Data and chips, the journey of smart electric vehicle players has just begun

Data and chips will be the key to the next round of competition. In this sense, the journey has just begun for all smart electric vehicle players. Recently, Tesla announced that it has established a data center in China to localize data storage, and will continue to add more local data centers. Tesla said that all data generated by vehicles sold in the Chinese mainland market will be stored domestically.

It is understood that Tesla's establishment of a data center in China is not a special case. Data security involves the entire automotive industry. At present, multinational automobile manufacturers including Volkswagen and Ford have already established data centers in China, and some automobile manufacturers that have not yet established data centers have also begun to plan related plans.

When building data centers in China, should we give in or seek new solutions?

With the general trend of "electrification" and "digitalization" in the automotive industry, automotive data security has also become a focus of attention. Previously, there was a rumor on the Internet that Tesla models were denied entry into units involving state secrets such as the National Defense Science and Technology Industry, because Tesla cars have a large number of cameras installed inside and outside, and the data is stored overseas. So, is Tesla's establishment of a data center in China a sign of surrender or a search for a new way out?

"In the end, Tesla will definitely put its data center in China, because China is its base. In recent years, its capital operation, sales, and even profit sources are actually mainly from China." Sun Xudong, founder of the automotive industry consulting and analysis agency Lingying Consulting, pointed out that Tesla has always been ambiguous about data security issues, and from its perspective, it is definitely inclined to transmit data back to its data center in the United States. Because Tesla's entire set of algorithm data models are in the United States, its database gathers data from all over the world and can be trained quickly. If China's data is only placed in China, then China's data will have to be trained from scratch.

As we all know, Tesla's autonomous driving benefits from powerful machine learning technology. Tesla uses computers as the "shadow" of the driver to learn various human driving behaviors during real vehicle driving, which will make the driving actions of fully driverless (FSD) cars closer to human driving habits. This form is officially called "shadow mode" by Tesla. The key to achieving all this lies in data. The larger the amount of data, the more likely it is to provide a good foundation for technology iteration.

For Tesla, the importance of the Chinese market is self-evident. Official statistics show that in 2020, Tesla sold 147,997 vehicles in China, of which 94% were domestically produced Model 3s; global sales were 499,550 vehicles, with the Chinese market accounting for 29.6%.

In addition, according to the public announcement of the second phase of the environmental impact assessment of the first phase of Tesla's Shanghai Super Factory, Tesla will support the early launch of new models and increase the production capacity of derivative models. The new car may be positioned as entry-level, sharing the platform with MODEL 3, and will be put into production as early as 2022, with a starting price of 160,000 yuan. This entry-level Tesla is not the first model to be launched in the US market, but the first model to be launched domestically in the Chinese market, indicating that Tesla has begun targeted research and development for the Chinese market. According to the information on the land use rights agreement of the Shanghai factory disclosed in the documents submitted by Tesla to the US Securities and Exchange Commission (SEC), Tesla must invest RMB 14.08 billion in capital expenditures in the Shanghai factory in the next five years. According to the plan, Tesla's Shanghai factory is expected to achieve an annual production capacity of 500,000 pure electric vehicles after 2-3 years of construction, and achieve 100% localization of parts by the end of 2020. Wang Hao, general manager of Tesla China, said at the beginning of this year that the Shanghai factory has basically achieved the goal of 100% localization.

Sun Xudong said that data is crucial to national security, and further tightening the management of data generated by intelligent products at the government level is a future trend. Specifically, in terms of the impact on the development of intelligent vehicles, in the short term, it may restrict the pace of intelligent development of autonomous driving and other vehicles, but in the long term, the industry can only develop healthily under a complete data supervision mechanism.

"But Tesla will never give up such a big pie in the Chinese market. And China does not want to let Tesla, the 'catfish', go." Sun Xudong said, and the automotive software business model envisioned by Musk needs a larger user base to support it. But Tesla may give up its previous slightly "arrogant" attitude and further strengthen communication and cooperation with the Chinese government to promote the construction of a Chinese R&D center as soon as possible. Based on the data generated by Chinese users, it will promote the development of autonomous driving solutions suitable for Chinese road conditions, maximize the value of this part of data, and promote its own development in the Chinese market.

In fact, the fact that data cannot leave the country is not necessarily a bad thing for Tesla. Sun Xudong believes that this will force Tesla to establish a complete autonomous driving technology team in China and further develop autonomous driving solutions suitable for Chinese road conditions.

Tesla is not the first overseas technology company to keep its data in China. Data, as an important national resource and production factor, has become a consensus worldwide.

Apple moved its data center to "Cloud Guizhou" in 2017. The cloud computing giant Amazon entered China by cooperating with domestic IDC companies - Amazon provides cloud technology and services, and the data is completely stored in domestic data centers. The difficulties encountered by TikTok in the United States last year were finally solved by choosing Oracle as the technology provider. Oracle has always been the highest-level IT service provider of the US Department of Defense and a data platform trusted by the US government.

At the policy level, my country's management of automobile data security is becoming increasingly strict. On May 12, the Cyberspace Administration of China issued the "Several Provisions on Automobile Data Security Management (Draft for Comments)", which clarified the scope of "operators", "personal information", "important data" and behaviors related to automobile data security, put forward five principles for operators to handle personal information and important data, and pointed out that the right to ensure that drivers or passengers terminate the collection, query and deletion of personal information, put the control in the hands of consumers, and clearly pointed out that personal information or important data should be stored in the country according to law. Earlier, the Ministry of Industry and Information Technology also issued the "Guidelines for the Access Management of Intelligent Connected Vehicle Manufacturers and Products (Trial)" (Draft for Comments) on April 7, reiterating that personal information and important data collected and generated in domestic operations must be stored in the country, and intelligent connected vehicle manufacturers should collect, use and protect personal information in accordance with the law, implement data classification and grading management, formulate important data catalogs, and must not disclose sensitive information involving national security.

Statistics show that in 2020, the market penetration rate of L2 intelligent connected vehicles in my country reached 15%. It is estimated that by 2035, these high-level autonomous driving vehicles in China will be used on a large scale. This also means that automobile data will be collected and used on a large scale, and smart cars will face data security challenges.

In response to the draft opinion on May 12, Cui Dongshu, secretary general of the National Passenger Car Market Information Joint Conference, pointed out that the field of smart cars is developing rapidly, and only by clarifying what can and cannot be done can the industry develop healthily. In this draft opinion, personal rights protection and data security are the basis for drawing red lines for operators, and the industry is given room for development on the premise of ensuring safety.

Data is the key to autonomous driving, and how to obtain effective data is also the key for car companies to strive for in the future. It is not difficult to find the contradictions that stand in the way of the development of intelligent electric vehicles. The development of the industry is inseparable from the acquisition of a large amount of data, but the data security issues faced will limit the way companies obtain data, thereby restricting the development of the industry. How to solve this problem requires in-depth discussion between the government, regulatory agencies and the industry.  

At the same time, like other automakers, Tesla is also troubled by chip
shortages. Last week, news broke that Tesla was preparing to take an unusual approach, pre-ordering chips and paying in advance to ensure the supply of important parts.

The chip shortage once caused Tesla's California factory to stop producing Model 3 for half a month. Recently, Tesla announced that the price of the Model 3 Standard Range Upgrade will increase by RMB 1,000, which is also related to the increase in chip costs.

Tesla has a reason to ensure the security of its supply chain. Currently, the production capacity of chip foundries has reached its limit. So far, in many countries and regions, automakers and chip manufacturers have signed contracts for half a year or even a whole year, but they cannot get chips.