Against the backdrop of continuous updates and iterations in internet-related technologies in China, digital technology demands that encompass IoT, big data, cloud computing, and other technologies have risen accordingly. From the perspective of the automotive industry, as major internet and ICT firms increase their investment in cloud services, their big data-based cloud service platforms can empower participants in the automotive industry across various sub-sectors such as flexible manufacturing, marketing, R&D design, sales/after-sales support. As of 2022, China's automotive cloud industry continued its good growth trend, benefiting from the structural rapid development of the new energy vehicle industry.
Based on the research and analysis of the Chinese automotive cloud market in 2022, Frost & Sullivan (Frost & Sullivan, abbreviated as "Frost & Sullivan") and LeadLeo Research Institute have released the latest "2022 China Automotive Cloud Market Tracking Report".
Cloud service platform empowers automotive digitization
Against the backdrop of continuous updates and iterations in China's internet industry, the demand for digital technologies that encompass IoT, big data, cloud computing, and other technologies has risen accordingly. At the same time, as of 2020, digital technologies represented by big data analysis and mining, IoT, and cloud computing accounted for a total of 53.7% of applications in the automotive industry, making the automotive industry a key application scenario for digital technologies.
From the perspective of the automotive industry, which is a demander of digital technology, digital technology permeates all aspects of the automotive industry, including manufacturing, production, marketing, management, operation and maintenance, as well as after-sales services. For instance, automakers can automate processes and digitize design and research and development through digital technology. Auto 4S stores can achieve intelligent operation of automobiles by relying on cloud computing-based big data platforms, thereby reducing customer acquisition costs and increasing user conversion rates. At the same time, in the automotive after-sales service market, automotive cloud platforms can detect the operating status and battery conditions of new energy vehicles in real time, synchronizing their data with nearby repair stations to enhance the user experience.
As vendors such as Alibaba Cloud, Tencent Cloud, Huawei Cloud, and Baidu Cloud actively deploy in the automotive cloud service domain, their big data-based cloud service platforms are driving the development of flexible manufacturing, marketing, autonomous driving, and connected vehicles among industry participants.
Architecture of Each Level of the Auto Cloud Service Platform
As a typical chain supply chain industry, the automotive industry has high requirements for consistency and coordination among upstream and downstream partners centered around the OEM. Typically, the digital transformation of OEMs drives the overall industry. Therefore, Frost & Sullivan defines the overall automotive cloud service/solution market as targeting the entire automotive industry chain (including OEMs/automobile manufacturers, suppliers, mobility services and other after-market enterprises) and providing services covering the entire lifecycle including design, R&D, production/manufacturing, sales and after-sales through IaaS, PaaS, and SaaS layers.
Among them, the automotive cloud service IaaS layer is mainly responsible for providing computing, storage, network, CDN, security, and disaster recovery-related infrastructure in design, production, and supply chain processes. The PaaS layer primarily includes microservice frameworks, middleware, databases, simulation platforms, application development platforms, big data, and other platforms. The automotive cloud service SaaS layer mainly empowers the digital transformation of core components in the automotive industry through collaborative applications, content applications, in-vehicle entertainment terminals, office software, and mapping software. In terms of proportion, currently IaaS and PaaS account for the main share of the Chinese automotive cloud market, accounting for 55.2% and 25.9% of the overall market in 2022, respectively. SaaS services targeting core participants in the automotive industry such as OEMs and suppliers account for 18.9%.
Automobile companies continue to increase their cloud budgets, and the acceleration of digital transformation in the supply chain brings new growth.
As the demand for cloud services by automakers continues to rise, their annual budgets for automotive cloud services are growing every year and have exceeded their original standard budgets. The annual automotive cloud budget for smaller Chinese automakers is around 10 million RMB, while that for large group-level car manufacturers is about 50 million RMB. For example, a Chinese local automaker's annual resource budget for cloud platforms for solutions such as connected vehicles and vehicle-road collaboration was in the range of 20 million to 30 million RMB from 2015 to 2018. In 2018, due to increased business volume related to cloud usage needs such as autonomous driving, its annual budget has exceeded 40 million RMB.
In addition, the acceleration of automakers' digital transformation and deeper adoption of cloud computing have also had a demonstrative effect on the supply chain. Considering supply chain collaboration, more and more suppliers are following in the footsteps of automakers by accelerating their own transformation to adopt cloud technology.According to Qichacha data, by the end of 2022, the number of automotive manufacturing-related enterprises in China had exceeded 160,000. The massive automotive supplier group and enterprises in the aftermarket such as travel services will also contribute significantly to the growth of the Chinese automotive cloud market through cloud usage and adoption.
At present, the automotive cloud's digital transformation scenario accounts for the highest proportion. Among the implemented application scenarios, connected vehicles are the main focus.
In addition to covering various digital transformation scenarios involving all parties in the automotive industry, China's automotive cloud application scenarios mainly focus on implementation applications such as connected vehicles, autonomous driving, and vehicle-road collaboration. As of 2022, the total scale of China's automotive cloud market was 21 billion yuan, among which digital transformation remains the most important scenario for the automotive industry. In 2022, the market scale reached 10.54 billion yuan, accounting for 47.7% of the overall automotive cloud market.
At the current stage, the usage of related products for connected vehicle solutions is higher than that of autonomous driving and vehicle-road coordination. As of 2021, the number of connected vehicle users in China exceeded 50 million, making it not only the scenario with the fastest intelligent development in the automotive industry but also the one with the largest demand and application for connected vehicle cloud service solutions. Among them, the connected vehicle market accounts for 38.6% of the overall market, with a market size of 8.54 billion yuan in 2022. Followed by autonomous driving and vehicle-road coordination cloud services, with market sizes of 1.85 billion yuan and 1.17 billion yuan in 2021 respectively.
Future development trends
Trend 1: Rising demand for cloud toolchains.From a market perspective, with the increasing demand for high-performance data storage for autonomous driving and future autonomous cloud platforms, the volume of data returned will drive stronger demand for cloud toolchains.
Trend 2: In the future, participants in the automotive industry will combine their own financial capabilities with external procurement products to meet customized cloud service needs.As more automakers participate in the research and development of partial autonomous driving and connected vehicles, they will also purchase external cloud service products. This has led to an increase in the customization of cloud services and personalized product needs.
Trend 3: The digitalization of local automakers' domestic operations will gradually shift towards top Chinese automotive cloud service providers.Against the backdrop of increasingly important data security, more and more automotive industry participants will prioritize local manufacturers.
Trend 4: Automakers will prioritize international cloud providers with an advantage in overseas experience for their outbound business.Each OEM is actively promoting their business overseas, and when developing overseas operations through digital means, they often lack experience in security compliance, operations, marketing, and other aspects. This has made cooperation with international cloud service providers, which have rich experience in overseas cloud services and well-structured node layouts, the preferred solution for the digitization of Chinese local automakers' overseas business. Well-known international cloud service providers such as Amazon Web Services have also reached business cooperation agreements with a certain number of Chinese automakers for overseas expansion.
Focus on enterprises
By conducting in-depth research on high-quality enterprises within the Chinese automotive cloud market, Frost & Sullivan and LeadLeo recommend focusing on Alibaba Cloud, Tencent Cloud, and Huawei Cloud.
