Industrial Reconstruction: The Walking Dead VS Lonely Ghosts?

A few days ago, the L9 with an ideal price of 459,800 yuan exploded in pre-sale, and the order is said to have exceeded 30,000.The day before yesterday, the pre-sale of Huawei M7 also exploded, and it is said that the orders exceeded 10,000 in 4 hours.

Just like Cui Liwen, a commune friend, in "Two pre-sale posters, it's shocking!” wrote, “A sudden change has already kicked off the prelude…” So, what problems are behind the “hot” pre-sale of these two models, and what industry trends do they indicate?

In fact, a very important point is the restructuring of the automotive industry that has been discussed in the industry in recent years.Including the recent 2022 China Automotive Supply Chain Conference, the focus on the relationship between supply chain and industrial restructuring.

Among them, Mr. Zhao Fuquan, a professor at the School of Vehicles and Transportation of Tsinghua University and dean of the Institute of Automotive Industry and Technology Strategy, was even more astonishing, saying, "Only hardware is a walking dead, and only software is a ghost."

Of course, this is mostly a joke.The background of this statement is the change from decoupling of software and hardware to "software-defined cars".People who used to disapprove are now beginning to understand.

From "chain" to "net"

First of all, Zhao Fuquan believes that three signs are necessary in the process of turning from a big automobile country to a powerful automobile country:

Logo 1, owning a world-class local vehicle enterprise;

Mark 2, have a complete supply chain system dominated by local enterprises and master key technologies;

The third sign is that it has a scientific, stable and unified legal management system for the automobile industry.

In fact, this process of strengthening involves the deepening of the restructuring of the auto industry.The "overtaking" ofnew energy is the beginning, and the emergence of new species of automobiles has promoted the changes and reconstruction of the ecology of the automobile industry chain.

In other words, the parts industry chain has undergone more profound changes.Taking the details of "lack of cores", the executives of OEMs now think that it is really difficult. Chips have changed from "supply needs to be in short supply" to "in short supply", so they have to go to chip companies for "public relations".And this just shows the subversion of the supply and demand relationship, and the main engine factory has changed from "south-facing face" to north-facing.

This is actually a common phenomenon in an industry. "The core issue is that the factors of production will be transformed from hardware to software, and data will be the new largest factor of production in the future. This will bring about earth-shaking changes in the entire industry."

Previously, Chen Qingtai, chairman of the ChinaElectric Vehicle100 Association, also said at the supply chain conference last year, "It can be said that more than 70% of the traditional parts system will face reconstruction."

In this case, it is no longer enough to consider components alone, and we should look at the problem from a broader perspective of the supply chain.Moreover, the entire automobile industry will become an industry with vitality and self-evolution.

At the same time, the industrial chain and supply chain are changing from "chain" to "network".Miao Wei, deputy director of the Economic Committee of the National Committee of the Chinese People's Political Consultative Conference, also said last year, "In the past, the automotive industry chain and supply chain were basically vertically integrated chain relationships. However, the current division of labor system is a networked ecology, and the original division of labor has been broken. , the specialized division of labor system is being reshaped, and the networked industrial chain and supply chain system are being built at an accelerated pace.”

Of course, Zhao Fuquan's statement that "only hardware is the walking dead, and only software is a ghost" is a bit sensational.However, the integration of hardware and software can really achieve the sublimation of the "soul".The integration capability based on hardware and new software has also become the core competitiveness that vehicle companies must master.

In particular, as the core electronic and electrical architecture in the car moves towards central computing, the number of ECUs is reduced, and the original software and hardware modules are being disassembled for the concentration of domain controllers.In this process, more and more OEMs hope to achieve full-stack coverage, from application-layer software to middleware, underlying software, and even core hardware.

Constrained by the existing supply chain system and its own software strength, it is only a gradual process for OEMs to gather software ownership and dominance.However, once the electronic and electrical architecture enters the stage of central computing + regional control, OEMs will enjoy software dividends for a long time, have a stronger voice in the industry chain than in the traditional fuel era, and will hold the lifeblood of continuous product updates in their own hands.

The prospect is so enticing.Just like the ideal mentioned earlier, the facelift of the ideal ONE delivered in June last year has replaced the supplier's solution with a self-developed system, and the navigation assisted driving function NOA (Navigate on Autopilot) has also been delivered before the end of the year.

For a new car-making force like Ideal, if it does not have the ability to develop itself, it will always be held back by suppliers.Therefore, in February 2021, Li Xiang said on the internal intelligent driving R&D group: "I once again emphasized a clear decision that we must develop self-developed assisted driving and automatic driving functions including visual parking, NOA, and L4. The use of any external suppliers is not permitted."

He also said, "If we are really incapable of doing it ourselves, I would rather close this company. I don't want to start a smart electric vehicle company that is backward and unpromising."

Correspondingly, some people in the industry believe that under the development model for "software-defined vehicles", OEMs (OEMs) are not only the definers and system integrators of the architecture, but also lead the basic software platform that is separated from the underlying operating system and hardware. and most strategic level software development.

