Frost & Sullivan in collaboration with LeadLeo Research has released the '2021 China Automotive Cloud Market Tracker'

Against the backdrop of China's internet industry being constantly updated and iterating, the demand for digital technologies that encompass IoT, big data, cloud computing, and other technologies has risen accordingly.Meanwhile, as of 2020, digital technologies represented by big data analysis and mining, the Internet of Things, and cloud computing accounted for a total application proportion of 53.7% in the automotive industry, making it 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 example, automakers can automate processes and digitize design and research and development through digital technology. Auto 4S stores can achieve intelligent operations of automobiles by relying on big data platforms based on cloud computing, 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, synchronize their data to nearby repair stations, and thus enhance the user experience.

As manufacturers such as Huawei Cloud, Alibaba Cloud, Tencent Cloud, and Baidu Cloud expand their cloud service offerings, their big data-based cloud service platforms are driving the development of flexible manufacturing, marketing, autonomous driving, and connected vehicles in automotive enterprises.

The overall market definition of automotive cloud services/solutions is centered around automakers/factories as targets, providing comprehensive lifecycle services including design, R&D, production/manufacturing, sales, and after-sales support 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 platforms, etc. The automotive cloud service SaaS layer mainly consists of software or programs targeting end-users, such as collaborative applications, content applications, in-vehicle entertainment terminals, office software, and mapping software.

The hierarchical classification of the China Automotive Cloud Service Platform mainly includes IaaS, PaaS, and SaaS layers. The IaaS layer is primarily responsible for providing computing, storage, network, CDN, security, disaster recovery, and other related infrastructure in design, production, and supply chain processes. The automotive cloud services on the PaaS layer mainly cover the cloud platform architecture required for after-sales (such as call centers, OTA, autonomous driving, connected vehicles) and production design (including simulation) processes. Automotive cloud SaaS mainly involves sales and consumption of various functional applications, typically billed based on usage time or the number of underlying resources.

Since some SaaS layers involve and provide consumer software directly targeting C-end users, their massive user base has led to a significantly higher usage scale of the SaaS layer at this stage compared to that of IaaS and PaaS for automotive cloud services.As of 2021, the SaaS layer accounted for as high as 64.6% of China's automotive cloud services, while the IaaS and PaaS layers accounted for 24.7% and 10.8%, respectively.

In addition to covering various digital transformation scenarios of automakers or vehicle manufacturers, the application scenarios of China Auto Cloud IaaS+PaaS mainly include connected vehicles, autonomous driving, and vehicle-road collaboration.

As of 2021, the total scale of the IaaS+PaaS layer in China's automotive cloud market reached 11.88 billion yuan. At present, due to the higher usage of related products for connected vehicle solutions compared to autonomous driving and vehicle-road coordination, the demand and application volume for automotive cloud service solutions related to connected vehicles are the largest. Among them, the application proportion of the IaaS+PaaS layer in connected vehicles accounted for 44.7%, with a market scale of 5.31 billion yuan in 2021. Next is the autonomous driving and vehicle-road coordination cloud services, with market scales of 1.32 billion yuan and 410 million yuan respectively in 2021.

Against the backdrop of favorable development in China's automotive cloud market, the scale of China's automotive cloud IaaS+PaaS application scenarios, represented by four use cases: connected vehicles, autonomous driving, vehicle-road coordination, and digital transformation, increased from 1.57 billion yuan in 2017 to 11.88 billion yuan in 2021, with a CAGR of 65.8%.

Among them, the autonomous driving field is a key growth area for China's automotive cloud in the future. With the development of autonomous driving technology, downstream customers will have a rapidly growing demand for cloud architecture transformation that includes autonomous driving functions. Taking simulation as an example, currently, domestic automakers only conduct simulations at a rate of about 15%-20% compared to Europe and Japan, leaving huge room for growth.Against this backdrop, the scale of China's automotive cloud IaaS+PaaS application scenarios is expected to reach 44 billion yuan by 2026.

As the actual costs of data traffic bandwidth, data storage, and chip computing power generated by automakers or vehicle manufacturers throughout the entire lifecycle of vehicles continue to increase, the demand for automotive cloud services from downstream OEMs and automakers will grow accordingly.

In the early years of the implementation of the entire automotive cloud service platform in 2010, the downstream market mainly focused on considering the functional services provided by various cloud providers. In addition to traditional considerations for downstream customers when choosing automotive cloud service providers (such as quality management process standards that meet automotive company requirements, like ISO 9001, A-Spice; product functionality, accuracy rate, stability satisfaction; service security; after-sales operation and maintenance capabilities), as the technical indicators of solutions offered by different automotive cloud service providers gradually reduced their differences, in addition to additional customization needs, automotive companies mainly considered the cost-effectiveness of solutions or products when choosing cloud providers.

From the perspective of the nature of automakers,In addition to the political factors affecting their own parent groups, Chinese domestic and joint-venture automakers mainly rely on purchasing local cloud providers. Their quotes during bidding have been continuously decreasing from 2015 to 2021. In contrast, foreign automakers are limited by certain factors and mainly use overseas Amazon and Google cloud providers.

From the perspective of cloud service providers,As major mainstream cloud providers are vigorously expanding their businesses in the automotive industry, some suppliers have unified the prices of cloud services required for automobiles with those of IoT cloud platforms to create more cost-effective solutions. Apart from foreign-funded and joint-venture automakers, Chinese domestic automakers mainly consider the cost-effectiveness of automotive cloud services.

As the demand for cloud services by automakers continues to rise, their annual budgets for automotive cloud services are growing year by year and have exceeded their original standard budgets. The annual automotive cloud budget for smaller Chinese automakers is around 10 million RMB, while the annual budget for large group-level automakers is around 50 million RMB.

For example, a Chinese local automaker's annual budget for resources on 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 for autonomous driving and other applications, its annual budget exceeded 40 million RMB.

As the budget for automakers' automotive cloud solutions has exceeded the budgets of traditional functional departments within the automaker, the cloud platform resources required for traditional digital transformation have been integrated with those needed for other automotive processes or application scenarios into the IT department of the vehicle group. For example, a certain automaker's annual cloud budget is 300 million RMB, of which 50 million to 70 million RMB are allocated for automotive cloud services beyond the traditional needs of digital transformation for automobiles.

By conducting in-depth research on high-quality enterprises within the Chinese automotive cloud market, this report suggests focusing on Huawei Cloud, Tencent Cloud, and Alibaba Cloud.