Farewell to the stage of hot money influx and capital pursuit, the autonomous driving industry is moving in a more rational and calm direction.
Since last year, the cold air has passed from the other side of the ocean to the Chinese market. First, Tesla and GM’s self-driving subsidiary Cruise respectively abolished many self-driving positions; then Aurora, the “world’s first self-driving stock” and known as Waymo and Cruise’s three-point self-driving world, was exposed to operating difficulties and was forced to lay off employees , cut salaries for executives, and sold assets to save money; even Argo AI, which is backed by Ford and Volkswagen’s two major financial backers, was not immune. Known as a “star enterprise”, it was suddenly shut down.
A strong signal has been released that the field of autonomous driving is no longer a place to make “quick money”, and the capital bubble has burst. Entering a new stage, whoever can take the lead in implementing the technology and running the business model will be more likely to survive.
Due to factors such as strong market demand and more suitable usage scenarios, commercial vehicles have realized the commercialization of autonomous driving one step earlier than passenger vehicles.
On July 18, 2023, at the Coal Expo held in Urumqi, Xinjiang, Yikong Zhijia announced that it has delivered 100 sets of 100-ton extended-range unmanned mining trucks in the “South Open-pit Mine”, the open-pit coal mine with the highest production capacity in China, becoming The first player in the industry to realize the scale commercialization of L4 autonomous driving.
Previously, the world’s largest single-mine unmanned driving operation fleet was the 108 unmanned mining truck fleet of Australia’s FMG mine, which was provided technical support by the unmanned mining trucks of Caterpillar of the United States and Komatsu of Japan. On July 18, after Yikong Zhijia delivered 102 unmanned mining trucks, the number of unmanned vehicles for a single mine in the South Open Pit Mine has reached 115, surpassing the record of 108 for a single mine in FMG Chichester and becoming the new world number one.
” We expect the fleet size to increase to 300 by the end of this year , ” the staff of Yikong Zhijia revealed. ” After the unmanned driving technology and operation capabilities reach the commercial level, the speed of replication can be very fast, and we are confident that we will continue to refresh. world record. ”
Behind this project, which is called ” Nantianmen ” internally by Yikong Zhijia , the elements that autonomous driving companies should have to promote commercialization have also surfaced one by one.
Rigorous demand forces commercialization to land
On February 22, 2023, a large-scale collapse occurred in a mining area in Alxa League, Inner Mongolia Autonomous Region, causing many workers and vehicles to be buried.
In order to ensure the safety of mine production, the relevant departments of Inner Mongolia issued a new regulation, requiring that ” the number of people working on a 300-meter working face shall not exceed 29 ” in the mine . According to the current status of open-pit coal mine operations, there are generally about 100 drivers working within a 300-meter working surface for mining, transportation and arranging operations. In order to comply with the new regulations, the mine needs to reduce the number of workers to less than 29, and achieving this goal means reducing production efficiency by 70%, and accepting hundreds of millions or even billions of economic losses every year.
It is necessary to comply with the regulations and ensure income, so unmanned mining truck technology has become the only economical and feasible solution at present.
The staff of Yikong Zhijia said: ” With the introduction of new regulations, many mines and engineering companies have begun to discuss the introduction of unmanned driving technology from the perspective of avoiding efficiency reduction, that is, from an economic perspective. This is the beginning of sales intentions. Emerging critical time nodes. ”
Therefore, in the field of commercial vehicles, it is actually user demand that forces the technology to land.
Previously, in the public’s inherent impression, unmanned driving belonged to the track with long slopes and thick snow, with high R&D investment and long payback period. Therefore, many people only think of unmanned driving as a ” money burning ” business. There have been unmanned heavy truck companies that have closed down one after another, which has discouraged many investors.
The prospect of commercialization is an important factor for investors to consider whether they are willing to pay for a technology. Today, the user end continues to spontaneously breed demand, making the commercialization prospects of commercial vehicle autonomous driving more and more clear.
Easy Control Smart Driving provides a good example. The company, which focuses on autonomous driving in mines, was established in 2018 and will realize gross profit this year. Since its establishment, Yikong Zhijia has invested hundreds of millions of yuan in research and development costs, and has gone through a five-year product development cycle, which has completed the commercialization of the product.
As the open-pit coal mine with the highest production capacity in China, the South Open-pit Mine has an annual output of 40 million tons. At present, there are more than 500 mining trucks in operation. The 100 unmanned mining trucks delivered by Yikong Zhijia will undertake the main operation of the entire bidding section of the mining area , is no longer a pilot project.
