The car company is "sweeping up" smart driving.

The war over intelligent driving is heating up again.

On April 20th, NIO held a "full-domain and full-quantity" intelligent driving press conference. NIO's founder, chairman, and CEO, Li Bin, announced that NIO's full-domain navigation assistance NOP+ urban area function will be fully rolled out to NIO Banyan·Rong intelligent system users starting from April 30th.

According to the data released by NIO, the cumulative verified mileage of its full-domain navigation assistance NOP+ has reached 1.208 million kilometers, with over 360,000 kilometers of verified mileage on highways/city expressways and over 847,000 kilometers of verified mileage on urban roads. It covers 726 cities in mainland China (with a city coverage rate of 99%) and achieves a main road coverage of no less than 90%.

It is worth mentioning that the user base for NIO's full-domain navigation assistance NOP+ urban area function is close to 230,000 people. In comparison, among new energy vehicle companies that can use urban intelligent driving functions, Xiaopeng Motors and WeRide each have over 60,000 users, while Ideal Motors has 108,000 users, and Arcfox has around 10,000 users.

Li Bin stated at the press conference, "NIO's goal for intelligent driving is to achieve a usage time ratio of 80% by 2025, which is 10 times safer than human driving, truly promoting the ultimate vision of intelligent driving to 'free up energy and reduce accidents'."

In fact, it's not just NIO that is fiercely guarding the moat of intelligent driving. Huawei, Xiaopeng Motors, and Ideal Motors all see intelligent driving as a new battleground for new energy vehicle competition. After all, intelligent driving can not only enhance brand influence but also create high premiums, becoming a new profit growth point for new energy vehicle companies.

The battle over intelligent driving is intensifying, and traditional car companies such as BYD, Changan Automobile, Geely Automobile, and Great Wall Motors are also accelerating their related layouts, planning to implement urban intelligent driving functions by 2024. Clearly, the turning point for intelligent driving has arrived.

01. 2024, the year of intelligent driving?

Intelligent driving is the technology in the information age that assists humans in driving through various behaviors of machines and, in some cases, replaces humans in driving cars.

Among them, urban NOA (Navigate On Autopilot) is currently the most focused technology in intelligent driving, aiming to combine navigation with assisted driving to achieve the purpose of autonomous decision-making for vehicles. Ideally, the driver only needs to set the destination and choose a route before the vehicle starts, and the intelligent driving system can control and operate the vehicle throughout the journey.

After experiencing the trend of accumulating mileage and opening up cities in 2023, many new energy vehicle companies have realized the imminent large-scale outbreak of intelligent driving and have increased their related investments.

In the field of intelligent driving, Xiaopeng Motors is one of the fastest entrants. As early as September 2022, Xiaopeng Motors pushed the urban NOA (XNGP) function to some Xiaopeng P5 owners in the Guangzhou area. By June 2023, Xiaopeng Motors announced the official launch of the urban XNGP function in Beijing.

At the Xiaopeng X9 launch event in January 2024, Xiaopeng Motors Chairman and CEO He Xiaopeng revealed that the urban intelligent driving capability of the XNGP intelligent assisted driving system will cover an additional 191 cities on top of the 52 cities already fully released, with a total coverage of 243 cities. He Xiaopeng then stated at the Spring Festival Intelligent Driving Launch event that Xiaopeng XNGP has won the industry's first place in "available cities," "available mileage," and "user reputation," making 2024 the year of intelligent driving.

To cope with the industry turning point brought about by intelligent driving, Xiaopeng Motors plans to achieve full coverage of the national main city road network with XNGP in 2024, enabling point-to-point intelligent driving on small roads, internal roads, and parking lots. They will also begin developing the high-speed NGP (Navigation Guided Pilot) for global use and the XNGP for global use in 2025 to meet the intelligent driving needs of overseas users.

Xiaopeng Motors is also facing pressure from followers. During the Shanghai International Automobile Industry Exhibition in April 2023, Huawei announced that it would implement urban intelligent driving navigation assistance functions in 45 cities by the end of 2023.

