Let’s talk about the truth about 5G cars

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Under the global consensus that "the arrival of the 5G era will usher in the era of the Internet of Everything", the entire industry has also launched a vigorous 5G marketing offensive.

If previously it was telecom operators, communication equipment manufacturers, and mobile phone manufacturers that were closest to ordinary consumers who were competing for the right to speak, now automobile manufacturers have also collectively joined the "screen swiping" battle.

Image source: Baidu Encyclopedia

Following Huawei's launch of the world's first 5G foldable screen mobile phone at the Mobile World Congress (MWC) in Barcelona, ​​Geely Holding Group announced that it will cooperate with Qualcomm and other technology companies to provide products based on Qualcomm's automotive 5G platform and C-V2X technology for some of its mass-produced models. The first batch of mass-produced models may be launched in 2021.

Geely is not the first automaker to announce the launch of 5G cars. As early as November last year, SAIC Group announced that it had signed a strategic cooperation agreement with China Mobile to jointly build the first mass-produced 5G Internet car.

The logic behind this is self-evident. In June 2018, 5G completed the first phase of full-function standardization. By the end of this year, 5G will complete the second phase of full-function standardization. This also means that 5G will begin to be commercialized. Therefore, 2019 is also recognized as the first year of 5G commercialization in China. According to the plan, 5G will be pre-commercialized this year and officially commercialized in 2020.

5G is seen as a gold mine. At the 2017 Mobile World Congress, the GSMA Association predicted that between 2020 and 2025, China's 5G connections will gradually reach 428 million, accounting for 39% of the world's 1.1 billion 5G connections. Therefore, GSMA said that China is expected to develop into the world's largest 5G market by 2025.

Compared with the 4G era, the most significant features of 5G are high speed, large capacity and low latency, which are closely linked to emerging technological fields such as the Internet of Things, artificial intelligence, big data and cloud computing.

Among the three major 5G application scenarios defined by the international communications standards organization 3GPP, namely eMBB, mMTC and uRLLC, eMBB corresponds to enhanced mobile broadband such as 3D/ultra-high-definition video, mMTC corresponds to massive Internet of Things communications, and uRLLC corresponds to low-latency, high-reliability communications, which are mainly used for services such as intelligent unmanned driving and industrial automation that require low-latency and high-reliability connections.

This makes 5G a hot commodity in the automotive industry. In the past few years, the industry trend of "electrification, networking, intelligence, and sharing" has forced traditional automakers to transform and upgrade, and smart connected cars with the goal of autonomous driving are one of the directions.

Research firm Gartner has predicted that by 2020, the total number of connected cars in the world will exceed 200 million, and 60% of new cars will be connected cars. At the same time, the number of connected car users in the Chinese market will exceed 40 million, and the penetration rate will increase from 8.3% in 2017 to about 22% in 2020, and the market size will exceed 200 billion yuan.

Consulting firm IHS also predicts that the global connected car market will reach 350 million vehicles in 2022, sales will reach 98 million vehicles in 2022, and the market share will increase to 94%.

However, compared with the heavy investment of telecom operators and communication equipment manufacturers, the layout of car companies in 5G is obviously not as simple as it seems.

1. Car companies join the battle: "Seize the commanding heights of 5G"

At least on the surface, Chinese automakers are as high-profile as mobile phone manufacturers in their 5G deployment. Currently, all major automakers have joined the battle.

Among them, SAIC Motor was the first automaker to propose the concept of "electrification, networking, intelligence, and sharing" - the "new four modernizations" of automobiles, and started early in 5G cross-industry cooperation. It joined the 5GAA Alliance in January 2017 and became a platinum member - this is a cross-industry cooperation alliance initiated and established by automakers, chip manufacturers and communications companies in September 2016. The founding members are Audi, BMW, Daimler, Ericsson, Huawei, Intel, Nokia and Qualcomm. It is mainly engaged in the development, verification and promotion of Cellular-V2X (next generation cellular vehicle networking, referred to as C-V2X) solutions, and its tentacles also extend to smart cities, intelligent transportation systems and other fields.

