With the support of hundreds of billions of yuan from the state, the “car-road-cloud” industry is experiencing explosive growth

The state continues to invest money in the construction of "vehicle-road-cloud integration", and the small-scale pilot project has been completed and is about to enter the fast lane. In early July, the Ministry of Industry and Information Technology and five other ministries and commissions issued the "Notice on the Announcement of the List of Pilot Cities for the Application of "Vehicle-Road-Cloud Integration" for Intelligent Connected Vehicles", and identified 20 cities (consortiums) as pilot cities for the application of "Vehicle-Road-Cloud Integration" for intelligent connected vehicles.

The cities included in the application pilot are Beijing, Shanghai, Chongqing, Ordos, Shenyang, Changchun, Nanjing, Suzhou, Wuxi, Hangzhou-Tongxiang-Deqing consortium, Hefei, Fuzhou, Jinan, Wuhan, Shiyan, Changsha, Guangzhou, Shenzhen, Haikou-Sanya-Qionghai consortium, and Chengdu.

Just before the announcement of the pilot cities, many places have launched vehicle-road-cloud integration demonstration projects. Beijing first put out a 10 billion order, Wuhan's vehicle-road-cloud integration project followed by 17 billion, and Chengdu, Ordos and other cities also launched related project bidding.

The funds for the above projects mainly come from national special bonds or ultra-long-term national bonds. At the same time, local finance and enterprises will also contribute to the construction. For example, the Beijing vehicle-road-cloud integrated new infrastructure construction project clearly states that the source of project construction funds is "government investment + state-owned enterprise self-financing", and the project funding ratio is 70% government investment and 30% state-owned enterprise self-financing.

"Local governments will have a certain proportion of funding, but they will mainly rely on special national bonds." Many industry insiders pointed out that the state will support local investment in vehicle-road-cloud integration projects in the form of ultra-long-term national debt, and the investment will reach 100 billion yuan this year. "It's a bit like the subsidies given to new energy vehicle companies in the past. These funds are mainly used for the installation and installation of road-side and vehicle-side equipment."

The difference is that some executives of relevant companies believe that the integrated construction of vehicles, roads and clouds is infrastructure construction, similar to the construction of high-speed railways. It does not pursue short-term commercial returns, but is a long-term investment as a data infrastructure and people's livelihood project.

01. The core work of the pilot cities is road and vehicle construction

The application for the pilot cities was initiated in early 2024. In January this year, the Ministry of Industry and Information Technology led five ministries to issue a notice inviting cities to apply for the pilot application of vehicle-road-cloud integration. As of the deadline for centralized application at the end of April, more than 30 cities submitted applications. After multiple reviews, 20 cities (consortiums) were finally left. The policy puts forward specific requirements for nine aspects of the pilot cities , including the intelligent roadside infrastructure, the core of which is to build intelligent roadside infrastructure (smart roads) and increase the vehicle terminal assembly rate (smart cars).

Smart roads mainly rely on roadside equipment (RSU). RSU can connect to dozens of signal control systems , vehicle OBU, millimeter wave radar and other detectors , road traffic signals and other information, and can provide differential signals to assist vehicles in high-precision positioning and navigation.

At present, RSU is mainly deployed in traffic intersections, demonstration areas and other areas. Smart cars rely on the vehicle terminal OBU. OBU is a vehicle-mounted device based on C-V2X for vehicle-to-vehicle and vehicle-road collaborative communication. Its main function is to broaden the driver's field of vision and increase the driver's perception of the driving environment and vehicle operation status.

At present, OBU products are still mainly aftermarket. With the mass production of C-V2X models by some vehicle manufacturers, the pre-installed market will also open up and gradually form a scale. According to data from the Ministry of Industry and Information Technology, there are about 8,700 RSUs deployed in various parts of my country. "Last year, there were about 310,000 pre-installed OBU vehicles in my country, which accounted for only about 1% compared with the 660,000 intersections in the country and the 30 million automobile production and sales last year." A senior executive of a related company said that this 1% and 1% penetration rate means that the probability of pre-installed OBU vehicles encountering RSU intersections is very low, "at least the penetration rate must exceed 20% to reflect value."

