🪂Autowist Report 95

Volvo-Daimler SDV, VW Q3, Tesla Connector, BYD all time high, Horizon Robotics

Author

Harikrishnan Radhakrishnan
October 31, 2024

IN TODAY’S REPORT

💼BRIEFING

Top insights and analysis that is moving the needle in the automotive industry

Volvo and Daimler Truck have announced their intention to form a 50/50 joint venture to develop a common software-defined vehicle platform for heavy-duty commercial vehicles. This collaboration aims to create a standardized hardware and software platform, including a dedicated truck operating system, to enable both companies—and potentially other partners—to build differentiating digital vehicle features that enhance customer efficiency and experience. The new joint venture will operate as an independent entity headquartered in Gothenburg, Sweden, while Volvo Group and Daimler Truck will remain competitors in all other business areas.

The joint venture plans to set an industry standard for truck operating systems and intends to offer its products to other original equipment manufacturers (OEMs) as well. Despite sharing the common platform, Volvo Group and Daimler Truck will continue to develop their own end-user applications and digital solutions to differentiate their products and services.

The preliminary agreement is non-binding, with a final agreement expected to be reached within the year. The goal is to close the transaction in the first quarter of 2025, pending necessary examinations and approvals from relevant authorities.

There are some aspects to this I want to go in detail

  1. One way to look at this is that both OEMs are beginning to understand what it takes to build an SDV Platform. But what really is happening is a hedge of bets. Win and lose together. If it takes Billion+ dollar OEMs to make a SW platform, then I think we have really gone out of our minds.

  2. Cost of platforms on a product line is just ballooning year after year. But why? Are we actually delivering features that are at par in complexity? I don’t think so. A lot of mis-practices, wrong organisations, forgetting the fundamentals all leading to a bloated product and organisation. Consultants, Suppliers and Partners all just band-aid it by saying that it takes even more to “actually” do it right.

  3. From a truck fleet owner perspective this can have some competitive advantage. Truck fleets are usually heterogenous. The fleets contain multiple brands and having common support systems and services for all vehicles in your fleet is a major value add. Today there is very little that can be shared between vehicles from different brands. Win-win.

  1. Overall the picture looks gloomy. Most numbers are pointing down, and together with news like plant closures the market outlook is also bearish. Lowest margins since the pandemic.

  1. VW is planning to reduce overall capex and R&D spending in the coming years. Currently Capex is about 13% of revenue. And the forecast is to be at 11%.

  1. Cariad is showing an increase in Sales revenue but is still negative cashflow. This is an interesting topic. How exactly is Cariads revenue calculated. If they are treated as a supplier to the OEM brands, then they are attributing different SW R&D expenses of the OEM brands to Cariad. The complexities of developing a SW product line for multiple OEMs, geographies etc. is hidden within Cariad’s operation. So could it be that Cariad would never register a profit overall since this takes a toll on product development. And as product lines get bigger this cost is going to grow over time.

  1. JV with Rivian: They claim that they have demonstrated technical feasibility on a drivable platform. One key question is the understand what the JV means for Cariad. Will cariad be still supplying to the lower segment OEMs while the Rivian Architecture is reserved for limited brands.

  1. In a previous issue I wrote about the Scout EV product. Read it here: https://www.autowist.com/p/autowist-report-94

Tesla is implementing a new Low-Voltage Connector Standard (LVCS) aimed at simplifying vehicle manufacturing by standardizing electrical connections. This approach reduces the typical 200+ connectors in vehicles to just six types, covering over 90% of power and signal needs. The LVCS expands on Tesla's 48V electronic architecture, first introduced with the Cybertruck, which operates efficiently by delivering the same power with one-fourth the current, lowering costs and complexity. The 48V system, designed with robust safety and compactness, also supports autonomous vehicle functionality, contributing to Tesla’s sustainable energy goals.

How BYD's Product Offensive Pushed It To The Top (Link)

China’s electric vehicle (EV) market, which accounts for over half of global Battery Electric Vehicle (BEV) sales, is dominated by domestic models, with Chinese companies offering 267 of the 468 all-electric models available as of October 2024. Leading this market shift is BYD, which started producing cars 22 years ago. Initially known for low-quality, Western-inspired models, BYD capitalized on market gaps during 2018-2019, outpacing rivals who faced pandemic and supply chain issues. In 2023, BYD surpassed Volkswagen as China’s top automotive brand.

BYD’s rapid growth is credited to its extensive model range in BEV and PHEV segments, with innovative battery technology and software. Sales surged from 427,300 units in 2020 to 2.89 million in 2023, outpacing Tesla’s growth during the same period. So far in 2024, BYD has sold 2.75 million units, including 1.17 million BEVs, while Tesla’s BEV sales slightly declined to 1.29 million.

BYD’s success stems from price competitiveness and vertical integration, benefiting from Chinese government support and in-house battery production. Its dual presence in the BEV and PHEV segments allows BYD to cater to a broad customer base, providing a product range as diverse as that of major Western automakers like Renault and Ford.

