The turning point of intelligent driving has arrived. What is the progress of the industrialization of intelligent connected vehicles in my country?

Intelligent Connected Vehicle (ICV) refers to the organic combination of smart cars and Internet of Vehicles. It is equipped with advanced on-board sensors, controllers, actuators and other devices, and integrates modern communication and network technologies to achieve intelligent information exchange and sharing between cars, people, roads, cloud platforms, etc. It has functions such as complex environment perception, intelligent decision-making, and collaborative control, and can achieve safe, comfortable, energy-saving, and efficient driving, and can eventually replace human operation. The most typical features that distinguish it from traditional cars are:

The first is the intelligentization of automobiles. AI-enabled automobiles bring about a new technological revolution, and autonomous driving and smart cockpits promote the evolution and upgrading of electronic and electrical architectures. Traditional automotive electronic systems can no longer meet the software requirements of smart cars, and electronic and electrical architectures based on domain controllers and central computing platforms will become the mainstream. Autonomous driving integrates multiple elements such as perception and computing, and puts forward new requirements for computing power; the smart cockpit takes human-computer interaction as its core and becomes the main competitive point for product differentiation. The core technical barriers of automobiles have shifted from transmission systems to software, electronic equipment, operating systems, etc., and "software-defined cars" have become the core feature of automotive intelligence.

The second is the networking of cars. The cost of commercial deployment of 5G is lower, and 5G-V2X is expected to become a new technical standard, which will accelerate the implementation of the Internet of Vehicles industry. V2X communication modules are mainly based on the DSRC standard promoted by the United States and LTE-V2X promoted by China, and the two sides are competing in the European market. The Internet of Vehicles is one of the application scenarios with the highest output value and the strongest certainty in the downstream of 5G; 5G will fill the technical gap of the Internet of Vehicles and autonomous driving in the communication network layer, opening up new growth space for the Internet of Vehicles.

The industry chain of intelligent connected vehicles is an upgrade and extension of the traditional automobile industry chain, including upstream industry support (perception, decision-making, execution, communication system hardware and software), midstream vehicle manufacturing and solutions, and downstream applications. The upstream of the intelligent automobile industry chain is mainly divided into: the perception sector including sensors, high-precision maps and positioning; the decision-making system sector including algorithms, chips and operating systems; the communication sector including cloud platforms and electronic and electrical architectures; and the execution control sector including wire-controlled chassis and integrated control systems. The midstream is mainly for intelligent driving cockpits, autonomous driving solutions and vehicle manufacturing. The downstream is smart car dealers, various service providers, etc.

Panorama of the Intelligent Connected Vehicle Industry Chain

Source: Qianzhan Industry Research Institute

1. Market size: The industry scale continues to grow and demand continues to expand

With the rapid development of intelligent network technology and the continuous influx of various Internet industry giants, the field of intelligent vehicles is becoming a strategic highland for a new round of scientific and technological revolution and industrial revolution, and my country's intelligent vehicle industry is gradually entering a golden period of development. According to the forecast of CCID Think Tank, the scale of China's intelligent network vehicle industry will be close to 900 billion yuan in 2023. With the advancement of intelligent network technology, the continuous iteration and upgrading of products and the gradual increase in the popularity rate, the expected growth rate will be higher than 40%, and the scale of the intelligent network vehicle industry will continue to increase.

From the perspective of demand, the growing demand for cost reduction and efficiency improvement on the B side drives market expansion; the willingness to pay for autonomous driving on the C side increases, and the market capacity for travel and private cars is large. According to the forecast of iResearch, by 2040, the number of trips by the Chinese urban population is expected to reach 2.2 billion per day, which will release a huge incremental market for shared travel.

2. Regional distribution: projects are flourishing all over the country, and the Yangtze River Delta region has become an important cluster of projects

According to statistics, by the end of 2023, there will be 17 national test demonstration zones, 7 Internet of Vehicles pilot zones, and 16 smart cities and intelligent networked vehicles coordinated development pilot cities built across the country, with more than 22,000 kilometers of test demonstration roads opened, more than 5,200 test demonstration licenses issued, and a total road test mileage of 88 million kilometers. Autonomous taxis, trunk logistics, unmanned delivery and other multi-scenario demonstration applications are being carried out in an orderly manner. Among them, the Yangtze River Delta region is the region with the most outstanding total number of intelligent networked demonstration projects and the most concentrated major projects; from the perspective of spatial distribution, my country has formed four major intelligent networked vehicle industry clusters in the Bohai Rim, Yangtze River Delta, Pearl River Delta, and central and western regions.

From the perspective of corporate distribution, leading companies are mainly engaged in autonomous driving and decision-making systems, smart cockpits, communication systems and other directions; new entrants mainly enter the industry from communication systems, decision-making systems and travel services.

Figure 2. Industry distribution of my country’s listed intelligent connected vehicle companies

Data source: Zhongguancun Industrial Research Institute

3. Competition pattern: There are many participants and the industry competition pattern is diversified

Traditional car companies, new car manufacturers, technology giants, start-up technology companies and other companies have entered the intelligent connected car market, and the intelligent connected car industry ecosystem is relatively complex. Among them, automobile OEMs focus on integrating various participants such as software, hardware, functions and ecological service providers to complete the delivery from vehicle manufacturing to long-term travel services; Internet companies have advantageous resources such as software, data and maps, and continue to explore the application scenarios of "people, cars and life" to create an Internet service ecosystem.

Table: Types and characteristics of major players in the intelligent connected vehicle industry

4. Autonomous driving: has not crossed the watershed and is generally in the transition stage from L2 to L3

According to the International Society of Automotive Engineers (SAE) autonomous driving level classification, autonomous driving technology is divided into six levels from L0 to L5. Among them, L0-L2 belongs to the category of ADAS (Advanced Driver Assistance System), and still requires a driver to drive; L3 is a watershed, starting from L3, the car really enters the category of autonomous driving; L3 and L4 level intelligent networked cars should have manual driving mode and corresponding devices, and be equipped with a driver; L5 level belongs to fully autonomous driving, which may not have a manual driving mode and corresponding devices, and does not require a driver.

Table SAE autonomous driving level classification

Thanks to the gradual maturity of hardware platforms and software algorithms, my country's autonomous driving has gradually transitioned from L2 to L2+ and L3, and the penetration rate of automobile intelligence has continued to increase. According to statistics, the penetration rates of L2 and L3 in new cars sold in my country in 2022 were 35% and 9% respectively, and are expected to reach 51% and 20% in 2023. However, due to technical and regulatory constraints, the L3 level has not yet been mass-produced and is only installed on small batches of models, or some L3-level functions are reflected on L2+ cars. The "14th Five-Year Plan" period will be a key stage in the development of the domestic autonomous driving market. According to the "Intelligent Vehicle Innovation and Development Strategy" jointly issued by 11 ministries and commissions including the National Development and Reform Commission, the Cyberspace Administration of China, and the Ministry of Industry and Information Technology, L2-level autonomous driving will be mass-produced in 2025, and L3-level will be market-oriented under specific environments. Therefore, autonomous driving is still in its early stages of development, but with the further liberalization of the policy environment and the rapid development of related "software and hardware" technologies, L3-level and above autonomous driving vehicles are expected to enter the market faster.

Overall, intelligent connected vehicles have shifted from small-scale testing and verification to a critical period of rapid technological evolution and large-scale application development. More forceful measures are needed to pool cross-industry forces and seize the "window period" for industrial development.