In addition, Yikong Zhijia has a mature supply chain and has successfully realized localization, which is also a key to speeding up its commercialization process.
The early commercialization process of unmanned driving technology was mainly limited by the high price of sensors. Take the 64-line lidar as an example. Five years ago, the price of this part was as high as 80,000 US dollars. If each car is equipped with 3-4 pieces, the cost will far exceed the driver’s salary. Now the same level of lidar only costs $500, and the price has shown a landslide decline, but at the same time, the wages of drivers are increasing year by year.
The technology of vehicle-by-wire chassis is not mature enough, which was once a major obstacle to the implementation of unmanned driving technology. There was a time when leading heavy-duty truck companies researching unmanned driving technology began to build cars one after another, and we could see the clues. The control-by-wire chassis has become a major technical bottleneck in the commercialization of autonomous driving, and in the short term, it is expected to cooperate with the OEM to solve the difficult problem.
A technical director of an unmanned heavy-duty truck company said: ” It is difficult for OEMs to break through the technical bottleneck of the control-by-wire chassis for the time being. , Second, due to the fact that the salary structure of the OEM is lower than that of the autonomous driving company, and there is no option incentive mechanism, excellent R&D talents will naturally flow to the vehicle R&D team of the autonomous driving company. ”
Aware of the above-mentioned problems, Yikong Zhijia started to set up a vehicle research and development team two years ago. Before the development of the unmanned heavy truck company’s products, Yikong Zhijia successfully launched its new product in April this year. EL100, this is the first extended-range mining truck with a load capacity of 100 tons in China.
” This high-load vehicle can be developed mainly because of the vehicle research and development team of Easy Control Intelligent Driving. The members have many years of experience in commercial vehicle research and development, including new energy system integration and matching, vehicle energy management, and remote control chassis. capabilities are industry-leading. ”
According to ” the mining policy announced by Xinjiang Zhundong, the elimination of mining vehicles below 90 tons must be completed by 2025, so many customers have begun to negotiate (with us) this model.” A business colleague of Yikong Zhijia said .
In addition to the reasonable cost and mature technology of the supply chain, affected by the international situation, the commercial vehicle supply chain, which is highly dependent on American parts and components, is also facing a ” stuck neck ” crisis. ” From the beginning of our research and development, we have focused on selecting and cultivating a domestic supply chain system. The new product has completed an important milestone in the national production of the supply chain.” The colleague in charge of vehicle research and development revealed to us .
At the same time, ” One of the main criteria for judging whether autonomous driving can quickly scale up is the speed and cost of scene replication. Only with technologies that can be replicated to similar scenarios quickly and at low cost can it have the potential for scale. Excessive customization requirements, or the need for a large number of manpower in the operation team, are obstacles that cannot be replicated on a large scale. ” Chentao Capital pointed out the necessary conditions for the scale of autonomous driving, and it is also an angel investor for Easy Control Smart Driving.
” According to the current technical level of autonomous driving, if a large-scale scene can be replicated within 3 months, it is considered to have crossed the threshold of commercialization. As the technology matures, it will gradually accelerate to the point where it can be replicated in 1 scene in the future. The deployment can be completed within a month or even two weeks, and the deployment time will be the core competitiveness of the leading companies on the track. ”
According to CCTV reports, the unmanned driving project of Yikong Zhijia in Fushan Mine in Shandong was successfully completed in only 2 months from the initial deployment to the realization of normal unmanned operation, which is far ahead of the industry average level and has broken through the rapid Barriers to commercialization for low-cost replication.
” Usually once the technology breaks through this threshold, the subsequent growth rate will be very fast. ” Chentao Capital has given full confidence in the large-scale development of Yikong Zhijia.
More consideration should be given to profitability after landing
Of course, easy-to-control smart driving is not just a matter of good luck.
The primary reason why users are willing to pay is that unmanned mining trucks can reduce costs and increase efficiency. From an economic perspective, investing in unmanned mining trucks is a good deal.
The unmanned mining truck developed by Yikong Zhijia is an off-road vehicle. According to the report of the national testing agency, through the energy recovery of the extended program and the global energy management of unmanned driving, the fuel saving rate of each vehicle reaches 30.88%. Increase gross profit by more than 5% for customers, and reduce nearly 4 tons of carbon dioxide emissions per vehicle per year.
The labor costs incurred by hiring drivers can also be saved. In 2019, the cost of unmanned driving hardware is 700,000 yuan, while the three-year salary of two drivers is only about 480,000 yuan; by 2023, the cost of unmanned driving hardware has dropped to 350,000 yuan, and the three-year salary of two drivers It has risen to 760,000 yuan, and the unmanned mining card can save users 310,000 yuan in cost. As labor costs increase year by year and hardware costs decrease year by year, such cost reduction benefits will expand rapidly.
