Automotive Strategies of Alibaba and Tencent

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

2018/12/14

Summary

上海汽車のeRX5
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.


Related reports:

Apollo, Baidu’s Open Autonomous Driving Platform (Dec. 2018)
CES Asia 2018: Electric, intelligent, and connected vehicles (Aug. 2018)
Emerging Chinese EV makers: Rapid development with IT investment and partnerships (Apr. 2018)



Alibaba: Connected cars and smart cities

アリババグループの売上高及び純利益

 Alibaba, an official sponsor of the Olympic Games, through its E-commerce (B2B and B2C) platforms such as Taobao and Tmall, generated sales of CNY 250.27 billion in 2018 (for the fiscal year ended March 31), reflecting an increase of 58.1%, with a growth rate of 500% compared to 2014. For the "Singles  Day" holiday on November 11, 2018, Tmall sales in China reached CNY 213.5 billion, reflecting a 27% y/y increase.

 Alibaba signed a strategic partnership agreement for connected cars with SAIC in 2014. And, in June 2015 SAIC released the Roewe RX5 connected car equipped with the YunOS, the predecessor to Alibaba’s current operating system AliOS. Since 2017, Alibaba has accelerated its alliances with OEMs and Tier 1 suppliers. In November 2017, Alibaba was designated by the Chinese government as a key company in the "field of urban transport" to promote the development of the nation’s next generation AI open innovation platforms. In the city of Hangzhou where Alibaba is headquartered, the smart city project is being powered by Ablibaba’s AI-driven technology.

 In September 2018 it was announced that Jack Ma, founder and chairman of Alibaba, will leave his position as company chairman in September 2019.

 

Alibaba Financial Result
Mar. Settlement Term/( in 1 million RMB) 2014 2015 2016 2017 2018
Revenue 52,504 76,204 101,143 158,273 250,266
Income from operations 24,920 23,135 29,102 48,055 69,314
Income before income tax of results of equity invests 26,802 32,326 81,468 60,029 100,403
Net income* 23,076 24,149 71,460 43,675 63,985

*Net income attributable to ordinary shareholders
(Source: Created by MarkLines based on Alibaba Group Holding Limited annual report)

 

ET City Brain urban transport solution utilizes AI

 At the CES Asia 2018, Alibaba stated that the flow from conventional Iov(Internet of Vehicle) to smart mobility and smart cities is comprised of a step-by-step relationship. From a mobility standpoint, all systems have an open northbound interface, where all data will be online and dependent on AI. From the viewpoint of the city, IOv will reach a higher dimension, and the Al city's brain must not only maximize individual mobility efficiency but must maximize urban operational efficiency and will need to consider fairness.

 The ET City Brain is the embodiment of the concept mentioned above, a solution specific to urban areas that is powered by Alibaba's AI-based “ET Brain" cloud-based platform. With the introduction of ET City Brain, the Alibaba Cloud measures and predicts traffic volume in real time, identifies accidents and gives evacuation instructions based primarily on information (data) from the city road network cameras. Depending on the situation, ET City Brain can send alerts and coordinate with various emergency response teams such as the police, fire department, and medical services, as well as optimize emergency response times by controlling traffic signals to give those vehicles priority passage privileges. Moreover, the system can be used to reduce congestion at key points and terminals in a city by adjusting the traffic flow of public transport vehicles such as buses and taxis by identifying areas of crowd density based on data obtained from the infrastructure such as live cameras and Wi-Fi probes.

 In promoting its AI business, Alibaba announced its plans to launch its first indigenous AI interference chip, AliNPU, in the second half of 2019. In September 2019, Alibaba also announced that it will establish a dedicated chip subsidiary to create AI chips and embedded processors to further support the Alibaba Cloud and the group's IoT businesses and to provide customized industry solutions.

 

