What Are the Winning Barriers to Self-driving Competition amid Critical Stage?
When will full self-driving service be fully commercialized? When will it be profitable? How has the philosophy of financing changed? How to set up new barriers in the new stage of competition?
Answers to these questions were shared by Hua Zhong, Senior Vice President of Engineering, WeRide and Maoxiang Li, partner of Cathay CarTech Fund, at a webinar held by EqualOcean.
I. Money is not all.
In the critical stage of the development of self-driving service, what kind of barriers should be set up against new competition? The two guests propose that strategy, partnership and talent are of crucial importance in the path to victory.
WeRide’s strategy has three key factors: technology, operation and policy support.
Hua said at the webinar that “WeRide has been working on three things: technology development, operation expansion, and seeking policy support. We have launched China’s first robotaxi service open to the public last year and published the country’s first robotaxi operation report. ”
“Technology, operation and policy are interconnected and interdependent. Technology is the foundation. Meanwhile commercialization does not happen overnight, operation needs to be planned and rolled out from early on and sustained. True driverless operation needs related policies in place, which requires the technology and operation are ready. So now we are promoting these three at the same time. ”
WeRide Triangle Business Model, the partnership WeRide has established in the ecosystem of the self-driving industry
Self-driving industry has very high entry barriers. The industry’s development is inseparable from that of AI technology companies, car makers and mobility service platforms.
“There is a 1-billion-dollar demarcation line in self-driving industry. AI companies valued less than 1 billion dollars are more focused on quick commercialization, while companies worth more than 1 billion dollars are developing its own ecosystem: building the future together with OEMs, first-tier suppliers and more. The AI companies with such capability is scarce, “ said Maoxiang Li, partner of Cathay CarTech Fund.
In October 2018, WeRide became China’s first L4 autonomous driving technology start-up company to obtain strategic investment from a top-tier global automaker Alliance Renault-Nissan-Mitsubishi. In August 2019, WeRide set up a joint venture, WeRide RoboTaxi, to commercialize robotaxi service. The joint venture is formed under WeRide’s Triangle Business Model which includes strategic alliances among AI technology companies, OEMs / Tier 1 partners and mobility service platforms.
It has always been WeRide’s strategic focus to build an autonomous driving ecosystem with partners from both the upstream and downstream of the industry. WeRide plans to replicate the Triangle Business Model in different cities in the future. In addition to partnering up with local enterprises, it will also gradually establish industry alliances at city level, regional level, and even national and international level through cooperation with larger car manufacturers and mobility companies, firmly establishing itself in the competition.
There are three autonomous driving companies in the world that have set up joint ventures: Baidu with Chinese local governments, WeRide with a taxi company, and Aptiv with an OEM. The joint venture model is undoubtedly another important path to the commercialization of driverless technology in the future.
WeRide sees AI technology as the scarcest resource, playing a key role in this business model. The document of “Strategy for Innovation and Development of Intelligent Vehicles” jointly issued by 11 national ministries and commissions has made clear that in the development of self-driving, tech companies will become the center, while OMEs, tier 1 suppliers and mobility companies are all on the supply side.
Hua believed that the next stage of the industry development is very likely to be driven by institutional investors and will see tech companies playing the leading role. Traditional car manufacturers will prioritize electric vehicles and low-level autonomous cars in their financing and R&D, and their investment in high-level autonomation is mostly as a defensive gesture in nature.
Maoxiang believed that the roles of different parties in an autonomous driving industry alliance vary. “Overseas companies have their own strategies. Startups and OEMs have their own timeframes with different priorities.” Who should be the leader in an alliance? What role does each member play? What value does each offer? Answers to these questions are of crucial importance be it for the interest of new investors or cooperation.
Maoxiang pointed out that by adapting the Triangle Business Model, the launch of WeRide’s robotaxi operation successfully leverages “combined forces”. “If autonomous driving was to be developed by one company alone, the cost might be magnified 3–4 times, or even more. A competitive company should have the ability to leverage the strength of its partners.”
WeRide’s talent lies in a well-structured team with the focus on mid-level management.
Maoxiang pointed out that talent scarcity is of great significance in the self-driving industry. Besides technology and business model, talent is the key piece of the puzzle to fund raising.
WeRide’s core management team has extensive experience in R&D, business models and operation both at home and abroad. Many of them held key positions in renowned companies such as Google, Facebook, Microsoft, Baidu, Didi, and Cisco. Among its 300 employees worldwide, 70% are R&D engineers, who have graduated from world’s top universities or have worked abroad as senior engineers and project managers with Google, Facebook, Apple, Microsoft etc.. There are more than 30 engineers obtained their doctorate degrees overseas and 70 obtained master’s degrees overseas. 30% of the engineering team are autonomous driving industry veterans.