In September 2023, at the launch event for WeRide's new M7, Huawei's Executive Director and CEO of the Terminal BG, and Chairman of the Intelligent Automotive Solutions BU, Yu Chengdong, introduced the Huawei ADS 2.0 advanced driving assistance system, stating, "It can be driven nationwide, as long as there are roads," directly elevating this intelligent driving battle to a new height.

At the WeRide new M5 launch event on April 23rd, Yu Chengdong stated that as of April 2024, HUAWEI ADS has accumulated over 200 million kilometers in total driving mileage, and NCA urban navigation has covered over 40,000 cities and towns nationwide.

Ideal Motors is also as aggressive as Huawei. Previously, intelligent driving has always been seen as a weakness of Ideal Motors by the outside world. However, at the Chengdu Auto Show in August 2023, Ideal Motors stated that it would use commuting NOA as a breakthrough point. The initial layout of commuting NOA will focus on first- and second-tier cities, covering 10 cities including Beijing, Shanghai, Guangzhou, and Shenzhen. The plan is to expand the coverage to 50 cities by November and cover 100 cities nationwide by December. In the second quarter of 2024, commuting NOA will be fully rolled out to AD Max users. In addition, Ideal Motors has proposed an end-to-end intelligent driving solution, delegating perception, decision-making, and regulation to AI, which is expected to be launched around October 2024.

In contrast, NIO has been relatively low-key in the field of intelligent driving. It wasn't until Li Bin announced at the intelligent driving conference that NIO's comprehensive navigation assistance NOP+ has verified a total mileage of over 1.2 million kilometers, covering 726 cities, achieving a 99% nationwide coverage in the most widely verified urban areas. Among them, the available mileage on highways and urban expressways is 360,000 kilometers, and the available mileage on urban roads reaches 847,000 kilometers. "There is no doubt that we are at the forefront of intelligent driving in China."

However, it is worth mentioning that despite the fierce competition in intelligent driving, for most new energy vehicle companies, their urban NOA coverage is still below 10 cities, and some are still in the early stage of exploring high-speed NOA, still a "game for the few." Huaxi Securities stated in a research report that intelligent driving has effectively influenced consumer car purchasing decisions. In the future, leading car companies that can identify differentiated selling points and maintain a technological advantage will form differentiation in the "standard intelligent driving" era and maintain a leading edge for more than two years. It can be foreseen that 2024 will be a year of intense competition in intelligent driving.

02. Intelligent driving suppliers prepare for listing

With the turning point of intelligent driving approaching, the battle is gradually spreading to the upstream of the industry chain. Currently, intelligent driving suppliers are actively seeking to go public, trying to seize the opportunity of the intelligent driving explosion.

As a core supplier of intelligent driving, Horizon and Black Sesame Intelligence have submitted prospectuses to the Hong Kong Stock Exchange, aiming to challenge the title of "the first stock of autonomous driving chips." Horizon mainly provides advanced driver assistance systems (ADAS) and high-level autonomous driving (AD) solutions for intelligent vehicles. Its main customers currently include SAIC Group, GAC Group, BYD, Ideal Motors, NIO, and NIO Automobile. In 2023, more than 30 Chinese car companies will become mass production customers of Horizon. Black Sesame Intelligence is a supplier of automotive-grade intelligent vehicle computing SoCs and SoC-based solutions, with its main products including autonomous driving SoCs and hardware and software supporting L2 to L3 level vehicle automation.

In order to implement urban/highway NOA functions, new energy vehicle companies have to choose high-performance intelligent driving chips, making NVIDIA's flagship chip Orin X the biggest beneficiary. For example, all new models of NIO are equipped with four Orin X chips, while Xiaopeng G9 and X9 are equipped with two Orin X chips, and the Ideal AD Max intelligent driving system is also built on Orin X.

Currently, Horizon and Black Sesame Intelligence still face many challenges in seizing market share.

