Jack Ma's automotive ambition: buying, selling, washing and repairing cars

Everyone knows that BAT is eyeing the automotive industry, but their strategies are different.

When talking about Alibaba's layout in the automotive and travel fields, you may think of the world's "first Internet car" Roewe RX5 launched together with SAIC, the large-scale investment in Didi, and the full acquisition of AutoNavi Maps. However, this is only a corner of its layout for the future automotive and travel industries. Jack Ma's real ambition is to create the Android system in the automotive industry and to build an O2O platform covering all automotive services such as buying, selling, washing, and repairing cars - that is, to take care of all your car-related businesses!

BAT has very different focuses in their layout of the automotive and travel fields. Baidu focuses on autonomous driving and the Internet of Vehicles, Tencent focuses on new energy vehicles and automotive aftermarket investment, and Alibaba focuses on the establishment of in-vehicle systems and automotive service O2O systems. This article is the second in Zhidongxi's "Unveiling BAT's Automotive and Travel Landscape" series, which mainly gives you a panoramic view of Alibaba's layout in the automotive and travel fields. For previous information about Tencent's layout in this field, please refer to "Unveiling Tencent's Automotive and Travel Landscape Market Value of 2 Trillion Yuan, You Can Do What You Want!"

Before making the whole vehicle, seize the car's central control screen

It was scorching hot in Hangzhou on July 6, 2016, but Yunqi Town, not far from Alibaba's headquarters, was crowded with people.

A few minutes before the meeting started, the second floor of the town's exhibition center was filled with long and warm applause, and Alibaba Chairman Jack Ma and SAIC Chairman Chen Hong entered the venue together. In the following hours, senior officials from Alibaba and SAIC took the stage to tell the participants about a Roewe SUV called RX5 and its YunOS operating system.

There are more than 100 new cars launched in China every year, but the only one that can attract the support of both the largest e-commerce company and the largest automobile group is the RX5, because in the eyes of Alibaba and SAIC, it is the world's first Internet car. According to data released by SAIC, the sales volume of Roewe RX5 in January 2017 was 20,008 units, which has exceeded 20,000 for the fourth consecutive month (in the enterprise industry, monthly sales exceeding 10,000 units are considered hot sales), and 70% of them are Internet version RX5 equipped with YunOS.

Putting aside the mechanical parts of the car, the biggest connection between RX5 and the Internet lies in the automotive version of YunOS operating system it is equipped with.

The YunOS operating system was launched in 2010 and officially launched in 2011. The latest version is YunOS 5. YunOS is developed based on open source Linux and can run Android applications. After its launch, it has not achieved much success in mobile phones and tablets due to its delicate relationship with the Android ecosystem, but has attracted a lot of doubts. After that, Alibaba began to gradually expand and shift the application scope of YunOS, with automobiles, TVs, and smart home products being several major directions, bypassing the failed mobile phone and tablet markets.

A former YunOS developer once said on Zhihu, "If Dalvik (virtual machine) is not rewritten, YunOS's changes to Android are not more than those of Flyme and MIUI."

For the automotive industry, the in-vehicle operating system has always been a difficult problem. Even for luxury cars that cost millions, the navigation or entertainment application experience is far behind that of smartphones. To solve this problem, Apple, Google, and Baidu have launched in-vehicle system solutions such as Carplay, Android Auto, and Carlife, but these solutions are all based on mobile phone screen projection applications, not independent operating systems installed on the large central control screen in the car.

Alibaba hopes to solve this problem with the help of the YunOS operating system.

In July 2014, Alibaba and SAIC signed a strategic cooperation agreement, stating that they would jointly build Internet cars. In March of the following year, both parties invested 500 million yuan each to establish an Internet car industry fund and set up a joint venture company, Banma Auto, to develop customized in-vehicle YunOS operating system for vehicle manufacturers such as SAIC.

In-car YunOS system: simple and easy to use but with limited functions

Compared with traditional in-car operating systems, the YunOS system in the Roewe RX5 is simpler and easier to use.