5 Some of GAA’s board members (Image source: Baidu Encyclopedia)

Between 2017 and 2018, SAIC Motor signed a tripartite cooperation framework agreement with China Mobile, which is also a platinum member of the 5GAA Alliance, and Huawei to jointly build an intelligent travel service system and industrial ecology based on C-V2X (including current 4G and future 5G) technology. At the end of 2018, it announced a collaboration with China Mobile to build the first mass-produced 5G Internet car, and signed a deepening strategic cooperation agreement with Huawei, expanding the scope of cooperation to industrial Internet of Things and other aspects.

In early 2018, Changan Automobile teamed up with Huawei, China Mobile, and China Mobile IoT Co., Ltd. to carry out joint development and research on LTE-V and 5G Internet of Vehicles. In July of the same year, it went to Shenzhen to sign a strategic cooperation agreement with Huawei to establish a joint innovation center to cooperate in vehicle-mounted mobile communication systems, multi-terminal interconnection, vehicle-mounted operating system development, vehicle-computer chip development, Internet of Vehicles evaluation system standard construction and new energy technology exploration.

In November 2017, GAC Group signed a strategic cooperation framework agreement with China Mobile to achieve in-depth cooperation in the fields of 4G Internet of Vehicles, 5G vehicle communication pre-research, C-V2X-assisted connected autonomous driving, basic communication services and joint marketing promotion. Previously, GAC Group also signed a strategic cooperation agreement with Tencent Auto, and the two sides carried out business cooperation in the fields of Internet of Vehicles services and intelligent driving.

Among private car companies, Geely Automobile, which previously cooperated with Qualcomm on 4G LTE car networking technology, announced in October 2018 that it would further cooperate with Qualcomm to develop 5G NR technology, and announced last month that it plans to launch 5G mass-produced cars in 2021. In addition, on November 26 last year, Geely Holding and China Telecom also signed a strategic cooperation framework agreement, agreeing that the two parties will cooperate in core areas such as enterprise informatization construction, car-home Internet, cloud computing and big data, 5G and V2X, edge computing, and international business cooperation.

BYD has cooperated with Huawei in cloud rail business and industrial Internet. In addition, a person in charge of Huawei's global wireless technology revealed to All Weather Technology that Huawei also conducted autonomous driving tests for BYD in its Pingshan factory. Other automakers such as FAW, Dongfeng, and BAIC have also cooperated with local branches of China Mobile on 5G technology.

In order to promote the coordinated development of 5G technology among domestic automobile manufacturers, China established the 5G Autonomous Driving Alliance in September 2018 to compete with 5GAA. Its members include China Mobile, Tsinghua University, Beijing University of Posts and Telecommunications, Dongfeng Motor, Great Wall, BAIC, SAIC, Geely and other multilateral forces from industry, academia and research.

However, the seemingly grand 5G layout of automakers has caused a lot of controversy. The main reason is that although there are many publicly announced strategic cooperation, most of them are signed framework agreements, and in fact, there is not much investment in manpower, material resources or financial resources.

Zhang Xiang, an industry researcher and independent automotive analyst, told All-Weather Technology that the most representative 5G technology achievement demonstration in China was the 2018 China Society of Automotive Engineers Annual Conference and Exhibition held in November last year. This was also the most recent large-scale achievement display in the automotive industry. The first interoperability test between the "three crosses" (communication modules, terminals, and vehicles) in the automotive industry was released at the conference. Eleven vehicle manufacturers including BAIC, Changan, SAIC, GM, Ford, BMW, and Geely and 11 communications and corresponding suppliers including Datang, Huawei, Qualcomm, Huali Zhixing, and TransInfo participated in the test. However, in terms of the actual demonstration, only some basic and simple functional demonstrations were achieved.

For example, in the most intuitive scenario, when two cars are crossing an intersection from different directions, they encounter a building that blocks the sight of the two cars. This is equivalent to both cars entering a blind spot. The C-V2X demonstration is used on site to achieve vehicle-to-vehicle communication to prevent the two cars from colliding at the intersection.

