Automotive Strategies of Alibaba and Tencent

Utilizing AI to promote connected cars and the construction of smart cities



The Roewe eRX5 installed with the OS jointly developed by Alibaba and SAIC

 In July 2018, Alibaba and Tencent were the largest and second largest IT companies in the list of 2018’s Top 100 Chinese Internet Companies announced by China’s Ministry of Industry and Information Technology (MIIT). Baidu, Alibaba and Tencent, collectively referred to as BAT, an acronym using the first letter of their respective company names, have each launched a series of company acquisitions and the development of new businesses to offer and expand a variety of services to meet the needs of consumers and industry. As a result, BAT have become massive platformers, influencing various industries such as financial, retail, logistics, education, manufacturing, and related services.

  Alibaba, which has launched E-commerce (B2B and B2C) platforms such as Taobao and Tmall, had sales of CNY 250.27 billion in 2018 (for the fiscal year ended March 2018), representing an increase of 58.1% y/y. In 2014, Alibaba concluded a strategic partnership agreement with SAIC to develop connected cars, and in June 2015 SAIC released the Roewe RX5 running the "YunOS" operating system, which later would be rebranded as the "AliOS" operating system.

  Meanwhile, Tencent, the largest online gaming company in China, launched the WeChat messaging (SNS) application, and the WeChatPay mobile QR code payment service app. Tencent has been growing steadily with sales in 2017 increasing by 56.5% y/y to approximately CNY 237.8 billion yuan, and net income increasing 74% y/y. In September 2018 Tencent announced plans to restructure the group, shifting its focus from being a consumer business to one catering to industry as well. Then, in November, Tencent announced its "AI in Car" smart car system that merges AI technology and the ecosystem. In early 2018 the Chinese government strengthened regulatory approval to restrict the number of new online games, resulting in decreased profitability on sales for the March to June 2018 period, with net profit decreasing from CNY 18.23 billion to CNY 17.88 billion y/y.

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CES Asia 2018: Electric, intelligent, and connected vehicles (Aug. 2018)
Emerging Chinese EV makers: Rapid development with IT investment and partnerships (Apr. 2018)