⚡ROUNDUP

Key headlines shaping the auto industry this week

  1. Volvo Cars to benefit from EU regulatory credits from Suzuki in 2024 (Link)

  2. Porsche 911 GT3 has two years left without hybrid or turbo (Link)

  3. Tesla Software Update Brings Powertrain Endurance Profiles for Vehicles With Track Mode (Link)

  4. QuantumScape begins shipping its first B-sample cells for automotive customer testing (Link)

  5. Porsche approves three Continental tire lines for original equipment on the Panamera (Link)

  6. Wolfspeed shelves semiconductor factory project in Germany (Link)

  7. High-Performance Cadillac Lyriq-V Is Coming Next Year (Link)

  8. Volvo and Polestar EVs are now getting Tesla Supercharger access (Link)

  9. Lucid announces pricing of upcoming Gravity SUV (Link)

  10. Volkswagen Group to shut three factories amid falling EV demand (Link)

  11. How BYD's Product Offensive Pushed It To The Top (Link)

  12. VW May Close Three German Plants, Lay Off Thousands (Link)

  13. Porsche Is Reconsidering Its Electric-Only Strategy (Link)

  14. Ford Rolls Out Software Update For Mustang Mach-E, F-150 Lightning (Link)

  15. Kia launches CarPay and partners with Parkopedia for seamless in-car parking payments (Link)

  16. Traton Group boosts sales revenue, earnings, and profitability in the first nine months of 2024 (Link)

  17. Tesla releases rare blog post and it’s an interesting one: Standardizing Auto Connectivity (Link)

  18. Auto loan debt hits crisis levels as Americans drown in car payments (Link)

  19. The Battery Revolution Is Finally Here (Link)

  20. Tesla extends 0% loans in China as it tries for record quarter (Link)

  21. Toyota is getting a new electic SUV from Suzuki next year: Here’s what to expect (Link)

  22. China tells automakers to pause investment in tariff-supporting countries (Link)

  23. Traton Group and Plus launch Level 4 autonomous truck operations in the US and Europe (Link)

  24. Snapdragon Summit 2024: Qualcomm launches next-gen automotive chips to boost AI and ADAS features (Link)

💡STARTUP SPOTLIGHT

Emerging startups disrupting the automotive and mobility industry

Horizon Robotics

Horizon Robotics is a ADAS and AD Systems Supplier that has recently gone public in Hong Kong. This is the largest tech IPO in Hong Kong(HK$5.4 billion) for 2024 and the largest overseas listing of Chinese tech companies since 2021. They are the first and largest Chinese company providing integrated ADAS and AD solutions in terms of overall solution installation volume since the mass deployment of our solutions in 2021, according to CIC. As of June 30, 2024, a total of 25 OEMs selected their ADAS and AD solutions for implementation in at least one vehicle model, by directly engaging with us or through our tier-one supplier customers.

Their integrated solutions have been selected by 27 OEMs (42 OEM brands) for implementation in over 285 car models, with price range from approximately RMB86,800 to RMB429,800.

Horizon’s position within the industry

They operate in both models where they are the Tier-1 or they supply towards platforms of other Tier-1s. They have achieved this by creating an open platform that could be used to make more custom applications on top of. This open platform approach allows all players in the value chain to contribute their best piece into the tech. stack.

Another key differentiator for Horizon is their software-hardware co-optimization approach in their solution design and development. Their strong capabilities in both software and hardware enable them to design hardware that meets the evolving demands of software and algorithms in the automotive industry. Simultaneously, their advanced algorithms and sophisticated software fully utilize the potential of their processing hardware to achieve optimal system-level performance. By leveraging this co-optimization, they provide customers with high-performance, efficient products featuring minimal system latency. This allows them to offer tailored services that enhance customers' product performance and competitiveness.

Their 3 main solutions is as follows:

Horizon Mono is the company's active safety ADAS solution designed to improve daily driving safety and comfort. It enables basic functions such as automatic emergency braking (AEB) and intelligent high beam (IHB) to enhance passenger and road-user safety. Additionally, it offers comfort functions like adaptive cruise control (ACC) and traffic jam assist (TJA) to improve the driving experience. The company currently embeds Journey 2 or Journey 3 processing hardware in Horizon Mono.

Horizon Pilot is the company's highway navigate-on-autopilot (NOA) solution, categorized as an AD solution, that provides a safe and efficient driving experience. In addition to enhanced active safety features, Horizon Pilot performs more advanced tasks such as automatic ramp on/off, autonomous merge-in and exit during traffic congestion, automated lane changes, highway autopilot, and more. These functions improve the driving and riding experience for end users, especially in long-distance commutes. At the same time, Horizon Pilot offers advanced parking functions such as auto parking assist (APA) and automated valet parking assist (VPA). The company currently embeds Journey 3 or Journey 5 processing hardware in Horizon Pilot.

Horizon SuperDrive is the company's cutting-edge AD solution equipped with their most advanced processing hardware. It is designed to achieve smooth and human-like autonomous driving in all urban, highway, and parking scenarios. It is expected to tackle a comprehensive range of complex road conditions with a more assertive and interactive driving style, featuring smooth execution of obstacle avoidance, gentle and human-like braking, dynamic speed control, smooth execution of unprotected left turns, and more. The company plans to embed Journey 6, their latest processing hardware, in Horizon SuperDrive.

Partnerships

The ecosystem partners mentioned above is the most valuable part of their business. It is even more important than the actual algorithms that they produce. Simply because the ecosystem partner is the No.1 reason for Tier1s and OEMs who are putting together their own platforms to choose Horizon. If Horizon’s solution is not even supported by the OEM platform, then they won’t even be considered for a design-win no matter what their “claimed” performance is.

VW/Cariad Partnership

The company strategically partners with affiliates of Volkswagen Group ("Volkswagen") through a joint venture called Carizon (Beijing) Technology Co., Ltd ("CARIZON"), established in 2023, to capitalize on future opportunities in customized driving automation solutions in China.

CARIZON engages in research and development, manufacturing of autonomous driving application software and self-driving systems, and provides aftersales services, training, consulting, testing, and technical support for its products. In the short term, its primary customer will be Volkswagen Group, and its products will be used in vehicles Volkswagen sells in China. Volkswagen holds 60% and the company holds 40% of the equity interest in CARIZON.

🐦AUTO BUZZ

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This week’s key movers in the automotive stock market

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