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Smart cities and cars require alignment among government, OEMs and consumers

At the 12th China Auto Industry Forum jointly organized by China Europe International Business School (CEIBS), European Automobile Manufacturers Association (ACEA) and China Association of Automobile Manufacturers (CAAM) on October 25 in Shanghai, OEM and supplier executives, industry officials and academicians discussed opportunities and challenges facing the industry as cities and cars get smarter. Following are highlights of the event. – Editor

 

Governments, OEMs and consumers are the three key stakeholders in the era of smart cities and cars, according to Pedro Nueno, president of CEIBS.

“They must get together somehow to decide what they want to, or it will just be one against the other,” said Nueno.

Other speakers agreed that technology readiness is only part of the solution.

“The possibilities are endless, but you need to have proven and mature technologies for the customers,” said Matt Tsien, president of GM China. “The deployment factors are, whether consumers demand, want to pay or accept these technologies, whether they are ready, and whether infrastructure is there to support these technologies.”

Tsien believes it’s not an issue of if, but when for the smart technologies to be deployed. GM is in fact launching its Super Cruise technology – which gives vehicles the ability to shift lanes automatically – in the U.S. in two years and in China soon after.

“The challenge in China for the Super Cruise is high fidelity maps and an accurate navigation database,” said Tsien. “China has the potential to lead but it takes collaboration.”

Carlos Ghosn, CEO of Renault and Nissan as well as president of ACEA, believes that in order for cars to be able to communicate with each other, it’s not so much about standardization but rather speaking the same language as the public service.

“The priority for us is making sure that the cooperation with government public services allows the infrastructure to be installed. When the infrastructure is built we cannot have a system that is incompatible with the infrastructure by the government,” said Ghosn. He stressed that smart cities are going to necessitate more cooperation among car industry and public area municipalities, governments, communications and electronics companies.

“We are finding our way to complement each other in order to bring something that is really desired by the cities and governments,” added Ghosn.

Nissan, according to Ghosn, plans to mass market an autonomous vehicle in 2020 and advanced technologies will be built up in the next few years to help the company move toward that goal.

Wang Xigao, chairman of Jiangling Motors Co., Ltd. (JMC), believes autonomous driving technology in China will depend specifically on traffic management and whether the general public can obey traffic rules.

“In China it will be more about the competency of pedestrians and drivers and educating them to follow the rules,” said Wang. “How do you prevent another vehicle from running into you?”

The rapid rise in automobile sales has brought conflicts to cities and these must be solved first, according to Wang.

“For the cities, it is about roads, parking, and sewers as well as how traffic lights are set up and managed,” said Wang. “The government must be responsible to resolve traffic congestion due to these factors.”

Wang stressed that the government must provide a fair and unbiased legal environment, which is conducive to the wellbeing of companies.

Ghosn suggested that the Chinese government must clearly identify where it wants to go – a ‘way north’ – such as Europe’s target to cut emissions by a certain percentage by 2030. “There needs to be better execution of policies too, otherwise they are useless. Actions must be consistent with long-term plans,” said Ghosn.

Ghosn is optimistic that China may become very soon the largest EV market in the world. “China is taking the right direction by building fast charging infrastructure, and its mass market EVs will be very competitive, which is good news for China’s smart cities,” said Ghosn.

Tsien also predicted that China very likely will become the world’s largest EV market because there is strong push by the government with credits and incentives to help drive growth.

Wang, on the other hand, predicted that EV penetration will grow dramatically starting from 2020 as CO2 emissions are expected to reach its peak level by 2030 but China will not put all eggs in the EV basket. “There will be other economical and effective technology routes that will be used to drive down emissions and increase fuel economy,” said Wang.

On the issue of overcapacity, both Ghosn and Wang believe it is only existent for some players.

“There is overcapacity for some and under capacity for others,” said Ghosn. “I am optimistic that long-term trend is up and OEMs have to prepare for that and look at the long-term potential. The next generation of growth is not going to stop in China.”

“The top 10 automakers in China account for 90 percent of the market, which means the rest, about 90 or so, fight for the remaining 10 percent,” said Wang. “For the automakers with core competitiveness, they don’t have enough capacity. For those that are behind, they will be challenged.”

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