Some people believe that when smart connected cars account for 10% of the total urban car trips, the existing transportation infrastructure and service models will need to be adjusted; when it reaches 40%, the entire urban transportation structure will undergo major changes; when it reaches 70%, the urban transportation and infrastructure pattern will be completely reshaped, leading to large-scale transformation in many aspects such as urban industrial structure, economic distribution and residents' travel.

The policy puts forward specific requirements for the intelligent construction of pilot cities. The policy puts forward higher requirements for the road-side and vehicle-side deployment in pilot cities.

First, intelligent roadside infrastructure should be built on the road side. Achieve full coverage of 5G communication network in the pilot area; deploy C-V2X infrastructure including LTE -V2X direct communication roadside units (RSU); carry out networking transformation of traffic signals and traffic signs, and achieve a networking rate of more than 90%; deploy roadside sensing equipment and edge computing systems (MEC) at key intersections to achieve interconnection with city-level platforms .

In fact, it is to improve the vehicle-side terminal installation rate. Classified measures will be taken to gradually increase the vehicle-side networking rate, and 100% of pilot vehicles will be installed with C-V2X vehicle terminals and vehicle digital identity certificate carriers; encourage existing vehicles in the public sector to carry out C-V2X vehicle terminal installation and transformation, and the vehicle terminal installation rate of new vehicles will reach 50%; encourage new sales in pilot cities with L2 and above level automatic driving functions to be equipped with C-V2X vehicle terminals; support the interconnection between vehicle terminals and city-level platforms. In addition, the policy also proposes to establish a city-level service management platform; carry out large-scale demonstration applications; explore high-precision map safety applications; improve standards and test evaluation systems; build a cross-domain identity mutual recognition system; improve road traffic safety assurance capabilities; explore new models and new formats, etc.

my country strives to build a unified and shared standard system for "vehicle-road-cloud integration" for intelligent connected vehicles by 2026.

02. The annual investment of 100 billion yuan mainly relies on financial support

This obviously requires huge capital investment. On average, the average equipment cost for a single intersection is 450,000-500,000 yuan, including 30-35 sets of equipment, such as cameras , millimeter-wave radars, lidars , RSU communication units, edge computing units, etc.; the construction cost of the intersection is about 850,000-900,000 yuan, including laying wires, installing light poles, and setting up optical fiber networks.

In addition, there are design and surveying costs, averaging 10,000 to 20,000 yuan per intersection. In addition, the construction cost of the cloud control platform is in the hundreds of millions of yuan, mainly for the control center of the regional cloud. Roughly speaking, there are 660,000 intersections in first- and second-tier cities across the country. If a single intersection is worth 1.5 million yuan, the market size can reach 1 trillion yuan.

According to fundamental analysis and industry volume, the total scale of project bidding in more than 20 cities is expected to exceed 100 billion yuan in 2024, and the annual volume of vehicle-road-cloud projects is 100-120 billion yuan. Among them, communication networks and private networks account for more than 20%, cloud control platforms account for more than 20%, and intersection sensing equipment accounts for 30-40%.

The price of vehicle-side OBU components once reached nearly 10,000 yuan, but has now dropped to 900 to 1,100 yuan. In the future, as the load increases, the price may drop to 500 to 600 yuan. Sources said that during the application process, the pilot cities have cooperated with the leading automakers in the region, such as Changchun and FAW, Wuhan and Shiyan and Dongfeng.

The above-mentioned automakers promised during the application process that they would install OBUs between 2025 and 2030, ranging from 50,000 to 200,000 or more. It is expected that by 2025 or 2027, the number of vehicles equipped with OBUs will reach several million, and in the long term it will exceed 10 million. In addition, cities also plan to transform existing taxis, official cars, buses and municipal vehicles into OBUs.

Where does the money come from? It is mainly provided in the form of special bonds, local bonds or ultra-long-term national bonds. The shortlisted pilot cities can obtain the support of these fiscal policies. Many industry insiders said that fiscal policy support accounts for the majority of the entire construction process. Local governments will allocate funds based on their own conditions. Some funds may come from local finances, and some may introduce social capital.