Alibaba's main initiatives in automotive-related fields
2014 Jul. Concluded a strategic partnership agreement with SAIC to develop “Internet Cars".
Nov. Concluded a strategic cooperation agreement with Huawei in the fields of IoV and smart cars.
2015 Apr. Announced the launch of the Alibaba Automotive division.
2016 Jul. Announced the launch of the world’s first connected car, SAIC’s Roewe RX5 equipped with the YunOS.
Aug. Announced its Ali Cloud division for cloud services. Also announced Alibaba Cloud’s “ET Brain” AI platform and applications.
2017 May. Formed a strategic alliance with Bosch.
Sept. Announced the AliOS operating system.
Oct. Announced the establishment of the Alibaba DAMO Academy, a research and development organization to promote science, technology and innovation.
Alibaba’s "Banma Network" startup formed a strategic alliance with Dongfeng Peugeot-Citroën to develop products based on the AliOS operating system.
Dec. Formed a partnership with Ford to identify opportunities in areas such as cloud computing, AliOS automotive operating system, and sales.
Alibaba and BMW announced their partnership to jointly develop "digitalized services for the car and home".
Announced the establishment of a car vending machine.
2018 Jan. Announced investment in the Emerging EV automaker Xpeng Motors.
Apr. Alibaba’s DAMO Academy completed a prototype car (Lincoln MKZ) with Level 4/5 autonomous driving capability.
Partnered with semiconductor manufacturer NPX for smart car development.
Volvo China announced the adoption of Alibaba's Smart Speaker Tmall Genie.
May. Partnered with SenseHisence and HKSTP to launch the HKAI Lab initiative, which has expertise in image recognition technology. The initiative aims to foster advances in areas such as AI technology and network resources, as well as to cultivate a local community of talent and startups in the areas of AI and data science.
Jun. Formed a strategic alliance with Qoros Automotive related to the Banma Network.
Aug.

Signed an MOU with Autonomic, a Ford subsidiary. The Transportation Mobility Cloud (TMC) developed by Autonomic for connected cars will allow the two companies to provide technical support to OEMs, public transport operators and software developers, and offer connected services and mobility solutions to Chinese consumers.

Signed a strategic framework agreement with the Chongqing Sokon Industry Group.
Sept. Partnered with Bosch; planning to enter the automated valet parking business.
Alibaba announced the direction of its five year technical research plan and jointly established the "Road Cooperative Association Laboratory" with governmental agencies.
Dongfeng Peugeot Citroen released the C4 Aircross connected car equipped with Alibaba’s AliOS operating system.
AliOS 2.0 announced.
Alibaba announced plans to release its first in-house developed artificial intelligence (AI) inference chip, called AliNPU, by the middle of 2019 to expand into IoT businesses such as fully autonomous vehicles, smart cities, and intelligent logistics.
Concluded a strategic agreement with Huawei for the IoV and smart cars.
Announced a strategic alliance with Renesas Electronics. The two companies will collaborate to embed Alibaba’s AliOS in the Renesas microcontroller (MCU) lineup, and expand online sales.
Accelerating the deployment and localization of automated valet parking technology in China based on Bosch’s next-generation intelligent technology.
Oct. Partnered with Volvo Cars.
Announced plans to introduce the AliOS operating system to the Ford Kuga SUV from late 2018.
Alibaba and AutoNavi jointly announce the introduction of an in-vehicle navigation system that uses augmented reality (AR) technology.

(Source:Created by MarkLines using Alibaba’s announcements and various news reports)

 

Major companies in partnership, collaboration, or receiving investment funding
OEM Parts Manufactures IT Semiconductor AI/AR Maps/
Navigation
Mobility Services Others
China SAIC Motor, 
CHANGAN,
Dongfeng  PSA,
Sokan Industry Group,
Qoros Auto,
Lifan Auto,
Geely Auto,
Xpeng Motor
Ningbo Joyson Preh Car Connect DragonDream Information Technology,
Zstack,
KASS Cloud, Cloud Care,
Websoft,
Neusoft,
INFINITIES,
Baosight,
Zhejiang Dahua Technology,
ENJOYOR,
Xiamen Shengxun Information Technology
C-Sky
Microsystems
(M&A)
SenseHisence,
Megvii Technology
Video++
AutoNavi
(subsidary),
MAPabc
DiDi Huawei, SUPCON,
ZTO Express, 
China Mobile,
ICBC, 
CCB,
Bank of China,
Agricultural Bank of China,
China Unicom, KONKA
Europe Renault, BMW,
Volvo Cars,
PSA, VW,
Daimler
Bosch,
Continental,
Siemens
SAP, Suse, Cisco NXP,
STMicroelectronics

