Ali missed another bus?

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Text / Brother Yu

Source/Alphabet List (ID: wujicaijing)

Ali’s car-building project has made new progress, but it looks more like stepping on the brakes.

On August 1, 2022, Zhiji Automobile, a joint venture between SAIC and Alibaba, announced the completion of the signing of the A round of equity financing agreement. This round of financing was led by Bank of Communications Capital Management Co., Ltd., an equity investment platform of Bank of Communications Group, and SAIC Motor Group continued to make additional investments. The post-investment valuation will reach nearly 30 billion yuan.

It is worth noting that Ali did not continue to invest additionally in the “pro-son” Zhiji Auto in the A round of financing. Moreover, judging from Zhiji’s development history, Ali’s involvement in car building is not much. In addition to providing basic capabilities such as Alibaba Cloud and AliOS operating systems to Zhiji, Alibaba seems to be more responsible for the task of “carrying traffic”.

Like Tencent, Alibaba’s “not touching hardware” has long been known. This is due to the genes of Internet giants. After all, it is difficult to invest in hardware, and the profits are hard to say. However, with the exhaustion of mobile Internet dividends, the growth of users has peaked, and the prospect of going overseas is confusing. As the most promising track, new energy vehicle manufacturing has become one of the options for giants to bet on the future. Baidu, once in the BAT camp, chose to enter the auto industry as a vehicle manufacturer last year. Xiaomi spent 10 billion to build a car, and Huawei is only separated by a layer of window paper from the car. Inspired by the success of domestic and foreign new energy vehicle companies such as Tesla and Wei Xiaoli, the trend of car building is getting more and more popular.

In the field of smart manufacturing, Ali gave up an opportunity, that is, mobile phones. This time, will Ali miss the smart car ride?

A

On November 26, 2020, at the top floor of the Shanghai Tower Sightseeing Hall. SAIC, Pudong New Area and Alibaba Group held a signing ceremony, and a new high-end car brand “Zhiji Auto” was born.

This action of Ali was 46 days earlier than Baidu and Geely officially announced the joint venture to build a car, and 124 days earlier than Lei Jun, the founder of Xiaomi Technology, officially announced his entry into the field of car manufacturing. During that time, the news of Alibaba taking the lead in entering the auto manufacturing industry was overwhelming, and Baidu and Xiaomi seemed to be the “later people”.

However, it can be seen from the ownership structure that Ali is not so concerned about the business of car building.

On December 25, 2020, Zhiji Automotive Technology Co., Ltd. completed the registration in Pudong New Area, and the registered capital of the new company is 10 billion yuan. Among them, SAIC Group invested 5.4 billion yuan, holding 54% of the equity; Zhangjiang Hi-Tech and Alibaba each invested 1.8 billion yuan, holding 18% of the equity.

It can be seen that SAIC Group occupies absolute dominance in the joint venture project of Zhiji, while Ali looks more like the role of a project initiator, or a “mascot”.

Because, if a newly established car brand wants to be a blockbuster, it must have the endorsement of a strong investor. Just like where NIO was established in 2014, it has obtained investment from dozens of well-known institutions in one go. At that time, Li Bin’s logic of taking money was: each company should take as little money as possible and leave opportunities to more “friends” .

According to Alibaba’s investment habits, in the early stage of cooperation, it will not show too strong desire for control. Especially in the automotive industry, as a “layman”, Ali’s more important task is to help a new brand complete the process from 0 to 1, which includes both the help of funds and the blessing of attention.

Ali’s investment in Xiaopeng Motors is the best proof.

In 2017 and 2018, Alibaba participated in Xpeng Motors A+ and B rounds of financing successively, but it disappeared after that, and was absent from B+, C, and C+ rounds of investment. It was not until the Xpeng Motors IPO that Alibaba reappeared as the lead investor in the Xpeng Motors financing list. Moreover, Xiaopeng was sent to the gate of the New York Stock Exchange – in Xiaopeng’s IPO subscription, Ali shot another 200 million US dollars.

In April this year, according to the documents submitted by Xiaopeng Motors to the SEC, as of March 31, 2021, He Xiaopeng, chairman and CEO of Xiaopeng Motors, held 22.7% of the shares and 56.6% of the voting rights; Alibaba held 12% of the shares. %, with 14.6% of the voting rights – Ali is still the second largest shareholder of Xiaopeng.