The goal and result of this change is that Tier 1 suppliers of each system complete the development of the underlying software to form an open application service ecosystem with plug-and-play efficient scalability.At the same time, the software generates value and meets the needs of thousands of users.

Therefore, compared with the traditional supply chain management model, which emphasizes efficiency, speed, supply, logistics, etc., it is now facing innovative breakthroughs.That is to say, the original supply chain management and control model that only pursues efficiency and cost will fail, and security will become the core consideration in the future.

The impact of industrial restructuring on the supply chain

The impact of industrial restructuring on the automotive supply chain is actually a particularly big topic.For example, what is the essence of industrial restructuring?Refactor in what ways?Another example is the famous "soul" competition in the industry. What is the soul of the future car?Who owns the soul?

After all, this impact is all-round and full life cycle, and the core participants and business models of the auto industry will undergo dramatic changes.

CITIC Securities believes that the century-old automotive industry is being restructured by AI, and the wave of intelligence will continue to restructure automotive products, vehicle market patterns and the automotive industry chain:

1) Products: popularization ofnew energy vehicles, accelerating the intelligent upgrade of automotive products, popularization of autonomous driving, and rapid iteration of smart cockpit innovation;

2) Industrial structure: Technology car companies with full-stack self-research capabilities are expected to lead industrial transformation and enhance brand power; (for example, companies such as Tesla and "Weixiaoli", etc.)

3) Supply chain: Local supply chain companies that deeply bind leading car companies will continue to benefit from the wave of intelligence and the rise of local high-tech car companies.

First of all, from the perspective of products, the consensus in the industry is that, as an important direction for the transformation and upgrading of China's auto industry,ICVwill bring about a new revolution in the automobile industry in the past century, and even lead to a major adjustment in the competition pattern of the auto industry. .

Therefore, around the intelligent networking of autonomous driving and intelligent cockpit, from perception, decision-making to execution, the structure of the vehicle market has been restructured, and the local industry chain has also ushered in a period of historical opportunity.Then, for the core technology of basic support, the OEM must control it by itself.If it can only rely on external forces, the product itself will inevitably become a "spokesperson" of a supply chain enterprise, which is not bad.

Then there is another problem that is happening now and needs to be solved, which is who owns the data?Who will use it?

In the future, the software itself determines the function and performance. For example, the brake pads may not be damaged, but if the software is wrong, an accident will occur.Especially after the conversion of the wire-controlled chassis is completed, compared with the mechanical control, even if the probability is small, the wire-controlled will still make mistakes.In addition, in the continuous OTA upgrade process, data must be reflowed and optimized, so that suppliers are not allowed to participate, how can they participate?and many more.

When it comes to industrial layout, it also involves a new localization issue.In the future, global auto companies will face the challenge of new localization, and the corresponding supply chain and the entire auto industry will undergo fundamental changes.Not only foreign-funded enterprises must do new localization in China, but also not only the localization of manufacturing, but also the localization of research and development, the localization of operations, and the localization of user operations.

China's own brands also need to adapt to the new localization.In China, after the formation of several large industrial city clusters, the competition in the automobile industry has also become a localized competition in the Yangtze River Delta, Pearl River Delta, Nanjing-Hefei Circle, and Chengdu-Chongqing Circle.In foreign countries, there is also the problem of localization after going overseas.

Let's look at Zhao Fuquan's statement: the future supply chain must be completely different, it must be a regionalized, soft and hard integration, and ecologically coordinated supply chain system, "The times are different, and we must open up the supply chain and technology in the future. chain, service chain and circular chain.”

Returning to the supply chain, in the past, the industry has overemphasized cost and efficiency, but neglected the security and resilience of the supply chain.Of course, "truly establishing a new chain of safety, and at the same time grasping the balance, this is a challenge to the chairman, president, R&D leader, and procurement leader of all companies."

After a year and a half of "lack of cores" and various price increases, the shortcomings of the previous simple "order-based management" and passive emergency response have been fully exposed, and it is inevitable to establish a supply chain under an agile system.The core is that the management and control of the supply chain by OEMs should be based on the scientificpredictionof the supply chain, and the OEMs should become a community of shared destiny.

That is to say, in the future, OEMs and key suppliers need to be deeply bound, and even need joint development and data sharing to establish a real strategic mutual trust.We have seen that in recent years, many OEMs have been deeply bound to chip companies such as Horizon. This is the reason.

In fact, when it comes to the security of the domestic auto industry supply chain, in the short term, it is to solve the problem of "guaranteing supply", and in the long term, it is to create a supply chain that integrates software and hardware, has strong resilience, high security, and at the same time takes into account efficiency and cost.In other words, a higher level refactoring.

According to Fu Baozong, director and researcher of the Industrial Institute of the China Academy of Macroeconomics, the "14th Five-Year Plan" period is a critical period for the transformation, upgrading and high-quality development of my country's automobile industry, and it is an important period for my country to move from a big automobile country to a powerful automobile country. period.

During this period, my country's automobile industry may enter a period of low-speed growth, from the original high-speed expansion stage to a new stage of high-quality development.In this new stage of high-quality development, what is reconstructed is confidence and vision.