Chinese OEM Autonomous Vehicle Strategies (2023 Update)

Chinese OEM Autonomous Vehicle Strategies

In the fast-paced world of automotive technology, China has emerged as a powerhouse in the development of Advanced Driver Assistance Systems (ADAS) and Autonomous Driving (AD) solutions. As we delve into the landscape of this rapidly evolving industry, it becomes evident that Chinese Original Equipment Manufacturers (OEMs) are not just catching up with their global counterparts but are often setting the pace. At TechInsights, we have been closely monitoring the trends that distinguish China's approach to ADAS and AD technology, revealing a landscape marked by innovation, strategic partnerships, and a concerted effort toward self-reliance.

Chinese automakers, including BYD, Li Auto, NETA, NIO, and XPENG, are making significant strides by developing semiconductor technology and ADAS/AD software in-house. This strategic move positions them to control the entire spectrum of chipsets, software, and electronics crucial to the evolution of automotive technology. This trend is in contrast to their reliance on non-Chinese tier suppliers, chipmakers, and semiconductor providers in the past. By bringing these critical components in-house, Chinese OEMs are not only ensuring a competitive edge but also fostering domestic innovation.

Chinese OEM Autonomous Vehicle Strategies

In the current landscape, vehicles rely on solutions from established players like Texas Instruments, Mobileye, NVIDIA, and Qualcomm. However, a paradigm shift is underway as Chinese OEMs forge relationships with both domestic and international semiconductor vendors. Notable names such as Black Sesame, Cambricon, Horizon Robotics, Huawei, and SiEngine are emerging as key players in providing semiconductor technology for the next generation of vehicles. This shift signifies a move towards greater autonomy and reduced dependence on foreign technologies.

While there was once a fervent focus on achieving SAE Level 4 and Level 5 autonomy, the industry is witnessing a recalibration of priorities. Global players like General Motors/Cruise, Waymo, and Baidu are redirecting efforts and resources away from unprofitable autonomous robotaxi ventures. Instead, the spotlight is now on meeting new car assessment programs and general safety regulations (NCAP/GSR). This shift aligns with market demands and regulatory frameworks, emphasizing the importance of safety features and compliance.

The mandate for a 5-star rating in NCAP continues to be a driving force for low-end ADAS demand. As governments, including China, mandate what was once considered "Advanced" features, such as Blindspot monitoring, Automatic Emergency Braking (AEB), and Lane Departure Warning/Keeping (LDWS/LKA), OEMs are under intense pressure to incorporate these technologies into their vehicles. While this presents a significant volume opportunity, OEMs face challenges due to strong cost pressures and consumer expectations for safety systems as standard equipment.

Chinese OEM Autonomous Vehicle Strategies

To navigate these challenges and generate recurring revenue, OEMs are turning to subscription-based models. Companies like Ford, GM, NIO, Tesla, and Volvo are charging subscription fees for L2+ solutions. This business strategy not only aligns with consumer preferences but also provides a sustainable revenue stream in an industry marked by tight margins.

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