Hua, as the head of the technology team of WeRide in China, fully recognizes the pivotal role played by the mid-level talent in a tech company. “When it comes to growth and development, it is not the same as having a few dozen people rolling up their sleeves working away at technical stuff. At WeRide, we keep bringing in mid-level talent with rich experience. They are what we call the Tech Leads, director-level management people. They will be the backbone of the company with their experience in large scale development projects and problem-solving skills, which will become increasingly important to the development of the company, especially when it grows from a small start-up to a medium-sized business. That’s why we have been putting a lot of effort in mid-level talent. “
II. DMV does no endorsement. Simple and recognized standards should be set up for autonomous driving industry.
At EqualOcean’s webinar, the two speakers also discussed the 2019 MPI report issued by California DMV, which sparked an unprecedentedly heated discussion in the industry on whether or not the MPI value (Miles Per Intervention, the average mileage traveled between two manual interventions) is a reliable standard for assessing autonomous driving technology. Waymo, Kyle Vogt (CTO of Cruise) and Chris Urmson (CEO of Aurora) have all expressed their doubt.
Hua said that there are two main misunderstandings about the DMV report. “DMV just releases whatever data it receives from enterprises. It is not responsible for data verification and does not endorse the companies in question.”
The DMV report also fails to offer a clear definition of disengagement data. It does not give instructions about what scenarios or what kind of cases can be counted as disengagement, so it has not been recognized as a standard by the industry. Statistics and reports based on different companies’ own understanding could cause big discrepancies, so it is difficult to make comparisons among different companies. “Taking MPI as the standard to assess the technical strength of different companies will be greatly misleading.”
As an investor, Maoxiang mentioned that the lack of widely accepted standard makes the decision-making process very painful, because there is no benchmark”
Hua also pointed out that tech people also feel very frustrated about the absence of a well-accepted standard. “Autonomous driving is a very complicated system. It is extremely difficult for us to come up with a single number that says it all. We believe that autonomous driving companies have the responsibility to come up with some relatively simple standards to allow horizontal comparison. “
It is undeniable that for investors and self-driving companies, such widely recognized standards are urgently needed in the industry.
III Five stages of development for self-driving companies
The outbreak of COVID-19 has made the value of self-driving technology ever more prominent. In addition to being safer, more economical and more comfortable, driverless cars can effectively avoid cross-infection, replace humans in high-risk environment and ensure transportation capacity.
Hua pointed out that there are five stages of development for self-driving companies:
The 1st tage: Fix route, short range demo. WeRide achieved this goal when it was founded in 2017. WeRide completed the first closed-field testing in 39 days since its establishment. 81 days into it, WeRide completed its first open-road testing.
The 2nd stage: Small area, point to point demo. WeRide accomplished this in Silicon Valley at the end of 2017. After the headquarters was set up in Guangzhou, WeRide launched China’s first L4 autonomous driving trial operation on Guangzhou International Bio Island.
The 3rd stage: Large scale test/operation that covers urban traffic scenarios. At the end of November 2019, WeRide launched robotaxi service open to the public within an area of 144 square kilometers in Huangpu District and Guangzhou Development District in Guangzhou .
The 4th stage: True driverless test/operation in limited area & time. WeRide is now at the fourth stage and making efforts in terms of technology development, operation expansion and promoting policy-making.
The 5th stage: Large scale true driverless operation that covers all weather and traffic scenarios.
Self-driving company is not far from making profit when it enters the fourth stage (True driverless test/operation in limited area/time); and after entering the fifth stage (Large scale true driverless operation that covers all weather and traffic scenarios), it should be fully profitable.
Hua said: “when drivers are no longer needed behind the wheels, breaking even won’t be a problem. You’ll start making money when half of your fleet are driven automatically.”
“ You won’t make money until the technology is ready. This is why WeRide has been actively pushing robotaxi operation. Technology takes time for adaptation.” Hua emphasized.
WeRide released China’s first robotaxi operation report. From December 1 to 31, 2019, WeRide’s robotaxis completed 8,396 ride-hailing orders with zero incidents, averaging 270.8 rides everyday and reaching 438 rides at its peak. During that period, the fleet accumulated a total mileage of 41,140 kilometers and served 4,683 riders.
“It is our hope that our operation will grow government’s confidence in this technology, as well as the society as a whole and accelerate the formulation of industry regulations.”