Firstly, their market share is relatively low, and their competitiveness is insufficient. According to data from Frost & Sullivan, in 2023, Horizon ranked second in the high-level and low-level intelligent driving markets in China, with market shares of 35.5% and 21.3% respectively. NVIDIA ranked first in the high-level intelligent driving market with a market share of 49%, while Mobileye ranked first in the low-level intelligent driving market with a market share of 26.6%.

Black Sesame Intelligence also has a relatively low market share. According to Frost & Sullivan's data on the shipment volume of China's highest computing power autonomous driving SoCs in 2022, Black Sesame Intelligence accounted for 5.2% of the market share in China, ranking third. In contrast, the market share of the first-ranked company was as high as 81.6%, indicating a significant gap.

Secondly, Horizon and Black Sesame Intelligence are still facing substantial losses. According to the prospectus data, from 2021 to 2023, Horizon's operating losses were 1.335 billion yuan, 2.132 billion yuan, and 2.031 billion yuan respectively. The adjusted net losses were 1.103 billion yuan, 1.891 billion yuan, and 1.635 billion yuan respectively. Black Sesame Intelligence's operating losses were 723 million yuan, 1.053 billion yuan, and 1.697 billion yuan respectively, and the adjusted net losses were 614 million yuan, 700 million yuan, and 1.254 billion yuan respectively.

Guotai Junan Securities predicts that mainstream autonomous driving chips will be successively mass-produced and delivered in the next two years. In the next five years, the competition for market share will become more intense, and leading domestic manufacturers are expected to break through.

However, as the penetration rate of intelligent driving continues to increase, many new energy vehicle companies have continuously generated new demands for intelligent driving chips. In particular, the evolution and diversification of algorithms and large models pose a major challenge to the computing power of intelligent driving chips. At the same time, the experience of intelligent driving will undergo a qualitative improvement in the next few years. The gradual realization of high-speed NOA and urban NOA will make scene processing more complex, placing higher demands on the comprehensive processing capabilities of intelligent driving chips.

In comparison, NVIDIA has a larger shipment volume and customer base, and has already established a complete software toolchain and development ecosystem. Against the backdrop of the dominance of giants and the pursuit of competitors, Horizon and Black Sesame Intelligence still need to overcome many obstacles to successfully break through.

03. "Catfish" Tesla FSD will enter China

In October 2022, Tesla proposed the FSD Lanes Neural Network at AI Day, which only requires the use of navigation maps to construct real-time lane-level topological structures, solving the pain point of only being able to obtain key information for intelligent driving from high-precision maps.

FSD has been gradually pushed since October 2020 and has undergone 11 large-scale updates. The latest version is FSD V12, which has gradually begun to be widely pushed to North American users. In response, CITIC Securities stated that the large-scale push of FSD V12 signifies that the moment of ChatGPT for intelligent driving is approaching. The new version has a higher performance ceiling, a more human-like driving style, and faster model convergence speed, and it is expected that end-to-end automated driving large models will undergo rapid evolution.

On April 20th, Tesla CEO Elon Musk stated in response to a question from a Chinese car owner that Tesla may soon provide FSD functionality to Chinese users.

Unlike most current intelligent driving solutions, after receiving input signals from visual and other sensors, Tesla's FSD can directly output vehicle control signals such as steering, braking, and acceleration. This architecture bypasses the process of transmitting signals level by level through individual modules, reducing the probability of cascading errors. This means that if FSD successfully enters China, it will become the strongest competitor in the intelligent driving solutions of new energy vehicle companies.

Guotai Junan also pointed out in a research report that if FSD successfully enters China, it will help accelerate the development of the domestic autonomous driving industry. This not only means that Tesla will have stronger competitiveness in the field of intelligent driving, but it may also trigger a new round of reshuffling in the domestic intelligent driving industry.

However, the core training scenarios for Tesla's FSD are still in North America, and it is still unknown whether its training results can be directly applied to domestic scenarios. For new energy vehicle companies such as "Weixiaoli" and Huawei entering the field of intelligent driving, time is running out to establish a first-mover advantage and build a moat.