Foundry has become popular, and a new battle in the automotive industry has begun.
Editor’s note: This article is from the WeChat public account “Tanker Tanker” (ID: TankerTK), author: Wandering Master, editor: Feng Yu.
In 2021, cross-industry giants such as Baidu and Xiaomi entered the game one after another to build cars, and the domestic auto industry’s melee was further escalated.
The first threshold after a new player enters the game is mass production delivery. From entering the market to delivering the first model, it took Weilai and Xiaopeng nearly 5 years. Compared with the new car “predecessors” Weilai and Xiaopeng, Baidu and Xiaomi have formulated a more radical delivery plan—achieved in three years. Mass production.
Behind the aggressive delivery goals of new players is the evolution of the manufacturing pattern of the automobile industry. “In the past, it took a long time for car companies to build production lines, recruit people to build teams, and open up the supply chain, but now it can save a lot of effort to find car companies.” A traditional car company engineer told Tanker Tanker.
For example, Baidu and Geely established a joint venture company Jidu Automobile. As a strategic partner, Geely will provide support in hardware and carry out manufacturing and production in accordance with Baidu’s product design requirements. In addition to traditional car companies, Foxconn, the mobile phone OEM giant, has also set its sights on car OEMs.
Following the product end, the production format of the automotive industry is gradually moving closer to the mobile phone field. The contemporary industry model has become popular, the barriers to entry in the automotive industry will be further reduced, and the Chinese automotive industry will also enter a new era of melee.
1, Why does foundry rise?
“If a company is still waiting and watching, then it may not even be able to drink the soup.” New energy car company insider Li Zheng “Explore Tanker” said that in the big environment of the car manufacturing industry, he wants to join the game. The companies that make car OEMs are also “uncountable.”
On May 18, according to foreign media reports, Nidec will form an alliance with 20 parts and components companies to set foot in pure electric vehicle foundry business in China.
In April of this year, BYD also stated that its e-platform has won Didi’s foundry orders. According to Didi’s related plans, by 2025, it will achieve the goal of 1 million shared customized cars, which is more than twice the sales volume of BYD in 2020 (BYD’s sales volume in 2020 is 427,000).
Traditional car companies are transforming, and new players continue to encircle. On the same day that Nidec entered the game, Foxconn made another success in making cars.
Stellantis, a new group formed by the merger of Fiat Chrysler Automobiles (FCA) and PSA Peugeot Citroen Automobiles, announced on May 18 that it had signed a non-binding memorandum of understanding with the foundry giant Foxconn to form a joint venture company Mobile Drive. Both sides haveThere are 50:50 voting rights.
The main business of Mobile Drive is software, the development of digital cockpits and personalized connection services, focusing on the development of infotainment, telematics and cloud service platforms. The announcement stated that this joint venture in the Netherlands will serve as a car supply Operators, providing software solutions and related hardware for Stellattis and other interested car manufacturers.
On January 13, Foxconn and Geely signed a strategic cooperation agreement. The two parties will establish a joint venture to jointly provide OEM production and customized consulting services for global automobile and travel companies. This cooperation covers the entire industrial chain and entire process of automotive vehicles, components, intelligent control systems, automotive ecosystems, and electric vehicles.
The opening of production capacity by car companies has given birth to the foundry model, and all this stems from the supply chain reform after the electrification of cars.
Li Zheng said that the original traditional car because of the existence of core components such as gearboxes and engines, the foundry model cannot fully meet the individual needs of car companies, and car companies are unwilling to leak their core technologies. However, after the three-electric system (electric drive, battery, electronic control) replaces the engine, car companies are less concerned, and the difficulty of car foundry is objectively declining.
“Automobiles were originally called the “Pearl” of modern industry because of their complex manufacturing processes and numerous parts and components. Toyota was able to become the first brother through sophisticated manufacturing capabilities in the early years, but now the rules of the game have changed. Competition depends on product design and the level of intelligent networking.” Li Zheng believes that the change in the nature of automobile products has ultimately changed the rules of the game for automobile production.
In addition to changes in the automotive industry, changes in the external environment have also boosted the rise of the foundry model. “The popularity of the foundry model is due to the serious overcapacity of China’s auto industry, on the other hand, it is difficult for new companies to obtain car manufacturing qualifications, and they need to rely on the original car companies to obtain production qualifications.” Gasgoo Research Institute analyst Wang Xianbin Said to “Explore Tanker”.
