From gimmick to label, automakers are all in for the era of intelligent driving | Insight Research

The first half of the new energy sector is characterized by electrification iteration, while the second half is marked by the revolution of intelligence.

China has achieved great success in the first half of the electrification campaign, surpassing the original targets with high growth in sales and penetration rate of new energy vehicles, thus establishing its position as the world's largest new energy vehicle market for eight consecutive years.

Now, the battle has moved to the second half, where China, Europe, and the United States, the three major new energy vehicle markets, are once again starting from the same line in the field of intelligence. Can China leverage its huge advantage in the first half of electrification to take the lead in commercial competition and successfully enter the first echelon?

In the first half of this year, mainstream domestic new energy vehicle companies have set NOA (Navigation on Autopilot) city pilot projects and specific planning goals, just as they did with new energy vehicle sales and penetration rate targets in the past. Level 3 autonomous driving is gradually transitioning from a gimmick used by new energy vehicle companies to promote their own models to a necessary feature for mainstream new energy vehicle models. This year is expected to be the year when Level 3 intelligent driving is implemented.

1. Accumulating Strength for a Breakthrough: This Year May Witness the Implementation of Level 3 Intelligent Driving

According to the domestic and SAE standards for the five levels of automotive driving automation, although there is only one level difference between Level 3 and Level 2, Level 3 is an indispensable step and represents an important stage in the transition from assisted driving to autonomous driving.

Before Level 3, the focus was more on technological accumulation, and the functions mainly included AEB (Automatic Emergency Braking), ACC (Adaptive Cruise Control), and APA (Automatic Parking Assistance).

Essentially, these functions do not achieve the goal of "hands-free" driving, but they are indispensable because they allow drivers to gradually adapt to the functions and operations of intelligent driving. Once the technology matures and the penetration rate increases, a breakthrough can be made to enter the Level 3 autonomous driving stage.

Currently, the timing is gradually becoming ripe.

Firstly, as the main force of autonomous driving, new energy vehicles have developed rapidly in China and have gained wide recognition from the market and consumers. The rapid increase in the number of vehicles also provides important impetus for the advancement from Level 2 to Level 3 intelligent driving.

In terms of incremental growth, in the first half of this year, domestic sales of new energy vehicles reached 3.747 million units, a year-on-year increase of 44.1%. The penetration rate of new energy vehicles reached 28.3%, surpassing the domestic target of 25% by 2025. In terms of stock, as of the first half of this year, the number of new energy vehicles in China reached 16.2 million units, accounting for 4.9% of the total number of vehicles. Since 2018, the growth of conventional fuel vehicles has been weak, and the growth rate of passenger vehicle sales will be mainly driven by new energy vehicles in the future, with this proportion continuing to rise rapidly. Secondly, due to the high cost of intelligent driving software and hardware, intelligent driving functions were mostly only equipped in high-end luxury models in the past.The penetration rate of high-end car models priced above 450,000 yuan at the L2 level and above is around 30%. However, the penetration rate of L2-level and above models in the price range below 150,000 yuan, which are the real sales force, is only about 10%, showing a huge gap.

However, the intelligent driving function is gradually transitioning from a gimmick used by car manufacturers to promote their own models to an essential label for mainstream new energy vehicles. Especially for new energy vehicle manufacturers, regardless of price, their models are basically starting to move towards intelligent driving. For example, Geely's 150,000 yuan-priced model, the Borui L, is equipped with an L2-level system.

The strong promotion by new energy vehicle manufacturers has not only rapidly increased the penetration rate of intelligent driving in new energy vehicles but also driven the overall penetration rate of passenger vehicles. In the first half of this year, the penetration rates of L2-level and above pure electric passenger vehicles and plug-in hybrid passenger vehicles reached about 50% and 60%, respectively, and the overall penetration rate of L2-level and above passenger vehicles also increased from the previous 20% to about 35%.

2. Comparison of intelligent driving systems among mainstream car manufacturers

With the increasing maturity of L2-level intelligent driving functions, mainstream car manufacturers have also shifted their focus to L3-level. It is expected that this year will become the first year for the landing of domestic L3-level intelligent driving, thanks to the vigorous research and development and support from numerous car manufacturers.

Currently, new energy vehicle manufacturers that are leading in L3-level intelligent driving systems have basically announced plans to conduct NOA (Navigate on Autopilot) city pilot projects within this year. They mainly include Tesla, Xiaopeng Motors, NIO, Li Auto, and new energy vehicle manufacturers affiliated with Huawei (Weltmeister and Arcfox). These new forces in the domestic automobile industry are clearly ahead of traditional car manufacturers and are in the forefront.

Specifically, domestic new energy vehicle manufacturers have reached a consensus on the pricing and selection of landing scenarios for intelligent driving systems. Except for Li Auto, which has chosen to offer the system for free, the system prices of other new energy vehicle manufacturers are mainly concentrated between 35,000 yuan and 40,000 yuan, far lower than Tesla's FSD (Full Self-Driving) system priced at 64,000 yuan.

From the perspective of Tesla and domestic new energy vehicle manufacturers' scenario paths, major new forces in the automobile industry have chosen to gradually iterate from highways to cities, reducing the initial difficulty of image and road segment recognition, and then progressively transitioning to more challenging urban routes.

In the future, the pilot cities for NOA selected by domestic new energy vehicle manufacturers are mainly high-penetration cities for new energy vehicles, such as Beijing, Shanghai, and Shenzhen.

The differences lie in the choice of technical routes and some hardware. Tesla fully embraces the pure vision route, so it does not carry lidar and previously did not even use millimeter-wave radar, focusing on camera-based advanced intelligent driving.

On the other hand, domestic new forces in the automobile industry adopt a technical route of camera + lidar + high-precision maps (Huawei and Xiaopeng's reliance on high-precision maps is decreasing), stacking various hardware devices to achieve multiple enhancements in perception.**There is currently no clear distinction between the two technological routes, but most automakers still have doubts about the pure visual route and have chosen the route of camera overlay radar. Of course, who will become the ultimate mainstream still requires long-term practical testing in autonomous driving. With the dual improvement of the scale of domestic new energy vehicles and the penetration rate of L2 level intelligent driving functions, as well as the continuous investment of new energy vehicle companies in the field of intelligent driving, intelligent driving functions can continuously accumulate data such as driving mileage, unexpected accidents, and map locations, and their performance will also be continuously enhanced.

In this new battlefield of intelligence, China's L3 functions are gradually being implemented. Not only are corresponding laws and regulations being introduced one by one, but also the applicable scenarios are expanding from highways to cities, and the technological level is constantly being updated and upgraded. Automakers are investing heavily in research and development. The trend of electrification is rapidly transforming into the trend of intelligence, and it is believed that we will see the turning point of intelligent driving this year.