On June 5, 2022 (the 26th Guangdong-Hong Kong-Macao Greater Bay Area Auto Show) officially concluded at Shenzhen Futian Convention Center. This show saw over a hundred domestic and foreign automotive brands actively participate, with nearly a thousand new vehicles displayed. A total of 41,181 vehicles were booked and sold, generating a transaction value of over 12 billion yuan. The show clearly demonstrated the trend of accelerated integration between automobiles and intelligent driving technology, along with significant changes in product forms, travel modes, consumption structures, and consumer preferences.
Supply Side: Intelligent driving technology is gradually transitioning to L3 level
Intelligent driving is defined as a situation where vehicles rely on various hardware technologies on the vehicle body—such as radars and cameras—along with artificial intelligence, global positioning systems, and computer system algorithms to make decisions and control, enabling normal operation without driver intervention. According to the "Automobile Driving Intelligence Classification" (GB/T40429-2021) issued by the Ministry of Industry and Information Technology, intelligent driving can be classified into L0-L5 levels based on whether it can automatically control horizontal and vertical movements, target and event detection and response, minimum risk strategies, and design operation conditions (ODC). By intelligence level, intelligent driving can be divided into Advanced Driver Assistance Systems (L0-L2) and Advanced Autonomous Driving Systems (L3-L5).
Evolution path of the domestic intelligent driving vehicle industry
Source: Frost & Sullivan
Currently, mass-produced vehicles from major global and Chinese automakers mainly remain at L1 and L2 levels, gradually moving towards L3. In 2021, the first year of commercialization of L3 in China, Tesla with EAP/FSD, Xpilot by Porsche, and NAD by NIO were among the most notable players in this segment. Meanwhile, some tech companies have chosen to develop L4 directly and conduct tests in specific routes and scenarios.
Looking ahead to the next few years, as automotive intelligence continues to advance,Frost & Sullivan expects that due to the many innovative technologies involved in L4 and fully intelligent driving, the domestic market will see more competition between hard-tech companies and internet companies.
Demand Side: Domestic consumers' recognition of leading new brands is rapidly increasing, but they still have strong demands for safety features
Data from Frost & Sullivan’s consumer research shows that in 2022, the overall willingness of domestic consumers to purchase new energy vehicles was between 30-40%, much higher than in markets like the United States.Brand reputation and cost-performance ratio remain the two decisive factors in users' purchasing decisions and satisfaction. Thanks to brand advantages, the top two models with the highest satisfaction rate are Tesla. Domestic brands NIO and Xpeng’s main models are also favored by domestic consumers due to their high cost-performance ratio.
Additionally, the functions that users are most concerned about at this stage are primarily safety-related.Functions that prevent fatigue driving and reduce attention distractions, as well as solving visual blind spots, receive more attention and are more practical.
The top five models with the highest domestic satisfaction rate
five advanced intelligent driving models
What domestic consumers are most concerned about
five key functions
Source: Frost & Sullivan
Supply and Demand sides: The domestic intelligent driving market is expected to continue expanding
Driven by updates in software and hardware technology on the supply side and increasing consumer acceptance on the demand side, the scale of the domestic intelligent driving vehicle market is growing rapidly.According to Frost & Sullivan’s statistics, the sales volume of domestic intelligent driving vehicles increased from 89.33 billion yuan in 2018 to 235.8 billion yuan in 2021, with a CAGR of 27.5% over the past four years.Due to the high maturity of L0-L2 technologies, their overall market share has consistently exceeded 90% over the past few years, and the replacement effect between L2 and L1 is also very evident.
It is expected that by 2024, due to technological updates in software and hardware, L3 and L4 technologies will be widely commercialized, bringing new growth opportunities to the industry. The sales volume of domestic intelligent driving vehicles is expected to grow at a CAGR of 22.2% to 526.54 billion yuan, with L3 and L4 vehicle sales accounting for over 30%.
China’s intelligent driving vehicle sales volume (2018-2024E)
Source: Frost & Sullivan
The domestic industry can be considered in the era of assisted driving from 2018 to 2025. During this period, the penetration rate of L0-L2 remains rising rapidly (expected to reach nearly 50% by around 2025), while the overall penetration rate of L3-L5 remains around 10%. Starting from 2025, the domestic industry is expected to enter the era of intelligent driving. L3 technology is expected to be widely commercialized, and its penetration rate is expected to increase rapidly, overtaking L0-L2 by 2030.
Change trend of the domestic intelligent driving market penetration (2018-2030E)
Source: Frost & Sullivan
However, Frost & Sullivan believes that to achieve a dramatic transformation to L3 and above levels, in addition to software and hardware development, the improvement of legal policies and safety responsibility identification systems is also essential.Since safety incidents at L3 and above will primarily involve the vehicle rather than the driver, vehicle manufacturers face significant challenges. Only Mercedes-Benz has completed international certification for L3 level.
