Auto industry gets smart, adapts to advertise changes

While auto sales in China suffered a significant drop of 42.4 percent in the first quarter of 2020, they have steadily rebounded and, in 2020, exceeded 25 million units, accounting for 33 percent of the world's auto sales.

The Chinese government has made development of new energy vehicles important for the united states. In September, President Xi Jinping announced the plan to really have the country's CO2 emissions peak before 2030, and achieve carbon neutrality by 2060.

8 weeks later, the State Council, China's Cabinet, also announced a 15-year (2021-35) industry development plan, setting clear targets for penetration of new energy vehicles: to achieve 20 percent by 2025, 40 percent by 2030, and more than 50 percent by 2035.Major government incentives include tax exemptions and support for the construction of electric vehicle charging stations.

Consequently, new energy vehicles accounted for 5.4 percent of total auto sales in China this past year and are likely to grow to 6.9 percent this year, based on the China Association of Automotive Manufacturers.

Vehicles are now regarded as the next big part of the era of the web of things, so intelligent connectivity is now standard in the current vehicles.

Along the way, China's auto industry is also rapidly commercializing self-driving vehicle technology. L4(a high amount of driving automation) robo-taxi trials already are taking place in several Chinese cities, including Shanghai, Guangzhou, Nanjing and Changsha.

L4 autonomous vehicles are also being used for the movement of goods. In July, Chinese automaker SAIC announced its quasi-commercial operation of a self-developed "5G plus L4" smart heavy truck at Yangshan Port in Shanghai. Chinese tech giants like JD.com, Alibaba and Meituan are tinkering with unmanned last-mile delivery.

The Chinese government in addition has relaxed its requirement of ownership by foreign original equipment manufacturers. Previously, they could only operate in China through 50/50 joint ventures with local Chinese partners, however now they are able to have full ownership. Tesla entered China through a wholly owned procedure located in Shanghai, and Volkswagen restructured its joint venture with Jianghuai Automobile Group Corp to have 75 percent ownership.

Investments are ramping up in China, the world's most significant auto market. In 2020, how much investment and financing in the country's automobile and transportation sector reached $8.6 billion, predominantly in new energy and autonomous vehicles.

Attracted by the upward exponential growth potential of the industry, new players with differing backgrounds are entering the marketplace.

For instance, Internet giant Baidu has create a joint venture with local carmaker Geely, which recently built another generation of smart vehicles.

Furthermore, Xiaomi, the world's third-largest smartphone maker, has announced it'll set up a fresh business aimed at making electric cars which will be led by the company's CEO, Lei Jun, with $10 billion of investment over another 10 years.

Startups are showing up along the complete value chain of the auto industry. Horizon Robotics, a 5-year-old company focusing on artificial intelligence chips for autonomous vehicles, aims to raise a lot more than $700 million in its series C round. The brand new capital injection will be utilized to accelerate the development and commercialization of the next-generation L4 and L5(full driving automation) autonomous chips. Neolix, a self-driving logistics startup located in Beijing, is running after the rapid growth of China's autonomous vehicle market and says it has sold a lot more than 200 vehicles to such customers as Huawei, Alibaba and JD, with the vehicles deployed in 20cities throughout China.

At the same time, incumbent original equipment manufacturers have already been repositioning themselves to be able to strengthen their competitive advantages in the new game.

In October 2018, Daimler's mobility service and Geely announced the forming of a joint venture to provide reduced ride-hailing service called StarRides. The service, which was launched in December 2019 in Hangzhou, Zhejiang province, now covers nearly all China's metropolises and popular travel destinations.

Among the biggest domestic players in China, Geely is looking to become a full-range transportation solutions provider through self-built capacities and partnerships. Over the past decade, Geely has launched Lynk& Co (a linked car brand providing customized mobility services), Polestar (reduced electric vehicle brand that runs on the subscription model), Caocao (a fresh energy vehicle ride-hailing platform), and has acquired Volvo Cars, London Taxi Co, Terrafugia (the first flying car company on earth) and has signed strategic agreements with Baidu, Tencent, Foxconn and Daimler to supply vehicle-related services.

In the past, the dominant kind of corporate structure in China's auto industry was joint ventures between Chinese and foreign companies. Going forward, various new corporate relationships will surface, ranging from wholly owned businesses to numerous kinds of joint and corporate ventures.

Demand and supply will continue steadily to increase significantly. It is pretty possible that oversupply will emerge, at least using segments. More rigorous customer demand might increasingly emerge, new policies reshaping the industry will continue steadily to evolve, and hyper-intensive competition will manifest.

To the end, past success won't be a warranty for future success. Some companies will end up being marginalized and perhaps be squeezed out of the picture. The winning companies could be the ones that may learn, adapt and strengthen on the way.