Although he made a heavy bet, Ali did not strongly intervene in Xiaopeng’s car manufacturing, but “played assistance”.

Xiaopeng P7 Xiaopeng P7

On the Xiaopeng P7, there is an important function called NGP (Navigation Guided Pilot), which literally translates to automatic navigation assisted driving. It needs a high-definition map that provides it with accurate road shape, data on the slope, curvature, heading, elevation, roll, etc. of each lane. So far, Xiaopeng’s high-precision maps are all provided by Alibaba’s AutoNavi map.

In addition, in 2019, when the Xpeng P7 model was still in the pre-sale stage, Xpeng Motors announced that it would cooperate with Alipay and jointly develop the “vehicle payment” function. In the second year, the cooperation between the two parties continued to deepen. The Alipay applet and Xiaopeng Motors in-vehicle system were fully interoperable, and the Alibaba ecosystem gradually entered the car.

In the joint venture project of Zhiji, Ali still does not touch the whole vehicle, and still provides the underlying technical support at the two levels of intelligent driving and intelligent cockpit.

For example, the “Cloud Data Factory” co-operated by Alibaba and Zhiji can provide highly reliable and efficient technical support for the entire link of data collection, labeling, uploading, computing and AI training of Zhiji’s intelligent driving system. At the same time, Ali also helped Zhiji to achieve 100% cloud-native status for the entire business system.

However, it is a little embarrassing that all front-line sales of Zhiji Auto are still using WeChat, a company owned by Tencent, to communicate with customers and retain clues. This means that for such important data as sales leads, Ali’s involvement will not be too deep. It seems that SAIC still has reservations about Ali’s “old friend”.

B

In February 2014, Zhang Xinquan, chief architect of strategy and network security of SAIC Motor, met with Wang Jian, chairman of Alibaba’s technical committee, at the Taiji Temple in Hangzhou for the first time.

In 2015, the entire Chinese Internet industry set off a wave of “Internet +”. Based on that background, SAIC Motor and Alibaba established a joint venture “Zebra Network”. The in-vehicle operating system “Banma Zhixing” jointly developed by the two parties is the first to be installed on the SAIC Roewe RX5 model.

At the Yunqi Conference in 2016, the cooperation results between SAIC and Alibaba were announced to the outside world for the first time. Zhang Yong, chairman and CEO of Alibaba, personally drove the SAIC Roewe RX5. In the co-pilot sat Wang Jian, and in the back seat sat Ma Yun and SAIC Chairman Chen Hong. At that time, Ma Yun said excitedly: “This is a good start, I will recommend it to friends, and I will buy one myself first.”

Although they greeted each other with a smile on the surface, behind the scenes, the cooperation between the two parties was not pleasant.

Because from the beginning, Ali did not intend to be deeply involved in vehicle manufacturing, and it was anchored in the in-vehicle system. In the era of software-defined cars, the in-vehicle operating system is the “brain” of a smart car, and it is also the core entrance. Ali is preempting this entrance.

The vision is beautiful, but the reality is skinny. As the two shareholders of Zebra, SAIC and Ali have disagreements on the future development of Zebra.

SAIC hopes that Zebra can become a dedicated operating system for its models, helping Roewe and MG brands to occupy a favorable situation in the market competition. Alibaba hopes to standardize and scale Zebra’s products to help it gain a firm foothold in the car networking market as soon as possible.

This is actually a normalized contradiction in the auto industry – auto companies hope that their suppliers and partners will develop a set of technologies that can build originality and leadership in the industry. However, suppliers often hope that a set of R&D results can be reused on different products, and the R&D costs can be evenly distributed by scale.

As the contradictions continue to intensify, in early 2019, Shi Xuesong, the first CEO of Zebra Networks, and Zhou Ping, the SVP, resigned one after another. That wave of executive departures kicked off Zebra’s corporate and strategic restructuring. In May 2020, the boots landed – Alibaba dispatched a number of executives to re-in charge of Zebra’s “steering wheel”.

However, Zebra’s reorganization only solved its own problems, and did not completely solve the general problems of the industry. Because big car companies are often on guard when cooperating with suppliers.