In overseas markets, the cost reduction benefits of unmanned driving are even more obvious. Taking Australia as an example, a car needs to be equipped with 3-4 drivers, and the annual salary cost of each driver needs to be 1 million yuan. In the Australian market, on each car, unmanned driving can save customers 2-3.2 million yuan per year the cost of.
In addition, when driving a traditional car, the average daily operating time is 19 hours due to the limitation of rest time such as driver handover, while driverless driving does not require a driver, and the average daily operating time has reached 21 hours, and it continues to break through. Extend working hours. Yikong Zhijia is expected to increase the efficiency to 115% of labor in 2024, and this figure will reach 127% in 2025. The improvement in efficiency will bring greater benefits to companies that undertake transportation services.
Overall, the application of unmanned mining trucks can increase the gross profit margin of the traditional open-pit coal mine transportation industry from 15% to 25%.
The realization of commercialization can only be regarded as the first step towards success. After landing, how to make a profit is an important part of proving the feasibility of its business model.
It is not difficult to find that what Yikongzhijia provides to customers is a set of mature overall solutions integrating software and hardware. This is exactly the same as Apple’s model.
For a long time, Apple has promoted its continuous growth with its excellent hardware design, sound ecosystem and brand influence. And this just reflects the effect of Apple’s integrated software and hardware moat. Only by producing software and hardware at the same time can we achieve a better coupling effect and provide users with a smoother product experience.
In the autonomous driving track, to achieve commercial profitability, it is equally important to take the route of integrating software and hardware.
In the final analysis, what users buy is hardware, and only by selling mining vehicles that integrate driverless functions can they master the ultimate customer relationship. Simply selling unmanned driving software will be the role of Tier1. Under the current situation of technology scarcity, a certain gross profit can still be maintained, but as the technology gradually matures and market competition intensifies, Tier 1 is often forced to reduce gross profit in order to seize the market because it cannot grasp the end customers, and gradually falls into low gross profit and high profit. The dilemma of dependence on specific OEMs.
The integrated solution of software and hardware can help the company build a strong customer stickiness, deeply participate in the customer’s production process, and stably maintain the customer’s continuous use willingness with high-quality products and technical services.
The business model of software and hardware integration adopted by Yikong Zhijia takes the sales of new energy wire-controlled mining trucks and unmanned driving technology services as the two main sources of income. The two charging bases for unmanned driving technology services, in addition to charging customers the cost saved by replacing drivers, and sharing part of the benefits of unmanned driving for customers to reduce costs and increase efficiency.
As the labor cost of drivers increases year by year, the technical service fee will also increase. However, because the product has matured, the R&D cost will not continue to rise. Instead, it can dilute the R&D cost of bicycles with the expansion of the user scale. Therefore, The gross profit margin of technical service fees will gradually increase, and it is estimated that it will eventually reach more than 70%.
One that has proven that this model works is Tesla. Users can choose to pay a one-time FSD (full self-driving) fee of $10,000, or choose to pay $199 per month for the FSD subscription package service. When the sales volume is large enough, the marginal cost of the software system is basically negligible. According to Tesla’s official disclosure, the long-term gross profit rate of the deferred revenue part achieved by FSD can reach 90%.
There has been a saying in the investment circle that as long as barriers are mentioned, there will be two schools of thought. Investors in the Internet track generally believe that barriers are false propositions, and the important thing is innovation and user experience, while investors in the hard technology track regard barriers, especially technical barriers, as extremely important, even as a decision to invest in a project main decision criteria.
Objectively speaking, having technical barriers means that there are few competitors, companies will not face price-cutting competition, and can maintain a healthy gross profit margin. For new technologies or new products, if there is half a year to one year of technological leadership, and even no competitors with the same quality can be found in the market, then the company can be given a chance to quickly staking the space.
Tesla CEO Musk said that unmanned driving is the peak application of artificial intelligence. This peak refers not only to the market size, but also to the technical difficulty. Warren Buffett said: ” Time is the friend of excellent companies and the enemy of mediocre companies. ” The same is true for technical difficulties.
The unmanned driving algorithm and the high technical difficulty and high R&D investment of the vehicle have helped Yikong Zhijia to establish extremely high technical barriers, preventing competitors from quickly following up, and giving Yikong Zhijia a “bonus period”. Since its establishment, Yikong Zhijia has applied for a total of 264 patents, of which 73 have been authorized, and more than 75% are invention patents. It is worth mentioning that the implementation rate of patented technologies has reached 70%.
