Chinese Tech Giants Enter the Automotive Market

Over recent months, numerous prominent Chinese technology companies have unveiled their strategies for entering the automotive industry. Several internet-based firms, such as the search engine Baidu, have opted to collaborate with established automotive manufacturers to facilitate vehicle production.

Xiaomi, traditionally focused on smartphone production and emphasizing its asset-light business model centered on software services, has also joined the movement towards automaking. This has led industry analysts to consider which company might be next to announce its automotive ambitions.

Huawei is frequently mentioned in these discussions.

Huawei's Position in the Automotive Sector

Huawei appears well-positioned to participate in vehicle manufacturing, possessing greater qualifications than some purely internet-focused companies. This is due to its established expertise in manufacturing processes, supply chain management, strong brand recognition, and extensive retail network.

However, the company has consistently refuted reports suggesting the launch of its own car brand. Instead, Huawei intends to function as a Tier 1 supplier to automakers, also known as original equipment manufacturers (OEMs).

Eric Xu, Huawei’s rotating chairman, recently reaffirmed the company’s stance during its annual analyst conference held in Shenzhen, stating that Huawei is not pursuing car manufacturing.

Focus on ICT Expertise

“Since 2012, I have personally engaged with leaders from major Chinese and international automotive companies, including those from Germany and Japan,” Xu explained. “These discussions revealed a need for Huawei’s expertise in information and communication technology (ICT) to drive the development of future vehicles, rather than the Huawei brand itself.”

He emphasized that this strategic direction has remained consistent since its inception in 2018.

The Automotive Industry's Key Players

Auto production involves three primary roles:

• Branded vehicle manufacturers, such as Audi, Honda, Tesla, and potentially Apple.
• Tier 1 suppliers, including Bosch and Continental, and now Huawei, who provide parts and systems directly to carmakers.
• Chip suppliers, like Nvidia, Intel, and NXP, whose role is becoming increasingly vital with the advancement of automated driving technologies.

Huawei also develops its own automotive-grade chips.

An executive from a Chinese robotaxi startup, speaking anonymously to TechCrunch, stated, “Huawei wants to be the next-generation Bosch.”

Securing Partnerships

Huawei has clearly defined its role as a Tier 1 supplier and has already secured significant partnerships. The company has established collaborations with BAIC, Chang’an Automobile, and Guangzhou Automobile Group.

Xu assured stakeholders that “We won’t have too many of these types of in-depth collaboration,” indicating a selective approach to partnerships.

Level 4 Autonomy: A Closer Look

Arcfox, a new electric vehicle brand operating under the umbrella of the state-owned BAIC Group, recently unveiled its Alpha S model. This vehicle integrates Huawei’s “HI” systems – an abbreviation for Huawei Inside – mirroring the “Powered by Intel” branding strategy.

The Alpha S electric sedan is offered with a price range of 388,900 to 429,900 yuan, which translates to approximately $60,000 to $66,000. It boasts a suite of Huawei functionalities.

These features encompass an operating system powered by Huawei’s Kirin chip, access to applications running on HarmonyOS, advanced automated driving capabilities, rapid charging technology, and cloud computing services.

Claims of Level 4 Capability

Notably, the Alpha S is reported to have achieved Level 4 autonomous driving capabilities, a claim verified by Huawei with TechCrunch.

This assertion suggests the vehicle can operate without requiring human intervention in the majority of driving scenarios, potentially allowing drivers to relinquish control of the steering wheel.

However, a degree of clarification is necessary regarding this claim.

Su Qing, the general manager overseeing autonomous driving at Huawei, explained in a recent interview that the Alpha S achieves L4 status in terms of the user “experience,” but remains at L2 concerning “legal” accountability.

Currently, China’s regulatory framework permits only a limited number of companies to conduct autonomous vehicle testing without safety drivers, and widespread deployment of fully driverless cars on public roads remains distant.

Demonstration and Technical Specifications

Huawei’s proclaimed “L4” functionalities were showcased during a demonstration. During this event, the Arcfox vehicle successfully navigated 1,000 kilometers within a bustling Chinese city without human input, although a safety driver was present.

The automation system relies on a comprehensive array of sensors, including three lidar units, six millimeter-wave radars, thirteen ultrasonic radars, and twelve cameras. It also incorporates Huawei’s dedicated chipset for automated driving.

Xu, a representative from Huawei, stated that the vehicle’s capabilities surpass those of Tesla.

The Debate Surrounding L4 Definition

Despite these claims, some industry observers contend that the Huawei-powered vehicle does not meet the strict definition of L4 autonomy. The disagreement appears to center on semantic interpretations.

Su Qing acknowledged this nuance, stating, “Our cars you see today are already L4, but I can assure you, I dare not let the driver leave the car.”

She further emphasized that achieving substantial MPI (miles per intervention) figures is a prerequisite for legitimately claiming L4 status, dismissing current demonstrations as preliminary.

An executive from a robotaxi company argued, “It’s not L4 if you can’t remove the safety driver. A demo can be done easily, but removing the driver is very difficult.”

A director from another Chinese autonomous vehicle startup added, “This technology that Huawei claims is different from L4 autonomous driving. The current challenge for L4 is not whether it can be driverless but how to be driverless at all times.”

Huawei’s Investment in Autonomous Driving

Regardless of its current L4 classification, Huawei is demonstrably committed to investing in the future of autonomous driving technology.

The company is projected to spend over $1 billion this year on smart vehicle components and related technologies, as announced by Xu during an analyst event.

The Role of 5G in Autonomous Driving

The potential of 5G technology is widely considered crucial for the advancement of driverless vehicles. Despite being a major global telecom equipment manufacturer poised to benefit from widespread 5G implementation, Huawei’s Xu contends that next-generation wireless connectivity isn't fundamentally required for self-driving capabilities.

According to the executive, true autonomous driving necessitates vehicles capable of independent operation. This implies a vehicle’s ability to navigate and function autonomously, irrespective of external network assistance.

Over-dependence on 5G, or even 5.5G, for autonomous functions presents inherent risks. Network outages at a 5G base station, for example, could create significant challenges.

Such a scenario would place an exceptionally high burden on mobile network operators. They would be obligated to guarantee comprehensive coverage, unwavering reliability, and robust network resilience. This level of performance, Xu suggests, is realistically unattainable.

Should Huawei succeed in acquiring Bosch’s market share, it could establish itself as a prominent Tier 1 supplier. A growing trend among Chinese companies involves a move away from Western technology providers. This shift is driven by anticipation of potential sanctions and a desire for cost-effective, yet equally dependable, domestic alternatives.

Arcfox represents only the initial phase of Huawei’s broader ambitions within the automotive industry.

Headline revised for improved clarity.