WayRay Schneider,
Philips (Consumer Electronics),
Accenture,
Bollore Group,
Covestro AG,
MHD,
Lufthansa,
Richemont,
Royal Dutch Shell
North America Ford Oracle,
TigerGraph (Graph DB), 
Vmware, Splunk,
Fortinet,
F5 Networks,
Plesk,
Haivision,
Hashi Corp,
Catchpoint
Intel,
Cypress Semiconductor,
NVIDIA, AMD
Magic Leap (AR),
EyeVerify
 (M&A/ biometrics authentication technology)
Starbucks,
Marriott International,
DELTA, PepsiCo
Japan Honda Renesas Electronics Softbank,
Fuji Television Network,
KOKUBU Group, The Hiroshima Bank, The Fukui Bank,
The Bank of Kyoto,
Mizuho Bank, NIPPON EXPRESS,
Panasonic
(Consumer Electronics),
JR Kyushu Railway, ANA
Korea Hyundai Group Samsung Electronics SK Holdings C&C
Singapore Lazada Group (M&A) Singapore Post,
Singapore Airlines
Israel SQream (Data analysis),
Twiggle,
Check Point (Security),
Teridion (Cloud),
ThetaRay (Big data analysis)
Infinity,
Lumus
ThetaRay(communication technology)
Others Jaguar & Land Rover Mail.ru Group (Russia)

(Sorce:Created by MarkLines based on Alibaba and Alibaba Cloud materials)

 

Developing cars to supply "AliOS" to OEMs

上海汽車のeRX5

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

  Alibaba's AliOS operating system has four OS solutions for each industry. Among them, the Internet Car Solution in the automotive field is a total system solution with the connected car set at its core. With this solution, partner companies, organizations, and institutions can quickly launch safe and efficient mobility environments and customized internet services.

  The Internet Car Solution is an automotive PaaS (Platform as a Service) service that communicates with other devices in the Internet of Things (IoT) using basic mechanisms such as the data and services of Alibaba’s map subsidiary, AutoNavi, ET City Brain, and cloud communications. This PaaS service consists of device connection and management services, intelligent mobility, intelligent internet services, digital insight, and device connection and management services.

  Prior to the release of AliOS in July 2016, in partnership with Alibaba, SAIC released the first connected car to market, the Roewe RX5, which ran on Alibaba's YunOS operating system. Afterwards, the AliOS-based Banma operating system was announced by Banma Network Technology Co., Ltd., a joint venture with SAIC. The Banma OS was also introduced in a model of Dongfeng Peugeot-Citroën Automobile. In 2018, AliOS was upgraded to Ver. 2.0.



Tencent: Shifting its focus from consumer to industry businesses, and the deployment of AI in Car

テンセントの売上高及び純利益

 Tencent, China’s largest online gaming company was established in Shenzhen in 1998, and listed on the Hong Kong Stock Exchange in 2004. In addition to its main business of online games, Tencent also deploys the WeChat messaging (SNS) application, and the WeChatPay mobile QR code payment service app. In China, the WeChat social media platform is sweeping the market instead of LINE and Twitter. 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. However, 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. In November 2018, Tencent announced that it would voluntary limit the play time of its on-line games for young users.

 In January 2017, Tencent released WeChat's new platform, Mini Programs. With its release, the Mini Programs platform eliminates the need for users to download new apps as well as the associated app updates. Furthermore, the mini programs, applications smaller than 10 megabytes, run on WeChat’s interface through its Wallet feature, to allow users to do everything from online shopping, ticket reservation, and use taxi dispatch services to the settlement of payments. The introduction of mini programs is helping to boost customer retention on WeChat and the use of services provided by Tencent and its affiliated companies for the various daily life needs of its users.

  In September 2017, Tencent announced the restructuring of its organization, simplifying the original 7 business groups into 6 business groups. Specifically, Tencent eliminated the Social Network Group (SNG), Mobile Internet Group (MIG), and Online Media Group (OMG), and newly established the Platform & Content Group (PCG) and the Cloud & Smart Industries Group (CSIG). The PCG promotes the integration and development of Tencent's internet-based social and utility platforms and manages the ecosystem around its content activities, and the CSIG promotes its cloud services and its internet strategy, creating solutions for industry through cloud computing services and AI technology, building an ecosystem that provides an interactive environment between consumers and companies.

 In November 2017, the Chinese government identified BAT as its first group of companies to spur the development of next generation AI technologies. Baidu’s focus will be on “autonomous driving”; the cloud computing division of Alibaba is tasked with a project called “city brains”, a set of AI solutions to improve urban life, including smart transport; and Tencent will focus on computer vision for “medical diagnosis".

