Collaboration expected to develop integrated systems to assist drivers
This year, Chinese carmakers SAIC Motor Corp Ltd, BAIC Motor Corp and Chery Automobile Co have united with Internet companies to develop smart cars.
Such moves have heated up speculation on intelligent vehicles, with local media reporting that smart vehicle stocks on Chinese bourses have surged 106.44 percent in the past three months.
Dong Yang, secretary general of the China Association of Automobile Manufacturers, said connecting vehicles with the Internet is a critical trend and will positively influence driving.
Bloomberg Intelligence auto analyst Steve Man said smart cars are designed to interact with the environment and use real-time information about traffic conditions to help drivers make informed decisions.
International Data Corp China's research manager Wang Yue wrote that automakers are seizing this trend to transform their businesses.
He said such vehicles would become two-way information sharing terminals, through which drivers and passengers could obtain information and enjoy services via their connection to the Internet.
At the other end, the access to drivers and passengers could be monetized into sustainable revenue.
Zhang Yu, general manager of Automotive Foresight (Shanghai) Co, said Chinese carmakers and Chinese Internet companies understand each other and, without language barriers, can reach agreement easily.
It is a rare chance for Internet companies to build car models successfully from scratch, and the companies acknowledge that, Zhang said. Their collaboration with the carmakers is not expected to produce new automobiles, but to develop software and hardware to enhance them, he noted.
"By announcing their entrance into auto manufacturing fields, the Internet companies are attracting more attention and promoting their integrated software and hardware systems through cooperation with the carmakers," he said.
Wang forecast that carmakers in the future will need to seek more profit from services and software related to the Internet, as they now face an overcapacity issue and find it difficult to boost their profitability simply by upgrading their manufacturing and managing systems.
The State Council's executive meeting on March 25 called for upgrades in manufacturing, and encouraged industries to adapt intelligence and integrate with the Internet.
Chaired by Premier Li Keqiang, the meeting announced plans for government support, special funding and tax incentives focusing on 10 industrial sectors including information technology and energy-saving vehicles.
General Electric Intelligent Platforms estimated that integrating with the Internet would benefit the manufacturers with about 20 percent more efficiency, 20 percent less costs and 10 percent savings on energy.
Zhang said Chinese smart vehicles are in the startup phase, while while the global carmaker giants' products and technologies work well only on highways, and Google's self-driving car can even navigate in urban areas.
Dong said the introduction of smart cars would mean fewer accidents as vehicles measure distances themselves and utilize automatic braking and parking.
Chinese Internet companies ready to go
・ Jan 20, Le Holdings Co announced it has set up Leshi Super Electric Car Company responsible for its smart, Internet-based electric car program.
・ Feb 3, Internet car service platform Yongche Inc, domestic carmaker Chery Automobile Co and telematics company Pateo Corp established a joint venture to build fully electric smart cars, not for sale, but for a sharing service.
・ Mar 12, SAIC Motor Corp Ltd and Alibaba Group Holding Ltd announced a 1-billion-yuan fund to develop an Internet connected vehicle, and hope to launch in 2016.
・ Mar 10, Robin Li confirmed publicly Baidu Inc has been researching smart cars with auto manufacturers, and he is willing to cooperate with carmakers.
・Mar 23, BAIC Motor Corp and Le Holdings Co signed a strategic agreement to build smart cars, and their first product is expected to make its debut at the Shanghai auto show in April. Letv Holdings neither confirmed nor denied this project is related to its "Super Electric Car".
・Mar 23, Tencent Holdings Ltd, Hon Hai Precision Industry Co Ltd and luxury car dealer China Harmony Auto Holding Ltd teamed up to manufacture smart electric cars.