Scenario two is when overtaking, 5G communication can sense the position of the car next to the driver to prevent a collision.

It is worth noting that "(at the time of) the demonstration, there were only two cars in the entire closed area." This is obviously far from the actual road driving scenario.

An industry insider who frequently attends industry exhibitions revealed that some car companies are even more simple and crude, simply sticking the equipment supplier's on-board terminal or communication module to the dashboard with tape, "cutting the wires in the car with pliers, connecting some wires to some terminals, and then wrapping them with tape. It's just like the primitive method used by electricians at home." The insider said that if real development is to be carried out, these terminal devices and chips must be integrated into the interior of the car, but the current practice of some car companies is completely a modification model.

"For example, the OEM signs an agreement with the equipment supplier, and the OEM provides several cars for the equipment supplier to modify. The OEM will also send several engineers to assist. They will tell you what the wire is used for. The equipment supplier will ask you to install a terminal here and connect the wire to make the car move. This is what it does, and it doesn't cost much."

As a popular communications equipment manufacturer in China, Huawei has had contact and even cooperation with many mainstream domestic and foreign automobile companies in the fields of Internet of Vehicles and autonomous driving, and they share the same feeling.

An insider of Huawei told All Weather Technology that last year Huawei cooperated with SAIC Volkswagen on autonomous driving technology. Initially, the company tested the technology in Yunqi Town, Zhejiang Province and found it feasible, so it took over 5 stations. SAIC Volkswagen officially equipped the cooperation with 2 drivers and several prototype vehicles. After working for more than half a year, it was found that it could not be used commercially for a while, so the people were withdrawn, "because they were unwilling to invest anymore."

2. Behind the “much noise but little rain”: the calculations of the OEMs

Why are Chinese automakers, who have a lot of money, unwilling to invest real money in 5G?

One of the key reasons is that the commercial implementation scenarios of 5G are still unclear. In fact, both 5G and autonomous driving technology are still far from commercialization. Unlike telecom operators and communication equipment manufacturers, automobile OEMs in the terminal vertical field are obviously unwilling to over-invest before they see clear and visible benefits, because once changes occur, the early investment may be wasted.

Take autonomous driving as an example. Many multinational automakers, including Nissan and Daimler, have announced plans to achieve autonomous driving by 2020. Google, the pioneer of autonomous driving, expects to achieve this vision by 2017. However, the reality is that no company has yet achieved true autonomous driving. Google, which relies on sensors, radars and cameras for autonomous driving, is unable to continue due to the high cost of sensors and lidar components.

This is true for autonomous driving and the same is true for 5G commercialization.

Ernst & Young has predicted that China's 5G capital expenditure will reach 1.5 trillion yuan between 2019 and 2025. Compared with the 4G era, the number of 5G base stations in the future will be twice that of 4G base stations, and the investment requirements for operators in 5G network construction will be at least 1.5 times that of 4G. According to a report by the Daily Economic News, the main investment of operators in 5G network construction may reach 1.23 trillion yuan, an increase of 68% over 4G investment.

But the embarrassing fact is that the three major operators, including China Mobile, China Unicom and China Telecom, are still stuck in the quagmire of 4G investment.

On December 4, 2013, the Ministry of Industry and Information Technology officially issued 4G licenses to the three major telecom operators. According to a report by the National Business Daily in April 2018, China Mobile's 4G network investment was 80.6 billion yuan, 79.1 billion yuan, 83 billion yuan and 65.7 billion yuan from 2014 to 2017, and the figure for 2018 is expected to be 58.5 billion yuan. In five years, China Mobile's investment in 4G networks exceeded 360 billion yuan.

The data also shows that by the end of 2017, China Mobile had 1.87 million 4G base stations nationwide, while China Unicom and China Telecom had 850,000 and 1.17 million 4G base stations respectively. Including the cost of related supporting facilities, the industry estimates that the three major operators have spent at least 800 billion yuan on 4G network construction.

