Commercial vehicle ADAS is about to explode. Can domestic enterprises stand out?

Compared with passenger cars, commercial vehicles such as buses and trucks are more likely to cause traffic accidents due to their large size, many blind spots, large passenger or cargo capacity, and driver fatigue. This has been previously statisticated, and it is reported that in 2016, although freight vehicles only accounted for 12.28% of the total number of motor vehicles in my country, deaths caused by road traffic accidents caused by trucks accounted for 48.23% of the total number of deaths.

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In the past two years, with the rapid development of ADAS technology, regulations have begun to require some commercial vehicles to install some ADAS functions, which has promoted the gradual popularization of ADAS in the commercial vehicle market. This situation has improved to a certain extent.

Driven by both market and policy, commercial vehicle ADAS will usher in a blowout

According to a survey of heavy truck drivers, the proportion of accidents caused by fatigue driving is as high as 73%, followed by vision obstruction at 41%, and the lack of driver experience and lack of concentration at 32% and 26% respectively. How to solve these problems is of great significance to improving commercial vehicle driving safety. At present, the development of ADAS is a good solution.

As a key technology in the development of autonomous driving, ADAS mainly uses sensors installed around the vehicle body to collect information about the environment inside and outside the vehicle, helping the driver to perceive danger as early as possible and take corresponding measures, or even actively intervene in the control of the vehicle, thereby reducing the occurrence of accidents at the source.

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The US Highway Safety Insurance Agency believes that vehicles equipped with basic intelligent assistance systems can avoid more than 60% of traffic accidents. According to relevant research data, if a car is equipped with a rear automatic braking system, reverse collisions can be reduced by 62%, and an automatic emergency braking system can reduce rear-end collisions by 50%.

Therefore, we can see that the demand for ADAS in the commercial vehicle market and its penetration rate have been increasing in the past two years. Of course, in addition to market drivers, policy promotion is also a very important factor.

"Commercial vehicles are a market that is strongly related to policies. In order to estimate the commercial vehicle ADAS market, policy review is essential," said Gao Linxi, a marketing analyst at Horizon.

In order to improve the operational safety of commercial vehicles, the country has been mandating the installation of some ADAS functions in the past two years. For example, in the "Technical Conditions for Safety of Operating Passenger Vehicles" issued in March 2017, it was clearly stated that operating passenger vehicles over 9 meters must be equipped with LDW and FCW, and operating passenger vehicles that meet the regulatory requirements must be mandatory to install AEB systems on April 1, 2019. The "Technical Conditions for Safety of Operating Trucks" issued in 2018 made mandatory installation of FCW, LDW, and AEB regulations for some trucks. On August 22 of the same year, the "Notice on the Promotion and Application of Intelligent Video Surveillance and Alarm Technology" issued by the General Office of the Ministry of Transport proposed to promote the application of intelligent video surveillance and alarm technology in the fields of road passenger and freight transportation, and improve driving safety by automatically identifying and real-time reminding to correct drivers' unsafe driving behaviors.

Against this backdrop, ADAS has begun to penetrate the commercial vehicle sector at an accelerated pace. Previously, the pre-installation rate of commercial vehicle ADAS was far lower than the 25% penetration rate of passenger cars. It is expected that with the mandatory installation and the practicality of its functions, the commercial vehicle ADAS market will show explosive growth.

How big is the specific scale? In 2018, China's heavy-duty truck ownership exceeded 6.69 million, and light and medium-duty truck ownership exceeded 14 million, with a market size of more than 5 trillion yuan, and this scale is still growing rapidly. According to Gao Linxi, by the end of 2020, the country will complete the mandatory installation of intelligent video surveillance systems for all new "two passenger and one dangerous goods" vehicles entering the market, as well as the installation of most existing "two passenger and one dangerous goods" vehicles. The market value of ADAS brought about by this can be imagined.

It is not easy for domestic ADAS enterprises to break out amid the dominance of foreign giants

As a key technology in the transformation of automobile intelligence, ADAS is ushering in a golden period of development as consumers' demand for driving safety and comfort continues to increase and relevant policies are promoted. In the past two years, a large number of ADAS companies with Chinese backgrounds have emerged in this field, such as Freetech, Horizon Robotics, MAXIEYE Intelligent Driving Technology, Jimu Intelligent, Jingwei Vision, and Zhihua.

Compared with foreign auto parts giants such as Bosch, Continental, Delphi, Denso, Mobileye, and Valeo , these new entrants are more based on a deep understanding of China's traffic scenarios. Under the premise of controllable system costs, they optimize hardware configurations and improve algorithm software performance to achieve ADAS functions and create differentiated competitive advantages. Many of them have already achieved a certain scale. For example, MAXIEYE, an intelligent driving technology company, has achieved a market share of more than 80% in the commercial bus field in 2019. Its products cover the landing application of Level 0-Level 4 multi-scenario intelligent driving, and has signed mass production projects and joint development projects with many vehicle manufacturers in the commercial heavy truck and passenger car markets.

Image source: Intelligent Driving Technology MAXIEYE

Despite this, domestic ADAS companies still need to overcome many difficulties if they want to gain a foothold in the ADAS field. The first is scale. Large scale will bring cost advantages, but the scale of domestic ADAS companies is not large, so it is not easy to increase the volume, which leads to commercial vehicles being in a relatively awkward position in terms of ADAS function loading; the second is the business model. Commercial vehicle ADAS has a large initial R&D investment, but faces factors such as profitability difficulties. How to find a business model that suits you and accelerate the mass production of ADAS is an important issue facing companies today.

Furthermore, compared with foreign auto parts giants, domestic ADAS companies are slightly lacking in terms of the technological maturity required for mass production, the completeness of the solutions, and the price competitiveness.

In addition, the market's increased attention to ADAS and the increase in market participants have significantly accelerated the iteration and update of products, and even brought about irrational price competition, which has also brought great challenges to the input-output and sustainable development of various competing parties.

This means that compared with international suppliers, domestic ADAS companies still have a long way to go. For this reason, some current players have begun to choose to join forces with local companies or directly acquire related technology companies to enhance their own strength. For example, in November 2019, Weichai Group acquired 55% of the equity of Qingzhi Technology for a cash consideration of RMB 660 million, becoming the major shareholder of Qingzhi Technology. Qingzhi Technology was established in April 2016 and mainly develops commercial vehicle intelligent driving assistance systems (ADAS) and specific scenario autonomous driving solutions. It has previously cooperated with many mainstream car companies such as Zhongtong, King Long, Golden Dragon, CRRC, Geely, Yinlong, ZTE, Shenlong, and BYD.

Image source: iot-automotive.news

In March 2020, China's commercial vehicle air brake system company Ruili Group invested in MAXIEYE, a supplier of visual perception intelligent driving system products, to jointly develop ADAS driving assistance product solutions and autonomous driving solutions.

However, in the long run, for companies that want to make money in the commercial vehicle ADAS market, the most important thing is to find a competition and development model that suits them, and rely on the advantages of the domestic market to make up for their own shortcomings and consolidate their core technology strength. Only in this way can they gain a firm foothold in the increasingly fierce competition.