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China Tech Giants Put $ 19 Billion On Global Electric Car Frenzy

(Bloomberg) – China is emerging as the first real test of big tech ambitions in the automotive world. Giants from Huawei Technologies Co. to Baidu Inc. are investing nearly $ 19 billion in electric and self-driving vehicle companies While Apple Inc. has long had plans for its own car, and Alphabet Inc.’s Waymo, its autonomous drive unit, is the size – and Speed ​​- the move of the Chinese tech titans put them at the forefront of that broader thrust. The bait is an industry that is becoming increasingly high tech as it turns away from the internal combustion engine. Sensors and operating systems make cars more like computers, and the prospect of autonomy considers how people will use it. As the world’s largest market, China is an important battlefield. Established car manufacturers such as Volkswagen AG and General Motors Co. are already grappling with local climbers such as the market treasure Nio Inc. and Xpeng Inc. For the past three months, Huawei, smartphone giant Xiaomi Corp., Baidu, China’s front-runner search engine and mapping app – and even Apple’s Taiwanese manufacturing partner Foxconn – have joined the battle, forging shackles and unveiling their own auto-manufacturing plans. Nowhere was this seen more than at last month’s Shanghai Auto Show, which has become one of the world’s premier events showcasing the hottest new trends in the automotive sector. Visitors queued for hours to gain access to the Huawei and Baidu pavilions. They crowded their displays, taking photos of sensor systems, high-tech dashboards, and model vehicles. Despite the strong interest, the new car era in China is highly competitive and tech giants have a lot to prove: “There’s a great element of trust in tech companies’ bets,” said Stephen Dyer, chief executive officer of AlixPartners Shanghai and former chief executive of Ford Motor Co. “This is about creating something new that doesn’t exist now. This is where the element of belief comes into play. “Huawei was at the forefront and recently announced plans to invest $ 1 billion in electric vehicles and its own self-driving technology on some aspects. The Shenzhen-based company, better known for its cellular networks and the subject of crippling US sanctions, has unveiled its first car developed with BAIC BluePark Mew Energy Technology Co. The medium-sized Arcfox S sedan uses HI, or Huawei Inside, an intelligent automotive software package that allows it to operate in autonomous driving mode in human areas over 1,000 kilometers without human intervention. Delivery is scheduled to begin in the fourth quarter. Huawei’s auto show display drew more visitors than the nearby China Evergrande New Energy Vehicle Group Ltd., an EV upstart who showcased nine models in one of the largest booths despite not selling a car under its own brand. In addition to the Arcfox S sedan, a Seres SF5 Coupé equipped with Huawei Inside was exhibited, together with the HiFin Intelligent Antenna Solution from Huawei, a new generation vehicle communication system and a 4D imaging radar for monitoring roads and traffic. One of the greatest challenges for newcomers to the automotive sector is the capital and resource intensity involved in manufacturing automobiles. How tech companies negotiate will be crucial and potentially provide opportunities for established players in the industry. Huawei repeatedly said it had no plans to produce its own vehicles. Rather, the company works with three Chinese automakers – BAIC Motor Corp., Chongqing Changan Automobile Co., and Guangzhou Automobile Group Co. – to produce self-driving cars that will bear their names as a sub-brand. Guangzhou Auto will work together to build a “truly unmanned car” to be produced in 2024, President Feng Xingya said last month. The automaker will also work with Huawei on big data, smart cockpits, and hardware and electronics chips, Feng said. “China is adding 30 million cars every year and the number is growing,” said Eric Xu, vice chairman of Huawei in April. “Even if we don’t enter the market outside of China, we can make an average of 10,000 yuan ($ 1,550) for every car sold in China. That is already very big business.” Apple seems to be considering a similar route at one point with automakers like Hyundai Motor Co. before the discussions fizzled out. Unlike China’s tech giants, Apple is largely keeping its plans a secret. The company lost a key executive overseeing its self-driving car program in February, and it’s unclear what impact this could have had on Apple’s progress in delivering an economically viable car. The rise of intelligent vehicles and autonomous driving opens up a number of opportunities for technology companies, not least access to data such as real-time insights into popular destinations and the routes that are led to them. In addition, some have the option of charging for technical add-ons and system improvements, and essentially treating the vehicle like computer hardware, the software of which is constantly updated. “You will definitely focus on being smart,” said Yale Zhang, general manager of Shanghai-based consultancy Autoforesight Co. “Making a good electrified car is a“ passport, ”while making a good intelligent car is an“ A- Note “results. This is what these tech giants are good at. Your main income will not come from selling the car, but from finding other ways to make money after it is sold, such as car rental. B. wireless system upgrades or software subscriptions. “Big Tech in China is watching electric vehicles for one reason: Hyperdrive DailyFirst MoversBaidu – The company started investing in robo-taxi technology back in 2013 and financed the Chinese EV startup WM Motors. Over the next five years, $ 7.7 billion will be spent on developing smart car technology through the newly formed Jidu Auto unit. The division plans to launch its first model in three years, followed by new releases every 12 to 18 months, said CEO Xia Yiping, “The core value of cars in the future will be how smart they are,” said Xia and repeated this a familiar refrain. “The earlier a company plans, the more control it has over technologies it has developed, the more advanced the technology, the more power it will have in the market.” Jidu has a core team of around 100 employees and will expand by the end of next year it should be up to 3,000 employees, including up to 500 software engineers. The first batch of cars will be based on the pure EV manufacturing structure of Zhejiang Geely Holding Group Co., while Jidu will work with Baidu’s Apollo autonomous driving unit, with a special focus on smart cars and the mass production of autonomous driving functions. The unit will begin its next fundraising round shortly, with further investment expected from Baidu and outside investors. Chinese smartphone maker Xiaomi has also announced plans to invest around $ 10 billion in electric car manufacturing over the next decade, but hasn’t released many details or given a timeframe for deliveries. Billionaire co-founder Lei Jun announced in March his intention to head a new stand-alone department and drive the drive to electric vehicles in what he described as his last major startup endeavor: “We have deep pockets for this project,” says Lei, who is also Xiaomi’s chief executive officer, said at the unveiling of the plan. “I am fully aware of the risks in the automotive industry. I am also aware that the project, with tens of billions in investments, will take at least three to five years. “While China’s tech giants may be late for the game and step into uncharted territory, it could be to their advantage, AlixPartners’ Dyer said,” This is not an industry to be the first to win, “he said. “In the auto industry, the first mover usually never wins. It is always the follower who wins. Because if you are the first pacemaker, you are the one who pays to learn all the mistakes. “You can find more articles like this at Sign up now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP