China’s disconnect with the future of automotive

It’s easy to think of copy cat gadgets and cheaply made products when you think of China, but this is a thing of the past. However, there is one element from Chinese production culture that remains at odds with the future of automotive.
by Nicole on May 16, 2017

Mobile Geeks recently attended StartUp Launchpad in Hong Kong, a buyer focused show which showcases the region’s latest hardware startups looking for shops to sell their wares. In addition to a VR pavilion, gaming hall, and a ton of Chinese manufacturers, there was a Connected Car hall where we talked to several automotive suppliers.

Many exhibitors had upgrades that added cameras to the car, while others promised assisted parking features. The most interesting were those with in-vehicle infotainment (IVI) systems. Despite not even sporting the latest version of Android, these manufacturers were looking to turn a profit the way China always has: through undercutting price and shipping volumes. Making the sale and moving on. This concept is a thing of the past in automotive, and it’s at odds with the way that Chinese manufacturers have structured their business model.

What’s most telling about this disconnect is that most IVI makers had no plans to upgrade their already out of date systems running last year’s version of Android.

The life-cycle of a car is significantly longer than a phone. In a world of yearly hardware upgrades and monthly software upgrades, how can anyone expect your car to sport a closed system? Across the board at every stand, the manufacturers of this car component thought that the user would simply just install a new system every two years.

Can you imagine asking a car owner to spend $200 on a new navigation system every year or two?

Over the air updates (OTA) are standard practice on smartphones. Most automotive manufacturers are struggling and selling upgrades or asking you to come into the dealership to have them installed. Companies like Tesla that push regular updates are an anomaly in automotive, but thankfully are drawing attention to their necessity.

The entire industry has a problem with updating their in-vehicle infotainment system. Chinese manufacturers are looking to replicate existing, proven models in automotive, but the trend with autonomous cars is a lifetime of updates.

Nvidia has made the commitment to update their autonomous drive platform for as long as you own the car. Sure, there will be an eventual end, but even 10 years of updates are 10 years longer than a Chinese manufacturer would want to support their product.

Products themselves are becoming more unique, but we still aren’t seeing many manufacturers issue consistent updates more than a few months after their product hits the streets. It makes sense – the software team is limited and needs to move on to the next product.

The Chinese mentality is: Why use resources on updates? They don’t make you more money off a product that you’ve already sold.

Updates are an overly complicated commitment for an ecosystem that doesn’t have the support system in place. Why hire a whole team to build up-to-date operating systems for devices you sold a year ago? It’s cheaper to sell it and not support it, but that’s not going to be possible when the hardware in the car will be out of date in a year or two but the car will be around for 10.

We’ve seen this trend with Smartphones, and we’re seeing it emerge in automotive.

The age of copycat hardware is over, but the mentality of pushing volumes and keeping margins low is still the linchpins in most Chinese business models.

Interested in reading more about the Chinese automotive ecosystem? Check out: The Future of Autonomous Cars in China