The Nomi-fication of the Auto Industry

While the global automotive industry has been obsessing over the adoption rates of electric vehicles, the impact of Tesla, and the onset of “software defined vehicles,” the Chinese car manufacturing sector has grown to encompass nearly one third of all cars made and sold annually.? This seemingly sudden reality has had a huge knock-on impact on technology adoption in the sector.

China is already leading the globe in EV sales and exports, 5G and V2X wireless connectivity adoption, and robotaxi development.? Nearly 27M cars were sold in China in 2022 and nearly 24M cars were manufactured in China.? About 3.3M vehicles were exported – almost incomprehensible after years of virtually zero car exports.

China is also busy building or taking over automobile plants in multiple geographies most notably Brazil where Ford Motor Company and Mercedes-Benz car plants were taken over by BYD and Great Wall, respectively.? The vehicle volumes and the scope of their increasingly global deployment has transformed perceptions of the China market.

From its inception a couple decades ago the modern Chinese automobile market has been something of a wild west where dozens of auto makers have pursued an anything goes approach in the interest of simultaneously bringing vehicles to market, capturing market share, failing fast and recovering, learning quickly from joint venture partners, and differentiating products with technology.? In those early days, safety was not a priority and owning and driving cars was something new for Chinese consumers.

The newness of automobiles to Chinese consumers may be partially to blame for China’s world-leading level of highway fatalities – estimated at more than 250,000 annually, better than six times as many fatalities as the U.S. with a 50% higher fatality rate.? With improvements in vehicle build quality and robustness and the increased integration of safety technology those figures should decline.

What is not in decline is China’s influence on the global automotive industry.? Increasingly, the developers and purveyors of new technology are turning first not to European or U.S. auto manufacturers, but to Chinese car makers.? Or, maybe it is more accurate to say that developers are increasingly turning to Chinese car makers after being rejected by European and U.S. auto makers.

Companies such as Qualcomm, Nvidia, Blackberry, Mobileye and others began, in 2023, focusing their earliest deployments and contractual relationships on leading Chinese auto makers such as Nio Motors, Zhejiang Geely Holding Group (Geely, Zeekr, Polestar, Lynk&Co. etc.), BYD, Chang An, Great Wall, and others. ?

Engaging directly with Chinese auto makers has its risks and rewards.? On the rewards side, Chinese auto makers move and are moving fast.? Competition in the local Chinese market is intense with dozens of local EV makers battling for business alongside joint venture import rivals from around the world.

Speed to market is everything.? By some estimates Chinese auto makers design and deliver vehicles at twice the speed of foreign auto makers.? That would translate to two years or less vs. three-four years for “legacy” auto makers.

To truly be price competitive, though, cars need to be made in China and for years foreign auto makers have had to design cars specifically for the Chinese market available nowhere else.? General Motors, in fact, has one of the best selling EVs in the Wuling Mini EV ($5,000-$15,000) – a million-plus seller now seeing declining sales in China, the only market where it is sold.

Chairman of Qualcomm China, Frank Meng compares China’s leading role in the smartphone industry to its emergence in the automotive industry: ?“With the burgeoning growth in the new energy vehicle market and the increasing need for intelligent connectivity technology within vehicles, the automotive industry is poised for transformation and opportunity.? This shift also positions Chinese vendors to be at the forefront in the industry potentially, akin to their role in the smartphone industry.”

Given the importance of connectivity to advanced safety systems and the emerging role of V2X, the West has more or less ceded connectivity innovation leadership to China. While wireless spectrum allocations and mandates continue to be debated in the U.S. and E.U., China is plunging forward with advanced 5G and V2X solutions likely to point the way toward safer driving.

There are downsides, especially in the increasingly toxic political environment of a post-COVID world.? Blackberry’s first design win for its Ivy cloud-based application platform was with Dongfeng in partnership with Pateo in China.? Blackberry’s outgoing CEO John Chen noted at the recent Blackberry Summit in New York City that winning business in China was not without risk.? He did not elaborate. Perhaps he was thinking of sanctions and tariffs.

Dongfeng’s adoption of Ivy is not unlike Zeekr’s introduction of Mobileye’s Supervision Pilot driving assistant system.? Mobileye’s technology may be widely deployed throughout the global automotive industry, but Zeekr jumped ahead of competing auto makers to be the first to bring Supervision technology to market.

All of which is reminiscent of Nio Motors’ Nomi on-dash digital assistant.? Introduced four years ago, and featured in a “60 Minutes” segment, Nomi anticipated the onset of in-vehicle digital assistants from Google, Amazon, Apple, Cerence, and Soundhound.

https://www.youtube.com/watch?v=fhxi0BMAL0I – “60 Minutes” segment on Nio featuring Nomi

Nio inspired multiple competing in-vehicle avatar’s – physical and virtual – in the local China market but has yet to be replicated outside China.? Some Western reviewers have panned Nomi – and some Chinese have been less than thrilled – but Nomi represents the kind of non-linear innovation arising from the Middle Kingdom.

BYD, for example, was demonstrating a “summon” feature – using a smartphone to remotely control a car – years before Tesla introduced the Roadster (and long before Tesla created its own remote control feature).? SAIC’s Roewe 350 was the first car to bring Android to a dashboard infotainment system.

As I wrote four years ago, regarding Nomi: “Outside China, infotainment innovation has nearly ground to a halt as caution has taken charge.?Leading auto makers outside China have retreated to safer choices in pursuit of global platforms, economies of scale, and incrementalism.”

Car makers such as GM, Mercedes-Benz, and Volkswagen are trying to come to grips with the demands of innovation and differentiation.? These car makers and others are seeking to cast off the yoke of homogeneity by moving away from Android Auto and CarPlay projected smartphone solutions.? Time will reveal the wisdom or folly of their strategies.

Anyone wanting to see the engine of innovation really churning in the automotive industry, though, will do well to visit China.? It’s the biggest and fastest moving auto market in the world and no legacies are being protected or preserved.? There are huge opportunities to develop and deploy safety systems designed to save lives and there is the scale to grow rapidly.

Perhaps best of all, there is no crabbing or complaining about the demise of internal combustion engine vehicles or consumer resistance to EVs.? Every single Chinese person knows firsthand – has seen firsthand – the result of unrestrained vehicle emissions.? Everyone looking for a car is looking for an EV – which has contributed to China having the least expensive EVs in the world – and some of the most clever and daring engineers.