It is also reported that the cash flow loss of the three major operators in the 3G era was 340 billion yuan. In theory, this means that the three major telecom operators have not yet recovered their investment in 4G networks. According to international experience, it usually takes 7 to 8 years for 3G and 4G network investment to pay back. It is also based on this that since 2017, there have been constant news about the merger of China Unicom and China Telecom. In 2018, the three major telecom operators all reduced their investment in 4G.

The Global System for Mobile Communications Association, which represents global mobile operators, estimates that the cost of launching 5G in Europe alone will be as high as 500 billion euros. Global Internet companies, automakers, and communications equipment manufacturers all agree that this is a hugely expensive project that cannot be completed by one company alone.

"The development of 5G terminals depends on the development of 5G terminals from its inception to true commercialization." Bai Yanmin, vice president of ZTE and general manager of TDD & 5G products, said at a meeting in September last year that 5G commercialization needs to explore more application possibilities in vertical industries, which is also the consensus of current telecom operators and communication equipment manufacturers.

For example, the eMBB scenario is suitable for the development of large-bandwidth services, such as new forms of live media broadcasting and 360-degree VR, while the uRLLC ultra-low latency scenario is suitable for applications such as remote control, drones, autonomous driving, and industrial control. The most intuitive example is the 5G mobile phones that Chinese mobile phone manufacturers have launched.

However, compared with mobile phone manufacturers, the needs of automobile manufacturers are obviously different. Automobile transportation is more dependent on ultra-large-scale infrastructure construction. Therefore, industry insiders including Zhang Xiang believe that 5G must first be applied on mobile phones on a large scale, and operators must first make money from mobile terminal users and further roll out 5G networks before it can be slowly applied to cars.

There is no doubt that this is also the reason why the OEMs are not in a hurry.

"The commercialization of 5G has little to do with us at present, it is a matter of the communications industry." A mainstream automobile manufacturer who requested anonymity told All Weather Technology that the cooperation between automobile manufacturers and communications companies is mainly to make smart connected cars, and some powerful automobile companies will also do some technical research and development reserves themselves. But that's all.

Another automaker said it would not include technologies with little hope of mid-term breakthroughs in its task line, as it viewed this as a waste of resources.

At a time when new technologies are evolving at the speed of light, won’t investing in 5G in two years miss the opportunity to become a 5G leader? In the eyes of people in the automotive industry, this is not a problem at all. Just like the clear division of labor in the traditional automotive industry chain, in the 5G commercial industry chain, telecom operators, communication equipment vendors, and terminal application vendors also have their own responsibilities, namely: operators lay out the network, equipment vendors provide terminal products and communication modules, and for car companies, they only need to buy module products and integrate them into the car circuit board.

"Car companies are very realistic. They want to talk about how much a system costs before the product is out," said Zhang Xiang.

3. A battle for control?

To some extent, just like the new energy vehicle trend that emerged in 2009 and the Internet of Vehicles that became popular in 2014, the performance of automakers in this wave of 5G competition reflects the regulatory will and policy drive. Therefore, in the eyes of some people in the auto industry, this is no different from the automakers' big push for "Internet of Vehicles" when the concept of Internet of Vehicles emerged a few years ago. On the one hand, it is a response to relevant policies, and on the other hand, it is also a marketing gimmick.

However, it is worth noting that for car companies, while cooperating with the communications industry and Internet companies, they are also faced with the attack and defense of control, as well as the struggle for new discourse power.

Take the cooperation in the Internet of Vehicles as an example. From 2014 to 2016, the concept of Internet of Vehicles, which became popular in the Chinese auto market after CES, gave rise to a number of cross-border alliances between Internet companies and automakers. For example, LeEco, which was booming at the time, cooperated with BAIC New Energy, BYD and Dongfeng Fengshen to promote its self-developed mobile phone car networking system Ecolink. Communications equipment manufacturer Huawei also cooperated with Dongfeng Motor, BYD and other automakers in the development of in-vehicle systems. However, most of the cooperation ended in failure.

