More and more companies in the automotive industry have achieved amazing results, and have successively emerged one IPO after another. The myth of wealth-making in China's automobile industry continues.

Digital Time Krypton (digital36kr)

text | Digital Time Krypton

More and more companies in the automotive industry have achieved amazing results, and have successively emerged one IPO after another. The myth of wealth-making in China's automobile industry continues. With the continuous development of the electrification, intelligence and digitalization of the automotive industry, more and more capital and new players are entering this track.

At present, we can see that domestic and foreign capital is concentrated in key common technologies such as new energy vehicle OEM, autonomous driving, smart cockpit, power batteries, complex environment perception, new smart terminals, and in-vehicle intelligent computing platforms, as well as key components and systems such as on-vehicle sensors, central processor , chips, operating systems, wireless communication equipment. Where will the next $10 billion company in the automotive field appear? Which directions will become future gold investment? At 19:30 on

9.29, we invited Wu Fan, Managing Director of Source Code Capital , and Vice President of Shunwei Capital , Qi Tianyu , as a guest at the Digital Intelligence Night Talk, let’s talk about where the next company with a 10 billion dollar dollar in the automotive field is. The live broadcast is hosted by Gong Siying, a special guest commentator of 36Kr .

Digital Night Talk

The following is the live broadcast record:

Gong Siying (host): Two people actually have very successful investment cases in the automotive field. Here I will share with you my investment stories

Wu Fan: I have invested in new energy and intelligent manufacturing related directions for more than ten years. In the upstream and downstream of the entire new energy vehicle and industrial chain, I have invested in NIO , CATL , Hive Energy, Xinwangda Power Battery, Kangpeng Technology, Junlian Intelligent Strip, Reshaping Technology, Jiufeng Energy and Huace Navigation, etc., plus our source code investment in Ideal Auto .

Let’s look at the past development of the entire electric vehicle in China. The concept of “electric vehicle” may be well known in 2008. During the Olympics, we used a lot of electric buses, and there was an “10 cities and 1,000 vehicles” event, and everyone knew that there was an electric vehicle.

So at first, the entire electric vehicle market was driven by policies, and at that time, companies like CATL were quickly nurtured. Relying on their excellent technology and a complete team that had experienced the battery industry, they successfully crossed from mobile phone batteries to power batteries, creating the current trillion-dollar companies. Behind

, Ideal, , NIO, etc., the entire industry logic has changed from a market driven by purely policies to a market that is biased towards products and consumption.

Qi Tianyu: Shunwei's team's attention to the entire upstream and downstream of new energy vehicles has been for many years, and it has not only started to do this recently. Around 2016, we invested in NIO and Xiaopeng , and also laid out Momenta, Zhixingzhe , etc. in the field of autonomous driving. The logic of turning the whole is the same as the name of our institution itself. We should follow the trend. We should pay more attention to the trend of industry development and discover this trend forward.

So, we saw a few years ago that from the factors such as national policy encouragement, global energy transformation, climate change, etc., it is necessary to judge that new energy vehicles are definitely the general direction and trend of the future, so they must be done.

We mainly look at some incremental opportunities, and they are technology-driven (assets may be slightly less done), and technological innovation opportunities. We have many layouts around the field of the new four modernizations.

For example, in the battery field, we have laid out Weilan New Energy and Deep Blue Huize, which focus on the new generation of solid-state lithium batteries, and we have also made layouts in the sodium ion battery field, such as Jiaso Energy, etc. In the field of

autonomous driving, we have also made layouts in various sub-tracks. In addition to the autonomous driving technology and applications mentioned just now, we also focus on line-controlled chassis, lidar , etc. At the same time, we will also integrate and match industrial resources for these invested companies to provide more efficient post-investment services. For example, NIO also uses the lidar developed by our invested company Tudatong, etc.Therefore, we can see that the projects we invest in are basically very forward-looking technology and leading technology-driven projects.

Gong Siying: When judging an investment project in the automobile industry, what other considerations are there in addition to the general trend?

Qi Tianyu: The basic ideas of the entire industry are similar when investing, but outside the industry consensus, there may be subtle differences in the specific investment logic level. For example, Shunwei, we mainly invest in early-stage projects, so we pay special attention to two logics:

, the originality and disruption of technology, and whether it represents the future development trend of the industry.

There are many types of technologies on each track. When we look at specific projects, how do we judge whether it represents future development trends and how to judge the direction of future technology? Different institutions still have different understandings, which reflects the comprehensive capabilities of each institution. For example, if you understand the industry and do industry research in the industry, you should go deeper to the front line and see and observe it yourself. We still attach great importance to this aspect.

The second is the team. We invest in early projects and attach great importance to the comprehensive examination of the team's sense of entrepreneurial mission, technology and capabilities.

So, in the general direction, everyone's ideas are basically the same; but they still have some understanding of their own in grasping specific projects.

Wu Fan: We think things are in human affairs - people and teams are very important. Although the main force is still a joint venture brand now, the penetration rate of for domestic electric vehicles is already very high, and most people will choose Chinese brands, which is the value brought by Chinese electric vehicles. Behind the value of

, we can see that when you choose Chinese electric vehicles, many of them choose Wei Xiaoli. After chatting with these entrepreneurs carefully, I found that the core change point lies in their starting point of making cars, hoping to better hear consumers' voices, and thus make products with high cost performance and better product display. People spend 400,000 or 500,000 to find products that feel like a million luxury car. It is this change in starting point that brings all the changes at the moment.

is also a test of the entire team's sentiment, corporate culture and execution at this time. You must be able to continue to innovate, endure cycles, and have better resilience. You must be a team worth investing in.

Gong Siying: In the automotive field, car computer OS was once a very popular track, including many companies that have mentioned that they should do ecology and operations based on large screens. Apple has released the new generation of CarPlay now has a posture of unifying the central control screen with all screens. Will this be a fatal blow to the companies mentioned earlier based on large-screen cars and large-screen ecosystems? Will Apple's move have some new inspiration for the investment in smart cockpits in the future? What do you think about it?

Wu Fan: This year's new CarPlay product will give everyone a good experience. In fact, , the Internet of Vehicles, , two or three years ago, was not so popular. The automobile industry was relatively closed. Every company wanted to use its own things, whether it was cars or data, and wanted to open up and become its own closed loop.

From a development perspective, current car manufacturers attach great importance to the Internet of Vehicles or data. Apple's idea is still to use mobile phones as the entry point to open up the system, thus forming a closed loop. If there are fans of Huawei in the live broadcast room, you can see that from Huawei's mobile phone to laptop to Ipad, the connection of multiple terminals has also been implemented. The mobile phone operating system has implemented multi-screen interaction, but everyone has made this thing back in the car.

So I think it will be a win-win situation in the end. How to make consumers have a better experience will become more important, and cars in the future will become more and more like mobile phones.

Qi Tianyu: Actually, I don’t think this is a big problem.

First of all, Apple can join in, which is a good thing, which means that big companies recognize this direction. Everyone thinks this is reliable and more people are willing to contribute this power. I think this is a good thing and the industry is more prosperous.

In addition, I don't think this is a technical matter.If you talk about technology, I prefer to look at the hardware, how does the hardware achieve this interaction. When we make hardware HUD, how to make the interactive experience better? This is about technology.

In fact, what you just mentioned is whether to use the Apple system to control it, Huawei system, or other mobile phones to control it, I think this is just an entrance. In essence, this thing is data, who is the data; the other is content.

data, I think it is the end of the OEM factory; the content, many Internet manufacturers want to do this. The most important thing is to see where the key value is. Just asked if there are any opportunities from third parties. First of all, you need to figure out what third parties can contribute here, what you can get, and then see where your voice is. I don't think it's a big problem overall, it's a good thing.

Gong Siying: From the perspective of both, we look at whether there are any investment opportunities for new energy vehicles in the next 3-5 years?

Wu Fan: is now a purely market-oriented market, which is different from before. In a market-oriented environment, we should pay attention to what other needs are not met. Wei Xiaoli has occupied high-end, comfortable and very good experience opportunities. The market education work for electric vehicles has also been completed by Tesla and them. Now Nezha is leading the way, filling the gap of about 100,000.

From the perspective of investors, we may see whether this new demand is rigid or non-rigid, and how big it is. Compared with other existing competitors, are there really such strong technical barriers or brand barriers, etc. If there is an unmet need and the entrepreneurial team can seize the opportunity well, they will definitely need to invest.

Qi Tianyu: I agree with Mr. Wu’s opinion as a whole, and I think the opportunity is quite great. Just look at the sales rankings. At the beginning of the year and now, the rankings are different, and they are still refreshing, and the shipments of various brands are still changing. This shows that the pattern of new energy vehicles has not yet stabilized and is still changing.

If there is change, there will be innovation; if there is innovation, there will be new entrants. However, it will be more and more difficult for new players to break the situation; for the original players in the field, the new players will become more and more powerful, and the challenges they face will be greater and greater.