High technical barriers require a strong R&D team to support it.
Unlike most of the star companies on the unmanned driving track, the CEO of Easy Control Zhijia, Wason, is not a master of technology, but a serial successful entrepreneur. Wason has successfully founded several companies in the past 20 years. Among them, the last game company was acquired by a listed company at a consideration of 2 billion.
Can’t play games but can make good games, don’t know technology but can do unmanned driving, what’s the secret of Wason’s entrepreneurship? In Wason’s view, “ My self-positioning is a very good HR, and my specialty is to build excellent team, and allow them to fully cooperate on the easy-to-control smart driving platform and give full play to their respective expertise. ”
Among the core team members of Yikong Zhijia, there are technical engineers from leading companies such as Yutong, Jingwei Hengrun, Baidu, and Ali Dharma Institute, as well as industry experts who have been working in mines for more than 20 years.
” The technology stack of unmanned driving software is very long. Under the requirements of software and hardware integration, vehicle design capabilities are also very important for the landing of the final product. Product definition requires experience in mine operations, and sales require strong business capabilities. The track’s The characteristic is that the short board determines the ceiling of the enterprise, not the long board. The importance of the founder’s ability to build a team far exceeds his own technical ability. The important factor is that the entire team has no obvious shortcomings.
Among the management of Yikong Zhijia, the number of doctors is very high, and there are 5 doctors at director level and above. The company has a total of 16 full-time doctors, and more than 55% of the company’s members have a master’s degree or above. The high talent density and low turnover rate are also important reasons for the leading technology of Easy Control Smart Driving. ” We have observed the common points of successful companies in different fields around the world. High talent density will make excellent employees have a higher sense of company identity, job achievement and happiness index, and at the same time lead to a low turnover rate. This virtuous circle can retain High-quality talents have once again increased the talent density. On the contrary, as long as there are some members with insufficient abilities in the team, it will inevitably have the effect of bad money driving out good money. ”
In July this year, in addition to achieving the achievement of the world’s largest single-mine unmanned driving fleet, Yikong Zhijia also won the honor of ” National Specialized Special New Little Giant ” , which is mainly due to its high talent density. team.
survive the darkest hour
Run through the profit model and bring abundant cash flow to the enterprise. This point, in the view of investment guru Buffett, symbolizes “the most important health indicator of a company”.
When choosing customers and tracks, the initial decision of a company is often a watershed in the fate of its subsequent development. Two companies with the same technical capabilities may have two outcomes of success and failure because of different track choices.
Open-pit coal mines are an industry with a very healthy cash flow. Coal transactions have a short billing period, and most of them are cash on delivery or even prepaid, so the mines are usually very cash-rich. This will be transmitted to the suppliers under it, such as general engineering contractors, engineering subcontractors, etc.
The customers of Yikong Zhijia are mainly the general contractors or subcontractors of mine projects. Because the cash flow of the industry chain is healthy, most of the customers who sell vehicles pay in full, and the vehicle suppliers of Yikong Zhijia can have certain Account period, so there is no advance payment problem. The technical service fee income is also a positive cash flow on a monthly basis. Healthy cash flow allows Yikong Zhijia to quickly sell vehicles, continuously improve technical services, and staking land, without limiting the development speed due to cash pressure.
In the eyes of many investors, Yikong Zhijia is regarded as a project case with fast development speed and short investment return period in the field of autonomous driving.
” Before the product matures, the ability to continue financing is the key to the survival of driverless companies. ” Chentao Capital said. Starting from the angel round, Chentao Capital has invested in Yikong Zhijia in almost every round. The old shareholder also expressed his recognition of the business model of Yikong Zhijia with practical actions.
Facts have proved that Chentao Capital did not miss the mark.
Since its establishment, Yikong Zhijia has successively completed multiple rounds of financing such as Angel round, Pre-A round, A round, and B round. In addition to Chentao Capital, the capital also includes Xinghang Guotou, Sidao Capital, and NIO Capital. , Zijin Mining, Wuxi Zhongrui and many other well-known institutions.
” Today is cruel, tomorrow is crueler, and the day after tomorrow is beautiful, but most people will die tomorrow night. ” Ma Yun, who has experienced the Internet bubble and cold winter, once said with emotion. The autonomous driving track has also gone through the bubble and cold winter. At least in the field of unmanned driving in mines, Easy-to-Control Smart Driving has taken the lead in surviving the darkest hour before dawn of ” tomorrow night ” , and has begun to commercialize. run wildly.