First of all, because maps are the most basic need for driving, RX5 makes maps into the system desktop rather than an application, so that users can always grasp geographical information when operating other functions. In addition, YunOS is equipped with high-precision maps, and the positioning accuracy in large cities such as Shanghai can even be accurate to the lane, and the map will automatically zoom according to the speed of the car (for example, it will show an overview at high speed and show accurate content at low speed).

Secondly, because operating systems in cars involve security issues, Alibaba has made the main interface of YunOS in the car into three cards to display information. Functions such as communication, music, and vehicle settings are all clearly visible, and it is also equipped with a voice control function. Users can use voice to control the sound system, adjust the air conditioning volume, and even open the sunroof. Thirdly, YunOS and Alibaba's services have also been deeply customized. It can pay parking fees through Alipay installed on YunOS. When passing a coffee shop associated with Taobao, the system will push corresponding promotional information, and car owners can complete the reservation and payment process directly on the car system.

Finally, vehicles equipped with the YunOS system can also interact with other smart hardware, such as using mobile phone apps to control car doors and air conditioning systems, using smart watches to unlock car doors, and using the central control system to view drone footage.

However, it should be pointed out that although the sales of RX5 are good, some car owners have made various complaints about the experience of the YunOS system. The main complaints include that although YunOS's basic services are free of traffic, the traffic beyond the basic services is too expensive, the car computer cannot connect to Wifi and the traffic card cannot be replaced by itself, there are too few existing functions, the voice recognition accuracy is not high when there are multiple passengers in the car, and it cannot exchange information with mobile phones.

Car service O2O system: buy, sell, wash and repair cars!

While using the YunOS system to seize the in-vehicle operating system on the one hand, Alibaba is also working hard to build an O2O service system covering the entire chain of pre-sales and after-sales of automobiles.

According to data released by Alibaba, Taobao Auto and Tmall Auto had a turnover of nearly 40 billion yuan in 2014, mainly including sales of new cars, auto supplies, and spare parts. In the same year, the total annual output value of the entire domestic auto industry was estimated to be about 4 trillion yuan.

Since there is still a demand for installation of automotive supplies/accessories, if Alibaba wants to continue to expand its transaction volume in the automotive industry, it needs to cooperate with offline repair shops and beauty shops.

In April 2015, based on the original Taobao Auto and Tmall Auto teams, Alibaba integrated auto-related businesses and established the Automotive Division, which consists of five teams: complete and used cars, O2O, auto supplies, APP, and marketing. From the perspective of its team composition, Alibaba abandoned the previous practice of only selling new cars and auto supplies on Taobao and Tmall, and began to adopt the O2O platform model, integrating car owners, offline stores, spare parts, and decorative supplies on one platform, allowing users to complete all-round O2O services involving 16 scenarios such as vehicle purchase, financial loans, repairs and maintenance, beauty and decoration, vehicle mortgage, used car sales, and rental and designated driving on one APP.

In fact, since 2013, there have been many companies hoping to change the automotive aftermarket landscape through the O2O model, including Tuhu Auto Care, Chediandian, Autohome's Yangchezhijia, Bopai Auto Care, eCar Wash, Yangchediandian and other companies. However, since 2015, these automotive O2O service companies have also begun to see a wave of bankruptcies, and many companies are no longer able to survive by relying on investment.

The reason is that the core of automobile services lies in offline installation and debugging. The automobile O2O platform itself faces a paradox: if you want to attract users, you need a large number of offline service providers, but if you want to expand the number of merchants, you will inevitably lower the screening standards. The existence of some low- and medium-level merchants will eventually affect the user experience, causing the platform to go bankrupt. O2O platforms can easily control automobile parts such as oil and tires, but it is extremely difficult to supervise installation capabilities and debugging technology.

Investing in maps and travel: Let payments invade mobile travel

In addition to actively developing an O2O service system for the entire life cycle of automobiles, Alibaba has also made investments in the two major areas of maps and smart travel.