But overall, it is not that there is no chance, but that it depends on each company's own abilities and whether it has the ability to make different things. Opportunities have always existed, at least the pattern has not been determined yet and is still changing, but overall, it is indeed becoming increasingly difficult.

Gong Siying: For the chip direction, including functional chips and main control chips , how do you view this pattern, and what opportunities are given to Chinese entrants?

Qi Tianyu: Looking at the opportunities of chip entrepreneurship around the world, chip entrepreneurship is already a relatively difficult thing in many Western countries; but in China, China is a hot spot for chip entrepreneurship. For example, the rise of Science and Technology Innovation Board in the past was listed by chip companies. I think this is the popularity in the first three or five years, and this should still be the popularity in the next three or five years. But the direction of entrepreneurship will change: in the first three or five years, entrepreneurs have done more things that are relatively easy to do, because the market is blank and you can cultivate it, but now everyone has occupied all the land they can occupy, and what they have not occupied is a difficult place to occupy.

I think, overall, there are still opportunities. I think the overall environment is also positive. Despite the fluctuations, I think it is also positive, positive and positive. Including the issue of production capacity, the instability of international division of labor, and some blockades, the urgent demand in the market still exists, and there will be a market if there is demand.

Moreover, I think the overall downstream trend and situation are improving. For example, when it comes to computing power chips, this aspect is indeed a place where we have a big gap with other countries, and it is also a place where it is difficult to catch up. It is difficult to break through, but the opportunity is still there.

Wu Fan: In the process of domestic substituting imports, the large computing power chips face two obstacles: design and manufacturing. Whether the domestic production can be produced stably may depend on the infrastructure and the capabilities of the IDM factory, and then the design problem itself. As you can see, the Horizon and others are doing well, and the products are also available, with good cost performance. But there is still a gap between high-end chips and foreign countries, and this cannot be solved immediately. We need time and patience in catching up in the entire industrial chain and talent reserve.

Gong Siying: How do you two view the impact of the new crown epidemic on China's automobile industry chain? Will there be any changes in the investment opportunities that will be brought about?

Qi Tianyu: First of all, the new crown epidemic does not only affect China's industrial chain, but also affect the global industrial chain. Relatively speaking, China has protected it better. We have observed that other countries have been hit harder, which is a global event.

From the perspective of investment opportunities, the impact of the entire epidemic has made everyone worry about the supply chain issues. For example, we talked to the OEM about production capacity or supply safety. It turned out that many chips were suddenly unable to buy, so we had to look for suppliers in China. In fact, it gave many domestic chip companies an opportunity to get on the bus. I used to have to queue up and wait outside for two or three years, and now I go directly to the fast lane. Relatively speaking, there is a good window period to give domestic products the opportunity to get on the bus.

On the other hand, we have also seen that in addition to market opportunities, after the supply chain was hit, many problems that had not been noticed before were exposed, making practitioners pay more attention to some breakthroughs at the core technology level. I think this is also the reason why I attach so much importance to technological innovation and hard technology in the past two years. Because the epidemic has not only impacted the supply chain, in addition to the supply chain, we have also seen the impact of the international situation on the industry. Everyone will be more worried about the sustainability and security of development and pay more attention to technological innovation, which will bring more investment opportunities in hard technology. The negative impact and pain that seems to be currently viewed may be a good thing from a long-term perspective.

Wu Fan: innovation and R&D investment need to be continuously done well and build your own moat. After the epidemic, foreign automobile electronics companies will definitely increase their investment, especially the Chinese market. I agree with what Mr. Qi said just now, but this continuous investment is not a blind effort to do a lot of research and development.

Gong Siying: Recently, chips, wire-controlled chassis, automotive software supply chain, including electronic and electrical architecture, etc. We believe that these relatively underlying technologies have been increasingly favored by investors recently. Does this mean that the entire direction of automobile investment is also paying more attention to underlying technologies?

Qi Tianyu: This situation does not exist for for Shunwei, because Shunwei has always paid close attention to innovation and breakthroughs in underlying technologies. It’s not that we suddenly become concerned about technology, but that we have always been paying attention to technology.

What is the logic of the question the host just mentioned? The industry has developed to this stage. It turns out that the first generation of cars were all oil-to-electric . At that time, there was not such a high demand for the control of the underlying linear control. Of course, Tesla has also made a lot of contributions to this and is constantly leading the industry to change. There are also many innovations in China, which shows that the industry has become more refined and the industry has made progress, so everyone has begun to pay attention to this area.

However, from the perspective of underlying technological innovation, Shunwei is always paying attention to it.

