emergence of AR technology makes it possible to combine AR and HUD. The combination of the two can further improve convenience and safety during navigation. During navigation, the actual scene and road conditions will be integrated for display, and road conditions and pedestrian information will be timely announced.

The global HUD industry is currently highly concentrated, with the top three companies accounting for 89% of the market share, and the top five companies accounting for 95% of the market share, namely Nippon Seiki, Continental, Denso, Bosch and Visteon. As the world's leading company, Nippon Seiki has a market share of 55%.

Compared with the global HUD companies, domestic HUD companies still have a certain gap in technology and strength, and the domestic companies have a low market share. The main participants include listed companies such as Huayang Group, Crystal Optech, and BOE, and non-listed companies such as Zejing Electronics and Dianshi Innovation.

Among the global HUD companies, Nippon Seiki's main products are W-HUD, and its customers include Mercedes-Benz, BMW, GM, Audi and other well-known OEMs. Next, Continental's main products are AR-HUD, and its main customers include Mercedes-Benz, Audi, BMW and others. Denso's customers are mainly Japanese companies such as Toyota, and its customers include Toyota, Lexus, Mazda and others.

Zejing Electronics is one of the earliest companies involved in W-HUD, and has been developing related products since 2010. Its HUD technology is at a high level. Currently, Zejing Electronics' main customers cover a wide range, including NIO, Geely, BAIC New Energy, Great Wall Motors, etc.

Huayang Group is also one of the earliest suppliers to deploy HUD research and development in China. It began to establish a HUD team in 2012. Its main customers include Great Wall Motors, Changan Automobile and GAC Group. According to the company's annual report, Sunny Optical completed the development and sampling of AR HUD core modules in 2019, and has reached a cooperation with Zejing Electronics to provide competitive HUD products for automakers.

3.4 Software operating system: market concentration is high, and domestic technology companies are making layouts

The smart cockpit is the interface for people to interact with the car, and the operating system becomes the core control software of the smart cockpit. The operating system can manage and control the hardware and software resources of the smart cockpit, and most subsequent software operations will be implemented based on the underlying operating system.

The operating system of the smart cockpit will provide users with a unified interface and a friendly interactive interface, improving the user experience. It will also provide a platform for the subsequent functional expansion of the smart cockpit and the installation and operation of third-party software.

The current mainstream in-vehicle operating systems include QNX, Linux, Android, and WinCE. QNX, Linux, and WinCE have been developed for many years, while Android was born based on the evolution of the Linux architecture. The Android 1.0 operating system was officially released in September 2008. The overall short development time makes the security and stability relatively insufficient. Currently, the QNX system requires paid authorization, while Linux and Android have achieved free applications.

The global operating system market is highly concentrated, with QNX leading the market share, followed by Linux and Android. According to the global operating system market competition landscape in 2019, smart cockpits mainly use three operating systems: QNX, Linux, and Android, which together account for 78% of the global market share. QNX leads the way with a 43% share, and the remaining companies' self-developed OS systems account for about 12% of the market share.

QNX maintains its lead with the widest range of customers, while Android is expected to further increase its market share by relying on domestic customers. From the perspective of cooperative customers of various operating systems, QNX has the widest range of OEMs and component suppliers, as well as a series of high-end customers including Porsche, BMW, and Mercedes-Benz.

Android's main customers include many domestic car companies such as Weilai, Xiaopeng, Geely, and BYD. With the substantial increase in domestic new energy vehicle sales, it is expected to expand its global market share. WinCE7.0 has stopped updating and currently has few developers and applications. It will gradually withdraw from the operating system industry in the future.

Based on the emphasis on software capabilities, some domestic companies have begun to develop their own underlying operating systems for smart cockpits, or make corresponding improvements on traditional operating systems such as Android and Linux to master software development capabilities. Alibaba proposed to develop the underlying operating system YunOS in 2014, and announced the integration of YunOS and the launch of AliOS at the 2017 Yunqi Conference. It has currently cooperated with many car companies such as SAIC, Ford, and Changan. More than 1 million cars are equipped with the Alibaba Cloud AliOS system, and the cooperation may be expanded to high-end car companies such as Mercedes-Benz and Audi in the future.

Huawei also officially released its smart cockpit solution in September 2020, and has cooperated with Geely Ecarx and BYD. In July 2020, the Huawei HiCar system based on Hongmeng OS made its debut and was installed on BYD Han.