In terms of maps, Alibaba acquired 60% of the shares of E-Map in August 2010. The company has Class A surveying and mapping qualifications for navigation electronic maps, Internet map services, and geographic information system engineering, and provides map data for map applications and vehicle manufacturers. Subsequently, in 2013 and 2014, it acquired AutoNavi Maps for a total of approximately US$1.3 billion. In particular, the acquisition of AutoNavi Maps has enabled Alibaba to have a complete map business that can provide support and cooperation for its businesses including YunOS in-vehicle systems and automotive O2O services.

Looking back to 2014, before Alibaba officially acquired AutoNavi, this map provider had been doing business with B-side users such as BMW. However, after the rise of mobile Internet, providing navigation services to users for free did not bring revenue to AutoNavi. AutoNavi was faced with the problem of how to commercialize more than 100 million users, and the best solution was to merge with an Internet giant that mastered O2O and mobile payments.

According to industry insiders, before Alibaba acquired AutoNavi, AutoNavi had contacted all three BAT companies and was about to sign an acquisition agreement with Baidu. But then Jack Ma heard the news and flew from Hangzhou to Beijing to have a meeting with AutoNavi that day, thus snatching AutoNavi from Baidu. Of course, this was also related to Baidu's own map business and its high profile.

In terms of travel, Alibaba's investment layout is mainly concentrated in online car-hailing and Internet buses.

Alibaba invested in Kuaidi’s A/B/D rounds of financing in 2013, 2014 and 2015 respectively, and invested another $3 billion in Didi in July 2015 after the merger of Didi and Kuaidi. At the same time, in order to protect Didi’s flank and seize overseas markets, Alibaba made three rounds of investments in Lyft, Uber’s rival in the United States, in 2014, 2015 and 2016.

In addition to online car-hailing services such as Didi and Lyft, Alibaba is also interested in online bus-hailing services (Internet buses). In August 2014 and June 2015, Alibaba invested in Chelai and Jiewo Bus respectively.

The bus location query APP Chelai cooperates with bus companies to display the specific bus arrival time on the mobile phone in real time, and also introduces a social chat function in the APP. Jiewo Bus is a customized bus service provider. Users can search for suitable shuttle buses and buy tickets in the APP. For users who do not have a suitable route, they can initiate a route. However, Zhidongxi also found that the newly created route needs 50 people to sign up before it can be opened. Customized shuttle buses still have a long way to go to successfully solve commuting problems.

The logic behind Alibaba’s layout in the automotive sector

Looking at Alibaba's layout and strategy in the automotive field, its three major businesses are very clear:

1. Independently develop the automotive version of YunOS operating system.

2. An O2O system of self-operated vehicle services, covering new/used car sales, auto finance, beauty and decoration, repair and maintenance, etc.

3. Invest in map and smart travel companies, including map companies such as E-Map and AutoNavi, and online car-hailing services such as Didi and Lyft, as well as online bus services such as Pick Me Up and Car Coming.

So why does Alibaba make such a plan?

First of all, intelligence and networking are the development direction of future automobile technology, and an important means to achieve intelligent networking is to install an intelligent operating system for the vehicle. From the perspective of the IT industry, the future car is a mobile phone or computer with four wheels, which shows the importance of the operating system.

After cars began to be equipped with large central control screens and had functions such as navigation and entertainment, the entire industry did not actually have a monopoly on-board system like Windows and Android. Basically, each car company developed its own system. However, due to the different development capabilities, the user experience was uneven and different car systems could not be interconnected.

In addition, although there are many navigation or smart rearview mirror manufacturers currently producing products based on Android or YunOS operating systems, since they are installed aftermarket, their existence is like embedding an Android phone in the center console of the vehicle, which cannot read the key information of the vehicle, nor can it control and set the vehicle on the center console screen. And because the shape of the vehicle's center console limits the shape of the screen, these systems do not have a good experience when running other programs developed for mobile phones.

