The next trillion-level market! What is the development trend of China's intelligent connected vehicle industry?

Many people, no matter what field they are in, seem to be able to feel that the world around them is changing every day, growing at a lightning speed, audibly or silently. This incredible phenomenon makes us feel both excited and nervous.

Why? On the one hand, we are delighted to see the world making progress, but on the other hand, we are afraid of being left behind and eliminated in this great wave of innovation and development.

Speaking of this great wave of innovation and reform, we have to mention a hot field now - intelligent networked cars. Some people say that this is a new, large and chaotic field, and it is at a critical stage of transition from the old to the new. Both the car companies themselves and the capital market have cast their concerned eyes on this field, and everyone has tried their hand at it and strived to be a trendsetter.

According to the analysis of relevant industry data, some authoritative organizations predict that the global autonomous driving market will reach RMB 220.7 billion and RMB 430.5 billion in 2020 and 2025, respectively, with a compound growth rate of about 14%. China will occupy nearly 1/3 of the market with the world's largest automobile consumer group. This means that the world's largest intelligent connected car market is in China, and we will be the irreplaceable development leader in the next era.

Since it is a leader, what is the development trend of China's intelligent connected vehicle industry? Today we will take a closer look.

The penetration rate of integration has increased, helping the automotive industry move towards a 100 billion market

At present, the intelligence and networking of automobiles are mainly reflected in advanced driver assistance systems and in-vehicle infotainment systems, and the functions they realize are still relatively rudimentary and the penetration rate is low. According to the analysis of CCID think tank, the penetration rate of China's advanced driver assistance systems is only about 3%-6%. In the later stage, with the advancement of technology and policy promotion, the penetration of intelligent connected vehicles is expected to accelerate, thereby driving a substantial increase in the market size. In 2020/2025, the market size of China's passenger intelligent connected vehicles will be US$55.8 billion/US$134.7 billion, respectively, with a compound growth rate of about 19%, which is higher than the global level.

According to a research report by SAFE in the United States: It is estimated that by 2050, autonomous driving will bring about 800 billion US dollars in social and consumer benefits to the United States each year, mainly from the reduction of traffic accidents, traffic congestion and oil consumption. China's population and market size are much larger than those of the United States. It is conceivable that the social and consumer benefits created by autonomous driving alone will exceed hundreds of billions.

Of course, the benefits brought by the development of science and technology are not only reflected in monetary terms, but also in many non-monetary benefits. For example, self-driving cars have been optimized in terms of acceleration, braking and gear shifting, which helps to improve fuel efficiency and thus reduce carbon dioxide emissions. The combination of self-driving cars and new energy vehicles can better protect the ecological environment.

Sensor devices are expected to explode first, while chips and algorithms will come later.

At this stage, intelligent connected vehicles are mainly in the early stages of development (SAE, Level 0-2), and will gradually develop to higher levels, with the ultimate goal of achieving fully autonomous driving (SAE, Level 5).

Primary autonomous driving is mainly manifested in advanced driver assistance systems (ADAS). At present, the penetration rate of ADAS in my country is only about 3%-6%, and there is a lot of room for rapid increase in the penetration rate of ADAS in the future. The realization of ADAS functions requires the use of sensors such as cameras, millimeter-wave radars and lidars to collect environmental information, and as the number of ADAS functions increases, the types and number of sensors required will increase accordingly. It can be seen that the increase in the penetration rate of autonomous driving is expected to drive a rapid increase in the market demand for perception equipment, and the industry is highly certain.

However, the increase in the level of intelligence means that the car has a higher degree of autonomy, which requires more environmental information to be obtained through sensing devices, and the car must be able to make autonomous decisions in more driving scenarios. It is estimated that each increase in the level will increase the amount of data processing by 10 times, so the real-time processing of a large amount of environmental information requires chips with higher performance, and autonomous decision-making in more driving scenarios also puts higher requirements on algorithms.

Therefore, the iterative upgrades of chips and algorithms will accompany the entire development stage of intelligent connected vehicles. Unlike the development trend of high-quality and low-cost hardware such as sensing devices, as the intelligence level of intelligent connected vehicles increases, the technical difficulty of the required chips and algorithms will increase significantly, thereby bringing higher product added value.

Take Mobileye as an example. As a pioneer in the field of autonomous driving, its core product is the EyeQ series of chips. With the improvement of the highest support level of autonomous driving, the number of operations per second has increased by about ten times compared with the previous generation of products. At the same time, the difficulty of chip manufacturing has also increased significantly. The EyeQ5 chip uses the most advanced semiconductor manufacturing process 7nm FinFET. The improvement of chip performance has strict requirements on chip manufacturing, and the increase in chip manufacturing difficulty will bring high added value to the product.

From this, we can see that the core technology and key to the development of intelligent connected vehicles are still chips and algorithms. Only by mastering the core technology can we gain more initiative. Therefore, for the capital market, chips and algorithms have the most long-term investment value.

C-V2X will be the future development direction of China's intelligent connected vehicles

The advancement of intelligent connected vehicle technology may drive a trillion-level market. To realize this trillion-level intelligent connected vehicle industry, V2X, as the soul of intelligent networking, is an indispensable technology . V2X is the key core for intelligent connected vehicles to interact with the outside world. It can obtain a series of traffic information such as real-time road conditions, road information, pedestrian information, etc. It has the functions of improving driving safety, reducing congestion, improving traffic efficiency, and providing in-vehicle entertainment information. It can help more vehicles communicate directly with other vehicles and the surrounding environment (such as traffic lights, road construction sites, sidewalks and buildings, etc.), such as understanding when the traffic light ahead turns green, and adjusting the speed accordingly to enter the green wave belt, thereby helping to improve traffic flow in the region, especially in urban areas.

In terms of V2X communication technology standards, China has focused on C-V2X, which refers to the information exchange between vehicles and the outside world, and has certain advantages in the technical route. Typical applications of C-V2X scenarios include emergency call services in the information service category, intersection collision warning in the traffic safety category, speed guidance in the traffic frequency category, remote control driving in the autonomous driving category, and vehicle platooning.

In the process of transmitting information in the Internet of Vehicles, privacy, security and high data transmission rate must be guaranteed, which requires strict latency limits for communication. However, previous wireless communication technologies could not achieve millisecond-level latency and could not support secure interconnection requirements. The ultra-high density networking and low device energy consumption of 5G networks greatly reduce signaling overhead, thereby effectively solving bandwidth and latency-related issues and meeting low latency and high reliability requirements. Through technologies such as network slicing, end-to-end latency as low as 1ms and peak rates as high as 10Gbps can be achieved.

80% of 5G applications will be used for communication between objects. The largest market for the mobile Internet of Things may be the Internet of Vehicles. The application of 5G technology represented by driverless cars may be the earliest application.

As the only V2X technology with a clear 5G evolution path and forward compatibility with 5G, C-V2X has the advantage of continuous technological evolution. As operators vigorously promote the commercial deployment of 5G, 5G-V2X technology with low latency (average latency can be reduced to a few milliseconds), high capacity, massive connections, high reliability, high mobility and other performance characteristics is about to emerge. In terms of standards, the 5G-V2X stage (R16+) for supporting advanced business scenarios of V2X has started research in June 2018, which will form a complementary relationship with LTE-V2X/LTE-eV2X.

According to the plans released by various operators, 5G will enter the pre-commercial stage in 2019, some regions will obtain 5G temporary licenses, and large-scale networking will be first realized in hot spots, and large-scale commercial use will be realized in 2020. Therefore, 5G-V2X vehicle-mounted wireless communication technology will accelerate the commercialization of intelligent connected vehicles.