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China automotive market has been increasing in the past 3 decades till 2018 where it is for the first time that China auto market had a Year-On-Year decline in both sales and production volume, and so far, there is no obvious sign of recovery. We believe the current Chinese market dip is a sign of change from emerging to mature market. China is a huge and fast changing market full of fierce and dynamic competition, and we see both challenges and opportunities at the same time.
With larger scale of the cities and further urbanization, the mobility needs of intracity and intercity transport continues to grow. China’s car density is lower than the worldwide average, the car park of China is expected to grow towards the worldwide average level, even though we do not see China’s car park to meet or exceed European or US market due to environment protection, limited energy supply and infrastructure reasons.
China’s future mobility pattern remains diversified: intracity and intercity transportation, individual and shared mobility will co-exist, e.g., with regards to intracity transportation, we see private cars, taxi, shuttle buses, subways, bicycles, and for intercity transportation, we have airplane, high-speed rail etc. While cars will remain as the most important way of private mobility, we see increasing needs of shared mobility, as it makes mobility more flexible, convenient, economic and environmental-friendly.
While challenges exist, we also see opportunities: the continuous upgrade of public infrastructure, such as the improvement of charging infrastructure for NEV and the commercial use of 5G network will accelerate the development of new energy vehicles, intelligent connected cars, and shared mobility in the future.
The global automotive industry is developing towards electrification, automation, intelligent connected vehicle as well as shared mobility. As one of the world's largest NEV market, China is leading the rapid development of new energy vehicle industry. The strong NEV market can mainly be attributed to the strong support of the Chinese government, which implemented numbers of measures including subsidies, easier access to license plates and tax preferences to support the development of NEV in China. Meanwhile, China’s car users have higher acceptance of NEV compared with the other regions and markets. Both the government support and market acceptance provide great opportunities to the development of NEV in China.
If we look at the scenario for the future of the combustion engine, Continental believes that by around 2025, we will see OEM developing their last generation of new combustion engines with production to take place around 2030, consequently combustion technology would start phasing out after 2040, and by around 2050, CO2 free roads and cities could be possible in an ideal scenario. Certainly, exact timing for realization of the roadmap may be different in different markets, it will not be driven by the end consumers, but rather by environmental needs, which will trigger regulations from authorities.
Talking about autonomous driving and intelligent connected vehicles, we believe there are different possible technical roadmaps in different markets, as illustrated in the Corporation MOU signed on "Intelligent Connected Vehicle and Automated Networked Driving” between China and Germany. In China the possible technical roadmap is that the smart infrastructure will play an important role to first support the realization of connected driver assist, then to connected automated driving, while in European market, it is likely that the vehicle could first realize automated driving on its own, then come to the final stage of fully connected automated driving.
No matter which technical roadmap, connected automated driving cannot live without connectivity. Recently, with the release of 5G licenses for commercial use by the Ministry of Industry and Information Technology, China has entered the 5G era earlier than expected, which will accelerate the development of the intelligent connected vehicles in China. Continental is well positioned for the 5G era. Continental’s Hybrid V2X solution integrates technologies not only for 4G and 5G network access, but also Dedicated Short Range Communication (DSRC) and Cellular-V2X for direct V2X communication on the same platform. This enables vehicle manufactures to overcome a big challenge when deploying V2X on a global scale.
As mentioned earlier, the smart infrastructure will become a very important path in China to achieve the connected automated driving. Continental is developing relevant technologies for the market, such as intelligent intersections solution. In CES Asia 2019, Continental showcased the Cooperative-Intelligent Transport Systems solution, which will improve the safety and efficiency at future intersection. It shows a simplified use-case involving infrastructure including Sensor Set (Camera), Road Side Unit, Intelligent Street Lamp, a Bike Rider, and a Vehicle. The solution makes it possible to warn an oncoming driver about a crossing bike rider outside the driver’s line of sight.
Government support also provides opportunities for the development of Intelligent Connected Vehicles (ICV) in China. In December 2017, guideline for ICVs standards was published by MIIT (Ministry of Industry and Information Technology) and SAC (Standardization Administration of the People’s Republic of China), to set up a preliminary ICV standard system to support ADAS and low-level automated driving by 2020, and further to set up a comprehensive ICVs standard system to support high-level automated driving by 2025.
Besides, Chinese users’ higher acceptance of automated driving also contributes to the AD technology development in China. According to the Continental Mobility Study 2018, 89% of the Chinese drivers surveyed are looking forward to automated driving, while the acceptance is 68% in Japan, 52% in Germany and 50% in USA.
The automotive industry is undergoing unprecedented revolution. China, as the largest mobility market, still has huge potential to provide mobility solutions and services to its 1.4 billion people. Only with the strategic deployment, long-term R&D investment, and strong local partnership, can enterprise continue to be a forerunner to move forward the development of the industry.