According to previous data from the China Automobile Association, the capacity utilization rate of passenger vehicles in my country will be reduced from 66.55% in 2017 to 48.45% in 2020, and the vacant capacity of tail enterprises is very serious. Geely, which cooperates with Baidu, is also facing a situation of overcapacity. Geely’s prospectus shows that from 2017 to the first half of 2020, Geely’s capacity utilization rate dropped from 84.96% to 45.18%.
“The operation of a factory requires the payment of a large number of employees’ wages, utilities and miscellaneous expenses, as well as the depreciation of equipment and plants. The established factory falls into a stage of overcapacity due to poor sales, which will naturally cause great pressure on the enterprise. Work becomes a solution that kills two birds with one stone.” Li Zheng said.
As early as 2018, the domestic policy sideThe barriers to entry for the automotive industry are “relaxed”. On 12th, 2018, the National Development and Reform Commission website issued the “Regulations on the Administration of Investment in the Automobile Industry”, which stipulates that newly-built pure electric vehicle companies have accumulated independent intellectual property rights to sell 30,000 pure electric passenger vehicles or pure electric vehicles in the previous two years. The accumulative sales can reach 3 billion yuan to obtain the qualification for car-making.
This means that new players can complete sales standards and obtain qualifications by looking for OEMs. The implementation of this policy has also accelerated the rise of the foundry model.
2, Who is “fat” by OEM?
The foundry model is undoubtedly common in the manufacturing industry. Take the mobile phone sector as an example. Manufacturers such as Apple took away most of the profits, while the profits left to foundries such as Foxconn were minimal. Under the guidance of the right to speak in the distribution of benefits, foundries have gradually become “tool men” for mobile phone manufacturers.
But in Li Zheng’s view, this phenomenon in the field of mobile phone OEMs will not occur in the field of automotive OEMs. “The automobile value-added process is longer, and the number of parts involved is far beyond that of mobile phones. Suppliers have eaten up a lot of profits in the long parts supply chain, so new players want to hold a huge supply chain say like Apple. It is unrealistic. And the parts of the powertrain of new energy vehicles are less, and the value-added manufacturing process is also shortened, which leads to an increase in the voice of manufacturers seeking OEMs.” He said.
In the current OEM model, OEMs and car companies are also making calculations with each other.
Before Geely and Foxconn, companies have already adopted the foundry model. In the early stages of development, new car-making forces, Weilai and Xiaopeng, both chose to step up the threshold of overproduction through OEM. Xiaopeng once looked for Haima Automobile’s foundry, and Weilai chose to use JAC’s foundry in a cooperative mode. Up to now, the cooperation between Weilai and Jianghuai is still continuing, and Xiaopeng has chosen to build its own vehicle factory after passing the initial sales ramp-up stage.
The reason why Weilai and Xiaopeng chose OEM is not difficult to understand, that is, mass production and delivery in the fastest way. “The development of new forces can reduce financial pressure through OEMs, and at the same time can use the mature technology of OEMs to ensure the quality of models, so that you can avoid detours.” Wang Xianbin said.
However, among the new forces in car-making, there is no lack of voices questioning the foundry model. Shen Hui, the founder of Weimar Motors, once publicly stated that the actual foundry operation is too different from the theory. R&D, technology and sales channels are all in their own hands, but the production links have to be handed over to others. Kind of problem. Shen Hui also bluntly said that the worry about the quality of the foundry model “makes myself unable to sleep every day”.
But in Li Zheng’s view, Shen Hui’s worries are only for the manufacturing level of the foundry. “If Toyota OEM for Weimar, Shen Hui will not complain.”
But be honestIn terms of international actions, the foundry model is just a stopgap measure for Weilai and Xiaopeng. After looking for Haima OEM, Xiaopeng was also very honest and chose to build his own factory. In the cooperation between Weilai and Jianghuai, its foundry was also established by the two, and the original production line of Jianghuai was not selected. It is also the control of the foundry model that makes Li Bin, the founder of Weilai Automobile, confident to say “The production quality of Weilai’s Jianghuai plant does not lose to Porsche.”
Looking back afterwards, it is not difficult to find that new forces such as Weilai and Xiaopeng chose the foundry model more out of the consideration of factory construction costs and production qualifications. They also chose to firmly define the product in the foundry. Hold it in your hand. Wang Xianbin also believes that in the process of choosing OEMs, the new forces are also familiar with all aspects of car manufacturing, so as to accumulate experience for future independent car manufacturing.
