On August 27, Alibaba-backed EV maker Xpeng Motors went public on the New York Stock Exchange, raising $1.5 billion, making it the largest Chinese IPO in the US since Pinduoduo.
So far, China's leading EV makers Nio, Li Auto and Xpeng have gone public in the US. What is Xpeng's unique competitive edge in the EV market against Tesla, Nio, Li Auto, Geely and WM Motor?
In a recent report, Yin Yanji, an analyst at Huaan Securities, pointed out that Xpeng is currently the only OEM doing research and development of the full stack (excluding chipset and radar) of automated driving assistance in China, and that Xpilot/ OTA/Xmart S OS is the biggest highlight, reflecting the three major trends of "smart driving/ smart internet/ smart cabin".
Core competency 1: XPILOT, the automatic driving assistance system
The automated driving assistance system XPILOT is Xpeng's core competence. XPILOT is highly recognized by consumers and has a clear product roadmap.
In terms of consumer acceptance, as of June 30, 2020, about 50% and 90% of customers of the G3/P7 models sold respectively have purchased the automatic driving function.
At present, XPILOT 2.5 has already implemented 6 L2-level autopilot functions, including 1) ASL automatic speed limit adjustment, 2) ALC automatic lane change assist, 3) ACC adaptive cruise control, 4) ATC adaptive cornering cruise, 5) LCC lane centering assist, and 6) AVP automatic parking assist.
In terms of medium- and long-term product planning, Xpeng is developing XPILOT 4.0 will add autonomous driving functions for urban scenes, the version is expected to be launched in 2021 to 2022.
For the medium to long term, Xpeng hopes to have fully automated driving in localized scenarios by 2024 to 2025.
Xpeng plans to launch High Speed Autonomous Driving next year, which will have better features than Tesla and will be the highlight of XPILOT 3.0.
NGP (Navigation Guided Pilot) for short allows the vehicle to change lanes, switch high-speed routes and select the best route in real time according to the route guide after setting the navigation destination on a specific highway.
NGP can now realize the following functions: ① entering ramp; ② lane centering; ③ vehicle detection and identification on the left rear side when merging into the main road; ④ automatic lane change; ⑤ automatic speed limit adjustment; ⑥ driving under low light and multi-climate environment at night; ⑦ recognition of safety road cone.P7 will automatically guide the vehicle into the next lane after detecting the safety road cone with front-facing four-eye camera; ⑧ automatically passing through the toll booth.
Overall, comparing Xpeng XPILOT 3.0's high-speed autonomous navigation driving (NGP for short) and Tesla Autopilot's automatic assisted navigation driving (NOA for short), the Xpeng NGP adds a left rear vehicle detection function when entering the main road, a safety cone recognition function, and an automatic toll booth passing function.
At the same time, XPILOT 3.0 adds forward parking and autonomous memory parking to its auto-parking function, creating a differentiated competitive advantage.
Core competency 2: FOTA iterative upgrade
XPILOT supports the OTA of the whole vehicle and can continuously deliver new functions to users.
OTA (Over-the-Air Technology) is the full name of the over-the-air download technology, at present, the OTA of smart car is mainly divided into two types: FOTA and SOTA.
FOTA (Firmware-Over-The-Air) can remotely upgrade the car's ECU, which will affect the power, battery, and even the body control system related to autopilot.
SOTA (Software-Over-The-Air, Software-On-Line Upgrade), on the other hand, belongs to the application layer, such as application and map updates for in-car systems.
For car manufacturers, only when they have both FOTA and SOTA capabilities can they be said to have the capability of "complete vehicle OTA".
Tesla is the first company in the automotive industry to realize FOTA, and the domestic manufacturers with self-developed FOTA function are Xpeng and Nio.
The traditional automobile architecture is complicated, there are many parts suppliers, and the core control logic of dozens or even hundreds of ECUs are in the hands of the suppliers, so there is a technical dilemma if they want to unify and write instructions to realize FOTA.
Before the development of the whole vehicle, Xpeng's architecture is designed with OTA in mind, and interfaces are reserved for controllers of different systems.
The basic auxiliary functions of XPILOT 3.0, such as ACC/LCC, will be gradually released to P7 users through OTA in the second half of this year.
The T-Box, as an important hardware base for OTA for smart grid-connected vehicles, will likely see a continued ramp-up.
The unit price of an OTA-enabled T-Box is around RMB 700-800, with a median of RMB 750.
According to the China Academy of Information and Communications Technology (CAICT), a government think tank in August 2019, the T-Box is currently installed in the front of domestic OEMs for about 20%-30% penetration rate.
Assuming that the penetration rate will reach 40% in the next 3 years, and based on the annual addition of 20 million passenger cars, the market size of T-Box for OTA function will reach RMB 6 billion.
Not only can OTA increase the residual value of the car, but also the value of the software upgrade will make the software-defined car more valuable, and OTA upgrade may also bring innovation in the business model.
Tesla has introduced an app store, where owners can purchase software packages for upgrades.
Core competency 3: Intelligent Cabin System Xmart OS
The future of intelligent voice in the car is bright: voice input is expected to be an important entry point for in-car scenarios.
The Xpeng P7 is equipped with the Xmart OS 2.0 in-car intelligence system, the latest Qualcomm Snapdragon 820A in-car entertainment chip, and intelligent voice optimized specifically for in-car space.
Ninety percent of the P7's self-developed application operations can be done by voice, and smart services are proactively recommended in multiple areas.
The voice assistant also enables sound source localization, which automatically determines whether the voice is coming from the driver or the passenger, with 98.6% recognition accuracy, before reacting differently to voice commands.
App and mini-program ecosystem: Xmart OS 2.0 supports both the app store and Alipay mini-program ecosystem, which has already supported more than 100 apps and services.
The Alipay mini-program will support Xpeng accounts, and the car system will be compatible with millions of Alipay mini-programs, users can call up Alipay mini-programs and apps through the P7's app store and use Alipay mini-program to wake up and control the car.
The P7 currently has five opening options: the Alipay mini-program, smartphone, smartband, NFC card and traditional car key.
The smart cabin is the new heavyweight entrance in the Internet era, and the in-vehicle consumption scene is yet to be developed.
According to the China Association of Automobile Manufacturers
and GAC Research Institute 2019 data, the value of smart cabin bikes is about RMB 8,000 yuan, and its penetration rate is about 30%.
Assuming the value of smart cabin bikes is RMB 10,000 in the next three years, and the penetration rate can reach 50%, the market size will reach RMB 100 billion based on the annual addition of 20 million passenger cars.
According to our estimation, Chinese people spend more than 60 billion hours in their cars every year, which contains a huge market space.
Smart cabin is the new heavyweight entrance in the Internet era, and the in-vehicle consumption scene is yet to be developed.
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