Collaboration and Co-creation are accelerated in the automotive industry
Several Chinese local media including SHINE reported that SAIC, Pudong New Area and Alibaba Group will work together. They will jointly create the high-end electric vehicle called “Zhiji Motor”.
SAIC Motor, the Pudong New Area and Alibaba Group launched Zhiji Motor, a high-end smart electric carmaker. The company is at Pudong’s Zhangjiang Hi-Tech Park, and has raised over 10 billion yuan (US$1.52 billion). Zhiji Motor will focus on technological innovation and application, as well as create a new operation model. In fact, the company can integrate and utilize SAIC Motor’s resources in research and development, manufacturing and marketing.
Zhiji Motor will take advantage of Zhangjiang Hi-tech Park’s world-class high-tech industrial cluster ecology and core technology resources. They include artificial intelligence and chips. Alibaba will focus on the use of big data, the latest technology from Alibaba’s DAMO Academy. Furthermore, the Chinese tech giant can make use of the synergistic advantages of Alibaba Cloud and other ecosystems. The company will launch a variety of high-end electric cars. It will focus on the new mobility needs of users, optimize the experience of immersive autonomous driving, new human-vehicle interaction and content sharing.
Who is SAIC Motor?
Based on its homepage, we can see the company profile of SAIC Motor as follows.
SAIC Motor is the largest auto company listed on China’s A-share market (Stock Code: 600104). It is striving to get ahead of the industry’s development trends, accelerate innovation and transformation. In addition, it grows from a traditional manufacturing enterprise into a comprehensive provider of auto products and mobility services.
SAIC Motor’s business covers the research, production and sales of both passenger and commercial vehicles. It is actively promoting the commercialization of new energy vehicles and connected cars. Furthermore, it explores the research and industrialization of intelligent technologies such as smart driving.
SAIC Motor also focuses on the R&D, production and sales of auto parts including power drive systems, chassis, interior and exterior trims. Others are the core components and smart product systems of new energy vehicles such as batteries, electric drives and power electronics.
SAIC Motor also produces auto-related services such as logistics, e-commerce, energy-saving and charging technology, and mobility services, auto-related finance, insurance and investment. It has overseas business and international trade, big data and artificial intelligence.
The numbers in SAIC Motor
In 2019, SAIC Motor achieved sales of 6.238 million vehicles, accounting for 22.7 percent of the Chinese market. As a result, it kept itself a leader in the Chinese auto market. It sold 185,000 new energy vehicles, a year-on-year increase of 30.4 percent. Thus, it continued to maintain relatively rapid growth.
It sold 350,000 vehicles in exports and overseas sales, a year-on-year increase of 26.5 percent. This outcome made the company rank first among domestic automobile groups. With a consolidated sales revenue of $122.0714 billion, SAIC Motor took the 52nd place on the 2020 Fortune Global 500 list, ranking 7th among all auto makers on the list. The Chinese company keep the top 100 rank for seven consecutive years.
Who is Alibaba Group?
According to its homepage, company overview of Alibaba Group is described as follows.
ALIBABA GROUP’S MISSION IS TO MAKE IT EASY TO DO BUSINESS ANYWHERE.
We enable businesses to transform the way they market, sell and operate and improve their efficiencies. We provide the technology infrastructure and marketing reach to help merchants, brands and other businesses to leverage the power of new technology to engage with their users and customers and operate in a more efficient way.
Our businesses are comprised of core commerce, cloud computing, digital media and entertainment, and innovation initiatives. In addition, Ant Group, an unconsolidated related party, provides payment services and offers financial services for consumers and merchants on our platforms. A digital economy has developed around our platforms and businesses that consists of consumers, merchants, brands, retailers, third-party service providers, strategic alliance partners and other businesses.
The Alibaba digital economy generated RMB7,053 billion (US$1 trillion*) in GMV in the 12 months ended March 31, 2020, which mainly included GMV of RMB6,589 billion (US$945 billion) transacted through our China retail marketplaces, as well as GMV transacted through our international retail marketplaces and local consumer services.
* The U.S. dollar amounts of annual GMV for fiscal year 2020 represent the sum of GMV in U.S. dollars for the quarters ended June 30, September 30 and December 31, 2019 and March 31, 2020, each converted from the RMB amounts at the average daily exchange rate for each relevant quarter.
AI and Cloud computing are indispensable
When we hear about the name Alibaba Group, what will you come to your mind? The marketplace? Alipay? Or Jack Ma? Alibaba is one of the largest market capitalization companies. What’s more, it is one of the biggest digital companies not only in China but all over the world. The Chinese technology giant has strong expertise in Artificial Intelligence (AI) and cloud computing. In fact, it is obtaining Big Data around us.
If an automotive manufacturer were to make use of these kind of technologies by only themselves, it seems almost impossible. This is because the capabilities of organizations and employees in software companies are totally different from hardware companies. This fact is true, even if an organization wants to create tiny software service.
What’s more, if the management of companies need take advantage of AI, Big Data and Cloud, there are huge gaps of expertise and experiences between IT giants and automotive manufacturers. Therefore, the new initiative between SAIC Motor and Alibaba Group is very understandable. This is because the companies must compete with not only Chinese companies but also big companies outside China. In this sense, collaboration and co-creation are essential to survive in the new automotive era. The rumor between Apple and Kia is another good example of this trend.