Wu Fan: still depends on the development of electric vehicles in China. If we talk about the development of domestic cars, 1.0 is our electrification, then we were all concerned about the third and third electric vehicles. Now that we have entered the era of 2.0 intelligent networking, chips, IVI, and communication are very important. If we say that the automotive industry 3.0 is unmanned or autonomous driving, no matter which level of automation it is, it will always return to the lowest level of chassis technology. Whether it is wire-controlled steering, wire-controlled brakes or air suspension, it is the most important thing in unmanned.We must follow the development of the industry and make forward-looking investments, which is also something that Chinese companies or investors must do. This is also one of the investment concepts that Source Code always adheres to and attaches importance to the first principle of the development of things.

Gong Siying: How do you two view the layout of new energy in the future? Can hydrogen energy compete with electric vehicles in the direction of passenger cars?

Wu Fan: There is an example of , let’s see what Toyota is doing, it is more representative. For many people, electric vehicles can run 600 kilometers at a time of charge, which is enough. hydrogen energy may limit some applications.

I think like plasma TVs and LCDs back then, a more open system, a cheaper system, and a better use of the global supply chain. Even if the technology was a little worse at that time, after this rapid iteration, everyone may choose a cost-effective product.

Qi Tianyu: My point of view, first of all, I am very optimistic about hydrogen energy. I think hydrogen energy is a very important energy and is used in industry. Our country is now the world's largest hydrogen producer.

In the field of transportation, I think that in terms of thinking, don’t think that hydrogen and electricity are a competitive relationship. This is not good and there is no need. In essence, the two are a complementary relationship. Because in many cases, electricity has many advantages; in other cases (such as cold areas and heavy loads), hydrogen is actually needed to be the main force.

But from the current development process, I think the cost of hydrogen energy has indeed dropped rapidly in the past 3-5 years (because I have been paying attention to this direction), and there is still a lot of room for decline in the future. We can still see hope in the iteration of technology in this area. The biggest problem in the industry now is to solve the problems of infrastructure such as "control, storage and transportation" and the inconvenience of hydrogen refueling. Of course, this includes the source of hydrogen. How to make it cleaner is all technical issues. After all, the hydrogen energy infrastructure is not as perfect as the power infrastructure. But I think these problems can be solved by cultivating the industry.

So, overall, we are still optimistic about this track and believe that it will be a long-term track and a track worth exploring and cultivating. Therefore, overall, hydrogen and electricity are not a competitive relationship, but a complementary relationship.

Gong Siying: What do you think about the development of China's electric vehicles going overseas?

Wu Fan: We can see that BYD is in the United States and Japan, and Wuling also has factories in Southeast Asia, so the entire overseas trip is definitely very fast. In different areas, the model is a very critical factor. Both Chinese and Americans like larger cars, so we currently have many electric cars, SUVs, and the more exquisite and fashionable cars may be limited, which may have certain challenges in Europe and Japan.

However, overall, our products have very high cost performance, especially in terms of IVI's capabilities, which have obvious advantages over BBA. In terms of product experience, users are universal, and there will definitely be better opportunities to iterate quickly and design products suitable for the local market.

Chinese cars may also be a new thing. How we build an international platform may need to be adjusted and adapted now. Good sales and low profits will definitely not be sustainable.

Finally, the automobile industry is a very important industry in every country to solve employment problems, so in addition to selling cars, there are more ways to innovate and open up.

Qi Tianyu: I also agree with Mr. Wu’s point of view. First of all, let’s look at the oil vehicle field. The reason why the West is stronger is that in the West, oil vehicles have been an industry that has been developing for a hundred years. The most core of them is engine technology, and the key technical barriers are also in this place.

Look at the tram field again. First of all, Shunwei is very optimistic about the issue of Chinese tram going overseas. According to the above logic, the advanced technologies and capabilities of global tram manufacturing are in China. At least we can see this trend now, so we have the confidence and ability. But we are facing great challenges. Mr. Wu said a lot just now. Domestic manufacturers have many challenges in brand awareness , localization, etc., which require time to solve.

In essence, the optimal production capacity of electric vehicle manufacturing is in China, and the latest technology is also in China. Therefore, overall, it is still optimistic about the general direction of domestic electric vehicles going overseas.

"Digital Night Talk·Future Transportation" series columns are a live broadcast column created by 36Kr Digital Time Kr. We will regularly invite industry insiders such as experts in the automotive industry, executives of the auto industry, and senior supply chain leaders to talk about hot topics in the automotive industry.

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