Toyota, Hyundai, Mercedes-Benz and a host of other global automakers are increasingly turning to Chinese tech giants in a bid to claw back market share in one of the world’s largest—and fastest-changing—auto markets.
In recent days, South Korea’s Hyundai Motor and Kia have unveiled plans to work with Chinese internet giant Baidu on mapping and artificial-intelligence technologies for auto-driving and vehicle software systems in China, while Nissan Motor said it would partner with Baidu on AI and Toyota has tapped gaming giant Tencent for help on AI models, cloud services and big data.
Mercedes-Benz, which saw sales fall last year in China, its single most important market, said it would sell models with an entertainment system featuring a popular mobile racing game from Tencent, helping make its cars a “personal arcade” for drivers.
The tie-ups, many of them announced at the just-ended Beijing auto show, come as competition in China’s market is ratcheting up, both in the form of a monthslong price war and in the development of auto-driving and software systems that are making China’s homegrown brands some of the most technologically sophisticated in the world.
The innovations helped Chinese automakers sell more vehicles at home than their foreign rivals for the first time last year. A growing shift toward electric vehicles has also eroded the one-time advantage of global makers of internal-combustion-engine cars.
“Foreign automakers don’t want to lose their China market” and need to adapt, said CCB International analyst Qu Ke. “Chinese electric-vehicle makers are spoiling customers” in the suite of features being offered at relatively low prices, he said.
One of those features is auto-driving. Local players have invested heavily in the technology, often in tandem with Chinese tech companies skilled in big data and AI computing. Chinese authorities’ data concerns have so far prevented Tesla from rolling out its world-leading, full self-driving system.
EV and plug-in hybrid makers including Seres, Li Auto, XPeng and NIO all offer some form of autonomous driving.
Chinese telecommunications equipment maker Huawei Technologies last month launched a software system to support assisted driving, assisted parking and other auto-driving features, with local brands including Dongfeng Automobile, Changan Automobile, Seres and Geely Automobile all planning to use the Huawei system in their cars this year.
For foreign companies hoping to offer auto-driving, “collaborating with Chinese tech giants is kind of an obvious choice,” said Barney Yao, an analyst with Haitong International.
“This year should mark the penetration of ‘intelligent driving’ features into China’s mass market,” and foreign automakers “have to catch up,” said Nomura analyst Joel Ying.
Another battlefield is in evolving interactive control systems that can perform functions such as analyzing drivers’ health data and stress levels to provide driving suggestions, and allowing drivers and passengers to control car systems by voice and gesture. The best of such systems require access to local data such as user driving preferences and traffic and road conditions in China.
“Only Chinese tech giants have Chinese users’ data,” said Qu of CCB.
Some in-car features are simpler in nature, such as karaoke offerings, refrigerators and massage seats. But they have burnished local automakers’ credentials as innovators and leaders of a new generation of cars, and offer lessons for global automakers losing market share, analysts say.
“In China, driving a car is becoming more of an experience than simply a means of transportation,” said John Zeng, director of Asian forecasting at consulting firm GlobalData Automotive. When drivers free their hands from the steering wheel, they’ll want better entertainment, he added.
“For foreign automakers,” added Yao of Haitong International, “it’s either enter the race now, or never.”