Car makers making smartphones will be a trend in China, and if successful, the model will expand to the global market, Canalys said.
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Nio (NYSE: NIO) officially launched its first smartphone model last month, and the CEO of Swedish electric vehicle (EV) maker Polestar mentioned last month that the company plans to launch a high-end smartphone in China in December.
Why are car companies getting involved in phone making? Market researcher Canalys shared their thoughts in an October 11 research note.
The core goal of carmakers choosing to produce smartphones is to boost the competitiveness of their cars and increase exposure for their brands, Canalys said.
By seamlessly integrating smartphones with smart cockpit systems, car companies can create their own ecosystems and differentiate the user experience, the note wrote.
Additionally, as assisted driving capabilities improve and driving behavior shifts, smartphones can help automakers continuously understand the changing needs of drivers, Canalys said.
Nio launched its first Nio Phone on September 21, a high-end Android device with a starting price of 6,499 yuan ($890).
Nio phone pic.twitter.com/pqLstETQ28
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Nio emphasizes connectivity between the Nio Phone and its EV offerings, providing a range of features such as a smart car key for remote car control and more than 30 functions, Canalys noted.
Polestar, on the other hand, is taking a more aggressive smartphone strategy, and will also be getting into other consumer electronics, including smartwatches, which is expected to reinforce the sleek tech brand identity it is intentionally pursuing, Canalys said.
As cars move to more advanced levels of driver assistance, driving behavior will also change, requiring the smart cockpit user experience to evolve with the times, according to Canalys.
In 2023, the penetration of L2+ assisted driving systems will reach 4.7 percent in China, Canalys said.
As regulations for higher-level ADAS (Advanced Driver Assistance System) at L3 and above become clearer, 2025 is expected to be an inflection point for higher-level ADAS in China, with L3 penetration expected to reach 4.6 percent, according to the note.
Introducing smartphones, a high-frequency contact device, into the EV ecosystem helps automakers understand the complex needs of drivers, Canalys said.
When smartphone apps and services are tightly integrated with the cockpit, users can unlock new smart life experiences when product power and entertainment experiences are limited, according to Canalys.
Additionally, automakers can effectively reduce R&D costs as well as shorten development cycles by integrating smartphone functionality to enable a similar user experience compared to the high cost and development time of rolling out new features that need to meet automotive-grade requirements, according to Canalys.
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So how to tell if a carmaker's smartphone strategy is a success or a failure? According to Canalys, the key lies in how often car owners use the phones.
The basic functions and performance of a smartphone from an automaker must be comparable to the devices commonly used by car owners. In addition, the design and user interface need to match the brand tone of the automaker, Canalys said.
To increase frequency of use while driving, automakers need to enable seamless switching of functionality between devices, utilize sensors and devices in the cockpit to enhance the user experience, and provide drivers with intuitive controls, Canalys said.
Automakers must explore strategies to encourage users to try new and scenario-enhancing features that come with smartphone-cockpit integration, Canalys said.
If these features succeed in pleasing users, they will not only enhance the overall user experience of the cockpit, but also create a favorable word-of-mouth for both the smartphone and the car, quickly increasing brand exposure for the automaker, it said.
The production of smartphones by automakers will be a trend in China, and if successful, the model will expand to the global market, Canalys said.
($1 = RMB 7.3068)
Nio launches 1st smartphone: Starts at $890, connects seamlessly with vehicle cockpit
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