Looking at the entire smart cockpit industry, participants can be divided into two categories: traditional auto parts companies and high-tech chip companies. Both types of companies are developing smart cockpits, but with different focuses.

Traditional parts companies started out by making cockpit parts and gradually expanded to the entire smart cockpit-related business. Their main areas of focus include HUD, smart instruments, in-vehicle infotainment systems, and driving safety systems. Specific suppliers include Bosch, Continental, Desay SV, Huayang Group, and Thundersoft, etc.

Some high-tech chip companies originally provided corresponding chips for smart cockpits, and have gradually begun to turn to other components of smart cockpits, mainly focusing on software systems. For example, NXP also provides smart instruments and in-vehicle infotainment systems in addition to related chips. MediaTek also provides in-vehicle infotainment systems in addition to chips.

Overall, among the participants in the smart cockpit, traditional auto parts companies have a wider layout. Except for chips, they have corresponding business layouts in HUD, smart instruments, and software systems. Chip technology companies have no companies involved in some fields such as HUD, and there are relatively few participants in other links except the chip field. Leading chip companies such as Qualcomm and Intel are still mainly responsible for providing chips for smart cockpits.

4.1 Foreign investment competition pattern: Both parts companies and electronics companies participate, and Faurecia lays out the entire industry chain of intelligent cockpit

The competition landscape of overseas smart cockpit industry is relatively fragmented, and the main participants include two categories: Tier 1 parts companies and consumer electronics companies. Parts companies mainly include Bosch, Continental, Visteon, Faurecia, etc., which have obtained a certain market share by maintaining close ties with car companies themselves. Consumer electronics companies such as Harman International, Panasonic, Pioneer Electronics, etc. have accumulated certain technology and strength in the field of consumer electronics, and have begun to turn to the new field of automotive smart cockpit.

Currently, overseas smart cockpit component companies have diverse products. After entering this field, consumer electronics companies such as Harman International and Panasonic have launched products mainly focusing on LCD instruments and HUDs, while traditional companies such as Visteon, Bosch, and Faurecia cover a relatively wider range of product lines, including multimedia information systems and navigation systems.

The main customers of Visteon, Bosch and other companies in the field of smart cockpits include Volkswagen, Mercedes-Benz, BMW, etc. Their customer resources are richer than other companies, and some of their customers focus on high-end models. Other companies, such as Harman International and Panasonic, have transformed from the consumer electronics field and have relatively fewer customer resources.

Parts companies that mainly produce interior parts are transforming to layout smart cockpits, and their layout of products is more comprehensive. Faurecia is a representative example. Faurecia has been continuously making efforts in the field of smart cockpit integration through continuous acquisitions of new businesses and corresponding integration. Faurecia itself started with interior parts. When it was established in 1997, its main businesses included car seats, car interiors, etc. Since 2016, Faurecia has started a large number of mergers and acquisitions.

In March 2019, it acquired Japan's Clarion, a supplier of in-vehicle infotainment systems, and in April 2019, it officially integrated several acquired companies to form Faurecia's fourth business unit - Faurecia Clarion Automotive Electronics. The new business unit is mainly responsible for integrating Faurecia's software technology capabilities. Since then, Faurecia has had corresponding layouts in interior products and software system products for smart cockpits, and has gradually developed into a company with a full industry layout for smart cockpits.

At present, the company's smart cockpit related products have been installed on some domestic mass-produced vehicles, such as the new Audi A8, GAC New Energy Aion LX, BAIC New Energy ARCFOX α-T, Changan CS75PLUS, BYD Han, Hongqi H9, etc.

4.2 Domestic competition pattern: From supporting independent enterprises to joint venture car enterprises, Huayu, Desay , etc.

Compared with the international leaders in the smart cockpit industry, my country's smart cockpit enterprises lag far behind. Some enterprises were established after 2010 as China made breakthroughs in smart technology, and they still lag behind foreign enterprises in technology and comprehensive strength.

Chinese companies still mainly supply domestically-owned brand car companies, and are now gradually expanding to joint venture car companies. For example, Desay SV, Huayang Group, and ThunderSoft have entered the supply chain system of foreign or joint venture car companies with their recognized in-vehicle infotainment systems, driving safety systems and other products.