To put it bluntly, there is a huge market demand for pre-installed vehicle systems, but there is still no optimized solution like Android, iOS, and Windows. Zebra Auto, founded by Alibaba and SAIC, is focusing on this area.

However, it should be pointed out that, from the example of Android, the operating system providers make most of their money not just from selling the system, but also from advertising, app stores, additional services, etc. Alibaba’s senior management has mentioned many times on different occasions that the future will transition from the IT era to the DT (Data Time) era, and only companies that master data will gain the upper hand. Alibaba’s efforts in the automotive version of the YunOS operating system can collect a large amount of car owner and driving data through the pre-installed market, further building its own data moat.

Secondly, in addition to new car sales, the automobile industry also has an aftermarket with a scale of over one trillion yuan, including common projects such as beauty and decoration, repair and maintenance, used car transactions, and auto finance.

However, at present, outside the 4S store system, the automotive aftermarket system has not yet formed a national repair and maintenance or beauty enterprise. Although there are chain brands such as Mobil 1 Maintenance Station, Zhongxin Zhibao, and Huasheng, their stores are mostly located in individual provinces, and their local market share is not large. After the warranty period of the vehicle has expired, most car owners still rely on acquaintances to choose aftermarket stores.

To put it in one sentence, the market is huge, but still not mature enough. What Alibaba wants to do is to build a unified O2O platform for automotive aftermarket services through O2O methods such as store qualification certification, unified supply of spare parts, and mutual evaluation between customers and stores. In this way, Wang Licheng, general manager of Alibaba's automotive business unit, said that car owners can use one APP to purchase vehicles, obtain financial loans, repairs and maintenance, beauty and decoration, vehicle leasing, mortgage loans, designated drivers, used car sales and other car-related services.

Matching buyers and sellers, providing a guarantee system for transactions, and providing financial services to both parties are exactly what Alibaba has been doing in the past decade. Therefore, although Tencent has also been involved in many automotive aftermarket service companies such as Youxinpai, Renrenche, Xiucheyi, and Kuantu, its approach is limited to financial investment and resource integration, while Alibaba has established an automotive business unit and chosen to do it itself in the automotive aftermarket.

Thirdly, the development of mobile Internet is closely related to positioning services. Maps are not only an essential application and a portal for mobile Internet, but also an important service required by various apps. Mobile apps including Taobao, Tmall, Weibo, Momo, Gudong, and Meituan are all using map services from AutoNavi.

Finally, Alibaba's layout in the entire automotive field can be coordinated with Alipay. The importance of the payment system to Alibaba and the mobile Internet is self-evident, and smart travel services such as Didi, Lyft, Pick Me Up, and Car Coming are high-frequency applications of the mobile Internet, and even to a certain extent represent the development direction of future transportation, with a large number of payment needs. Alibaba's investment in it, on the one hand, hopes to have a certain voice in possible star companies in the future, and on the other hand, it is also to ensure the status of Alipay in these applications and access to financial services such as Ant Huabei.

Conclusion: For the commercial faction in BAT, business comes first

As for the characteristics of Alibaba's layout in the automotive field, Zhidongxi believes that they mainly include independent operation and greater emphasis on the integration of existing businesses.

On the one hand, whether it is the in-vehicle YunOS or the O2O service system that hopes to integrate the entire life cycle of the car, Alibaba will either set up a joint venture to jointly develop it or build its own team to operate it. This kind of independent participation is of course a step further than financial investment.

On the other hand, Alibaba is also making strategic investments, but we have also observed that Alibaba's layout in the automotive/travel field does not involve complete vehicles and autonomous driving technology. Instead, based on its own capabilities, it chose to start from the in-vehicle operating system and invested in areas such as maps and smart travel that can directly connect with its own business.

So looking at Alibaba’s layout model, it is more like the layout model of a commercial company rather than a technology company, and it will penetrate into every pore.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.