It can be seen from the current list of cooperative car companies that Zebra is not going well in developing new customers. In addition to FAW-Volkswagen, Zebra’s vehicle partners are all brands associated with SAIC Group, such as SAIC Roewe, SAIC Maxus, MG, Feifan Motors, Skoda, and Zhiji Automobile, a joint venture with Ali.

When talking about the cooperation between car companies and Huawei to build cars, Chen Hong, chairman of SAIC Group, put forward the “soul theory” point of view: “It is unacceptable for SAIC to cooperate with third-party companies like Huawei for autonomous driving. This is like a company The company provides us with a holistic solution, so that it becomes the soul, and SAIC becomes the body. SAIC cannot accept such a result, and it must take the soul into its own hands.”

Whether it’s an operating system or an autonomous driving solution, OEMs hope to rely on partners to deliver results quickly, but they don’t want suppliers to completely control their future destiny.

Baidu has seen through the “insider” of the auto industry early on. In the process of cooperating with OEMs, Baidu Apollo’s appeal is that Baidu provides software and algorithms to car companies, and Baidu gives them back data and some product needs. But the focus of the controversy is that car companies want to make their own closed-loop systems, and they are not willing to use suppliers as part of the closed-loop, leaving the risk of being “stuck in the neck”.

Baidu, which “sees through the red dust”, can only end up building cars by itself. After all, only by going deep into hardware manufacturing can you fully master the ability of data production and form a more robust and stable closed loop.

C

In the PC Internet era, there is such a description of BAT: Baidu’s technology, Tencent’s products, and Ali’s operations. Technology has always been the foundation of Baidu. Ali, on the other hand, seems to be far away from hardware.

In 2015, when it was still the era of smartphone entrepreneurship, Alibaba’s Wang Jian once said in an interview with Yunos: “Ali will never enter hardware manufacturing, because that is not what Ali is good at.” Entering smart cars in a blink of an eye When the air outlet is used, the tuning of not touching the hardware continues.

The last big company that repeatedly emphasized “not building cars” was Huawei.

At the end of 2020, Huawei’s internal “Resolution on Strategies for Responding to Macro Risks” flowed out, which mentioned that the company “will never build cars, but will become an incremental component provider for intelligent connected vehicles.” However, at the time in the small print at the end of this document, Huawei carefully proposed that the validity period of this article is 3 years.

Huawei’s entry into the automotive industry is more of a forced choice. Huawei’s mobile phone business has been hit hard in 2020. According to IDC data, Huawei’s global mobile phone shipments in 2020 will be 189 million units, a year-on-year decrease of 21.5%. Affected by this, in 2020, Huawei’s consumer business revenue was 482.9 billion yuan, a slight increase of 3.3% year-on-year.

After the mobile phone business was blocked, there are more than 5,000 high-end experience stores with good locations and areas across the country, and they are about to face the situation of running out of stock to sell. Most of these stores are operated by Huawei’s retail partners, and they have signed contracts with shopping malls and property owners for up to five years or more.

This is why Huawei is very eager to choose car companies that already have ready-made factories and ready-made products to cooperate. On the one hand, these car companies can quickly implement the products that Huawei has deployed in the automotive industry chain, and solve their urgent needs; Prepare.

In essence, after Internet companies and technology companies cross-border into the automotive industry, most of them will first consider the combination of existing business and the needs and trends of the automotive industry. But with the deepening of cooperation, the more capable cross-border players will discover what they can do more and more deeply – this is the case with Baidu, and Huawei is still exploring.

Of course, if Ali does not venture into a new field, it must be a decision based on his own situation. Alibaba, 23 years old this year, already has more than 250,000 employees. Compared with “young” companies such as ByteDance, Alibaba must be cautious about entering a huge and unfamiliar field. But at the same time, Ali has less of the “smell of gunpowder” that only existed when he was young and energetic, and more calm and tolerant towards “friends and businessmen”. Therefore, traditional car companies such as SAIC will be quite hostile to Huawei, but respectful towards Huawei. Ali and Tencent, who guard the border, greeted them with a smile.

This article is reproduced from: http://finance.sina.com.cn/tech/csj/2022-08-03/doc-imizirav6539904.shtml
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