At present, listed companies in the domestic smart cockpit industry include Desay SV, Joyson Electronics, Huayang Group, HUAYU Automotive and Thundersoft, while non-listed companies include Huawei, Good Helper, Yuante Technology and Philco. Domestic smart cockpit companies such as Desay SV and Thundersoft have gradually expanded their customer base to SAIC, GAC, SAIC-GM-Wuling, etc., and have also entered the high-end industrial chains of German and Japanese companies.

Desay SV's main products are in-vehicle infotainment systems, driving information display systems, and air conditioning controllers. In June 2019, the company released the Smart Cockpit 3.0 version at CES in Shanghai. The company's first four-screen interactive smart driving product based on the world's leading chip, Qualcomm Snapdragon 820A, will soon be mass-produced on Ideal Auto's Ideal ONE model.

The company combines its own in-vehicle infotainment system and other software with Qualcomm chip hardware to better support functions such as voice recognition and instant feedback, further expand its cooperation relationship with Qualcomm, and enhance the smart cockpit service experience.

Huayang Group focuses on the research and development of in-vehicle audio and video systems, digital instruments, streaming media rearview mirrors, head-up displays (HUDs), air conditioning controllers and other products in the field of smart cockpits, and integrates them into smart cockpits for external use. In January 2019, Huayang Group demonstrated an infotainment solution equipped with a new generation of automotive chip i.MX8 and the latest in-vehicle system Android P at the International Consumer Electronics Show. This solution can comprehensively improve the speed and stability of the car machine, and in the future it can also achieve one chip and multiple screens. At present, the company's smart cockpits have been equipped with FAW, GAC, SAIC-GM-Wuling, etc.

Joyson Electronics has a complete solution for cockpit electronics and safety products, and can provide products mainly based on human-computer interaction control systems and solutions, such as driver control systems, air-conditioning control systems, in-vehicle entertainment information systems, etc. It has currently cooperated with Volkswagen, BMW, Mercedes-Benz and others.

Joyson Electronics' subsidiary Joyson Intelligent Driving is a cockpit electronic system supplier with global R&D and supporting capabilities. The CNS3.0 car system it provides to Volkswagen consists of two parts: the native Linux system and the Android system. It provides remote monitoring, voice control and other functions, greatly improving the human-computer interaction experience.

HUAYU Automotive is the largest interior parts company in China. With its advantages in interior parts, seats, and lights, the company is actively developing smart car business. In the field of smart cockpit, the company is led by its subsidiary Yanfeng Technology, and cooperates with Goertek in cockpit acoustics, HMI interaction, and BOE in display screens. The company aims to build a complete cockpit system with cockpit domain controller as the core, display screen, smart switch, HMI interaction, cockpit acoustics, smart seats, safety system and other components.

The company disclosed that the company's smart cockpit released the Yanfeng XiM21, a technology display platform that was independently designed and developed in June 2020 and embodies complete product capabilities. It uses unique design language and digital technology to build a car's smart brain through technology integration capabilities, creating exclusive sensory characteristics, interconnected services and personalized experiences for users. Currently, Yanfeng is working with vehicle customers such as Volkswagen, Audi, BMW, and SAIC Passenger Vehicles to develop the next generation of smart cockpit systems.

Huawei is also planning its smart cockpit business, which is mainly composed of the Hongmeng car OS software platform, the Hongmeng car domain ecological platform, the smart hardware platform and HiCar.

In terms of Kirin chips, in 2020, Huawei HiSilicon and BYD signed a cooperation agreement and are currently exploring the application of Kirin chips in the field of smart cockpits. The first chip will be Kirin 710A. Kirin 710A chip is comparable to Qualcomm Snapdragon 820A. It is independently designed by Huawei HiSilicon. It was originally a mobile phone chip and was manufactured by TSMC. It is currently manufactured by SMIC. The supply cycle of mobile phone chips is generally 2 years, and automotive chips need to be guaranteed to be continuously supplied for 10 years. Kirin 710A is Huawei's independent chip that can achieve the greatest control of the industrial chain.

In terms of Hongmeng OS, Huawei has released Hongmeng OS 2.0, which consists of distributed soft bus, distributed data management, and distributed security. Version 2.0 has expanded from smart screens to car machines and other fields. Hongmeng car machine OS covers HMS-A (Huawei Mobile Services), 12 car machine subsystems and more than 500 APIs.

The Hongmeng cockpit operating system HOS can provide users with services such as voice interaction, visual recognition, and audio optimization, and provide development interfaces for automobile manufacturers, so that cooperating automobile manufacturers can quickly conduct research and development based on the Huawei Hongmeng OS system.

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