Tencent Financial Results
Dec. Settlement Term/(in 1 million RMB) 2013 2014 2015 2016 2017
Revenues 60,437 78,932 102,863 151,938 237,760
Operating profit 19,194 30,542 40,627 56,117 90,302
Profit before income tax 19,281 29,013 36,216 51,640 88,215
Profit* 15,502 23,810 28,806 41,095 71,510

*Profit attributable to equity holders of the Company
(Source:Created by MarkLines based on the Tencent Holdings Limited annual report)

 

Tencent’s 'AI in Car' connected car system and 'Tencent Intelligent mobility (TIm)'

  In November 2017, Tencent announced its AI in Car connected car ecosystem in cooperation with five companies: the GAC, Geely Auto, Changan Automobile, Dongfeng Liuzhou Motor, and BYD. The AI in Car system merges AI technology and the ecosystem based on five functions including intelligent voice services, content services, and value added operations services. AI in Car provides services such as operating information and content in real time that correspond to the driving scenarios of each user. The system has already been installed in GAC's Trumpchi GS4 and Dongfeng Liuzhou Motor’s Fengxing T5 models. In November 2018, Tencent announced that it was upgrading its AI-powered intelligent network for cars based on the AI in Car smart car system.

  In addition, in November 2018 Tencent’s new CSIG (Cloud & Smart Industries Group) business group mentioned above announced its Tencent Intelligent mobility solution (TIm). TIm will be supported by the Tencent AI operating system and the Tencent Cloud. In the future, Tencent plans to collaborate with developers in areas such as public transportation, OEM, logistics, and O2O (Online to Offline), with plans to accelerate the formation of an ecosystem connecting people, goods and services.

Structural image of Tencent Intelligent mobility (TIm)
TIm (Personal, Sharing , Public)
Tencent Auto Intelligence Tencent Autonomous Driving Tencent Location Based Services Tencent Riding Code
Tencent Content Platform Tencent Security
Tencent AI Tencent Cloud


  Regarding autonomous driving, Tencent established an autonomous driving laboratory in the second half of 2016 and signed a strategic alliance agreement with the Shanghai International Automobile City for automated driving. For some time afterwards there were no announcements by Tencent relating to autonomous driving, but in late-October 2018 it was reported that Tencent invested in autonomous vehicle start-up Momenta, which is participating in Baidu’s open-source autonomous driving platform Apollo. In November, Tencent announced its Tencent Intelligent mobility solutions initiative to develop a platform in cooperation with its partners and participating companies, and unveiled its platform consisting of 3 core technologies relating to autonomous driving for the first time.

 

 

Main activities of Tencent's automotive-related business
2015 Sept. Announced an alliance with Bosch in the area of vehicle telematics systems, such as the integration of Tencent automotive related apps and services into a single app.
2016 Sept. Announced its open platform strategy in the area of connected.
2nd half year Autonomous driving laboratory established.
Dec. Signed a strategic alliance agreement with the Shanghai International Automobile City for automated driving.
2017 Mar. Invested in Tesla.
Jun. Announced the "My Volvo" WeChat app for automobiles jointly developed with Volvo Cars
Nov. Formally announced the AI in Car ecosystem related to connected cars.
At the Guangzhou Motor Show, Tencent announced the "iSPACE DA" electric concept car jointly developed with the GAC Group.
2018 Mar. Formed a strategic cooperation agreement with the China Automobile Dealers Association to jointly propose solutions to dealerships in areas such as AI, location information services, after-sales services information, and the collection of user experience data.
Apr. Agreed on a strategic alliance with Changan Automobile for connected cars.
Formed a strategic alliance agreement with FAW. Jointly developing a connected car based on the AI in Car intelligent-connected vehicle (ICV) solution.
May. Announced a business alliance with the GAC R&D Center to cooperate in areas such as automotive internet solutions and big data.
Jun. "JD.com", the E-commerce site and distribution business of the Tencent organization, announced a service using the trunk space of the NIO ES 8 to deliver merchandise purchased from the JD.com website.
Jul. Announced the formation of a partnership with Nokia to collaborate on the 5G next generation communications standard and the establishment of a "5G test laboratory".
Sept. Agreed to a strategic alliance with Dongfeng Liuzhou Motor in the area of intelligent connected cars.
Oct. Invested in autonomous vehicle start-up Momenta.
Nov. Announced its Tencent Intelligent mobility and core technologies related to autonomous driving.

(Source: Created by MarkLines based on the Tencent Holdings Limited annual report)


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Keywords
BAT, Baidu, Alibaba, Tencent, AI, autonomous driving, connected car, Platformer, big data, ecosystem, smart city   

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