Internet giants such as Baidu have not had smooth cooperation with OEMs. Baidu had previously worked with several automakers, including BMW, on Internet of Vehicles and even autonomous driving. Baidu hopes to have in-depth exchanges on V2X and even the Internet of Things (or autonomous driving technology) in addition to basic long-term cooperation on underlying map data. "Automakers provide manufacturing experience, and Internet companies provide data and software technology. This is a "strong alliance."

But automakers obviously don’t think so. As new technologies have swept the world in the past few years, traditional automakers have realized that with the penetration of electronics, digitization, informationization and intelligence into automobiles, the future automotive industry will gradually transition from being dominated by hardware to being dominated by software and services. Whether automakers will become OEMs for Internet giants in the future has become a shadow in the minds of automakers.

As a result, automotive OEMs realize that they must firmly grasp control—possess and maintain core competitiveness at the information technology level.

The final result is that the automakers who are unwilling to lose control and the Internet and chip giants who are pressing forward step by step are fighting each other. The processors and operating systems used by various manufacturers are different, which makes it impossible to standardize the nodes of the Internet of Vehicles, which in turn makes it difficult for various applications to be universal, and ultimately makes it impossible to form industry standards and thus business models.

As you can see, the Internet of Vehicles has been booming for more than four years, but there is still no unified industry standard. According to previous industry analysis, car companies with divided interests cannot unite to complete industry standards. They can only be completed by the state or formulated by Internet companies.

Obviously, the situation of 5G is not optimistic either. Wu Jianjun, head of Huawei's European Research Institute's 5G team and one of the founders of 5GAA, once bluntly stated the concerns of automakers about the 5G technology route: some international automakers have always been worried that V2X, which relies on cellular technology, will lead to the control of autonomous driving business by telecom operators. Therefore, although they all know that cellular technology has better performance than 11p (DSRC) and can reuse operator base stations, reduce road test equipment investment, and help accelerate the commercialization of the Internet of Vehicles, they are unwilling to accept V2X. It was not until the MAO architecture was proposed in 5GAA, which balanced the division of forces among the various parties in V2X, that the above-mentioned automakers' concerns about cellular network V2X were dispelled.

Autonomous driving C-V2X solution (Image source: Baidu Encyclopedia)

In fact, although communication equipment vendors and Internet companies have repeatedly stressed that they are willing to be "pipeline" service providers and content service providers and will not get involved in vehicle manufacturing and core technologies, it is not easy for car companies to really relax. Although most car companies believe that it will not be easy for Internet companies to succeed in their own battlefields, how long can the industry barriers of vehicle manufacturing last? This is a question.

However, under the impact of new technologies, automakers are realizing the importance of openness and cooperation. "The automotive industry also needs to be exposed to a lot of cross-border technologies. We may have to design all the matching technologies. For traditional manufacturing, the challenge is very great." An auto company person told All Weather Technology that on the one hand, the development cost of high-precision technology is high, far beyond the ability of a single auto company to bear. On the other hand, this is a necessary expenditure in the face of the future. If we don't do it now, we will inevitably fall behind in the future.

"The automobile market is completely open and free to compete. Under such circumstances, if you don't move forward, you will fall behind," said the above person.

Of course, while waiting for operators and communication networks, Chinese automakers still have a lot to do. The 2018 Global Mobile Trends Report: What Factors Are Driving the Mobile Industry Forward? released by GSMA Intelligence believes that no matter what the future holds for 5G, 4G will remain the mainstream in the next 10 years.

Wen Ku, Director of the Department of Information and Communications Development and spokesperson, previously revealed that China's 4G network coverage was 95% in 2018, and the future goal is to strive to increase the 4G network coverage to 98% by 2020. However, the market share of models that have applied 4G technology in China is far from enough. Even though millions of Internet cars from major brands are already on the road, there is still a long way to go before the real 4G scene application is implemented. These are all homework that Chinese car companies need to make up.