China becomes a Player in the AV and EV Car Markets

On Friday, February 23, Chinese automaker Geely announced it had bought a $9 billion stake in the German automaker Daimler. Zhejian Geely Holding also owns Sweden’s Volvo Cars, London’s black-cab maker LEVC and its own Geely Automobile Holdings. It also agreed recently to buy a stake in AB Volvo (trucks) for $3.3 Million.

Geely officials said they were interested in Daimler because the company is the only German automaker not controlled by a family and they wanted to partner with the Germans in developing autonomous vehicles (AV) and Electric Vehicles (EV). Apparently, Geely officials had also been talking informally with Fiat Chrysler for a potential takeover before turning attention towards Daimler.

Stuttgart based analyst Frank Biller said, “A Geely stake in Daimler would underscore their push for cooperation that’ll help them get more expertise, like electric cars. At the same time, this opens another path into China for Daimler.”

Bloomsberg recently posted that China wants to become the Detroit of Electric Cars. Competition inside China is fierce with Chinese as well as worldwide automakers preparing for an electric future. The Chinese government wants to be a world leader in new-energy vehicles and already Chinese consumers buy more electric cars than anywhere else.

In 2017, EV sales doubled worldwide with China counting for more than half. By 2025, the Chinese government has targeted a total of 7 million EVs on the road. Pollution and deescalating the reliance on imported oil are two of the biggest reasons for the push. Also, since both the EV and AV industries are relatively young, China can make a worldwide mark on technology and innovation.

Many world automakers are also in China developing partnership deals or establishing their own factories to avoid the 25 percent import tax. Ford and Volkswagen have already formed joint ventures. Tesla wants to build a factory in the country as well. Competing Chinese companies include the Warren Buffet backed BYD, SAIC Motor, BAIC Motor (in which Daimler has a stake), Great Wall Motor, NIO and of course Geely.

But all this cross pollination of automakers with the Chinese might prove to be a bit vexing to governments. On Monday, German Economy Minister Brigitte Zypries said that the Chinese Automaker’s buy of Daimler stock is a business decision and she said she would not judge (whatever this means). But in two daily German newspapers, Zypries was quoted as saying that investors must abide by market rules. She added, “Germany’s openness must not be used as a gateway for other countries’ industrial-political interests.” The Geely stake in Daimler has rekindled fears in Germany that its technical expertise will fall into Chinese hands.

In the Autonomous Vehicle (AV) realm, Chinese giant Baidu might out google Google. Baidu has developed an open operating platform and has invited everyone to be a partner. (Google did the same thing whenever the company was developing the Android smart phone platform.)

The platform is called Apollo and 1.0 was released in July. Baidu started road testing cars with the platform in late 2017. Senior Director of Baidu’s intelligent driving group Jingao Wang said that with autonomous driving, the open-source approach makes sense simply because it’s an AI-based technology that needs a huge amount of data to thrive.

Since Baidu opened up its platform in July, more than 6,000 developers gained access to the platform and over 1,700 partners have begun to use the open codes while more than 100 automakers have partnered up with the platform.

In January, Apollo 2.0 began operating and cars using the platform can now utilize night driving.

Here are some other recent announcements of Baidu partnerships:

Nvidia, Baidu, and ZF team up for Mass Production of Autonomous Vehicle AI

Blackberry’s QNX OS to be bedrock of Baidu’s Apollo autonomous driving platform

Behind the Microsoft Baidu Cloud Partnership

NXP and Baidu partner on Apollo’s Open AV Platform

Baidu partners with Ford, Nvidia, and others to boost its self-driving car platform

Okay…you get the picture. China is a player and the question now is–can the rest of the world catch up?

 

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