However, with the entry of leading domestic automakers such as BYD and Geely, the model of automobile foundry is very different from that of a few years ago, and the logic of foundry is being rewrite.
Automotive analyst Zhou Tao told Tanker Tanker that with the development and innovation of the three-electric system of electric vehicles by giant car companies, the open platform of electric vehicles has become a new model of foundry. At present, Geely SEA Haohan architecture, Foxconn HIM and BYD e platform have all become its foundry tools.
“In addition to the most basic foundry, the BYD e-platform and other car-making architecture platforms will also affect the customer’s product design. Perhaps in the future, Geely’s cars and Geely’s OEM cars for Baidu will only have autonomous driving, The difference between intelligent network connection and LOGO.” Zhou Tao said.
According to a Baidu Apollo insider, in the cooperation between Baidu and Geely, Geely will provide engineering and technical support in addition to manufacturing, and the cooperation between the two parties will also be based on Geely’s SEA vast structure.
Li Zheng believes that in the foundry cooperation between Geely and Baidu, Baidu can rely on Geely’s mature car manufacturing technology to achieve a better combination of product hardware and software, and Geely can also accumulate experience in the application of intelligent technology. Baidu The accumulation of technology in artificial intelligence, autonomous driving and other fields will also make Geely profitable.
In addition, Baidu foundry has further amortized the research and development costs of Geely’s SEA vast architecture, and the cooperation between the two parties is tantamount to endorsing each other’s quality.
3, Has the threshold for building cars dropped?
In the short term, the foundry model is a win-win situation, but the ceiling of automotive foundry has loomed.
“A giant like Foxconn will not appear in the field of automotive foundry, and the foundry model will not become the choice of all car companies.” Wang Xianbin predicted to “Tanker Tanker”.
“The automotive industry in the United States and Europe has been developed for nearly a hundred years, and there has never been a company that can OEM all its products. Automobiles are not as easy to standardize as mobile phones. There are too many differences in the product segmentation of automobiles. OEMs are also difficult to meet the differentiated needs of car companies. In the future, it may only be because my production capacity is not enough. I can find someone to help me OEM part of it, or find someone to OEM for a certain model.” He said.
The complicated business situation of the automobile industry is destined for Foxconn to be unable to replicate its foundry legend in the mobile phone field. However, the modular car manufacturing method represented by platforms such as Geely Haohan and BYD e will also have a profound impact on the car manufacturing method.
Wang Xianbin believes that in the future, the model of automobile foundry will evolve into three types. The first is the pure “tool man” model that Haima Automobile OEMs for Xiaopeng; the second is the transformation of enterprises into travel service providers through the OEM model, and mastering C-end resources as their core competitiveness. This is a company such as Didi. The future development direction of the company; the third is the foundry method based on the modular car manufacturing platform of Geely, BYD and other auto companies.
Such a classification will provide the tiers of OEM manufacturers, and it also means that OEMs with more voice will get more benefits. The lowest-level foundry model is completely reduced to a “tool man”, becoming a must-have choice for new players, but it can only earn profits by expanding the scale. The second and third types mean that foundry companies will exert influence on the design and manufacturing of foundry products.
“In this case, most of the foundry car hardware differences will be reduced, and the intelligent network function will become the key to victory.” Li Zheng said. This also puts forward more requirements for manufacturers who manufacture automobiles through OEMs. Companies such as Baidu and Xiaomi must maintain a highly differentiated development in intelligent network connection, and they must also innovate in hardware. “When you make a new hardware, you have to be as innovative as Apple Air pods to complete the product upgrade iteration, because your ordinary parts are not in your hands. “He added.
In addition, in Wang Xianbin’s view, the rise of the foundry model does not mean that the barriers to entry for the car industry are lowered. However, with the gradual maturity of the foundry model, the trial and error space for car companies will be enlarged compared with the past. “In the past, I had to build a car and put it into production. In case I couldn’t sell it, the money would be lost. Now the cost of foundry is much smaller, which reduces the trial and error cost of new players.”
In Li Zheng’s view, the foundry model will become an important model of the auto industry in the future, but it also means that the competitive landscape will become more intense.
“The competition has shifted from hardware security to software and hardware innovation.” A new battle in the automotive industry has begun.