Technology companies enter the scene, "automotive OEM" is also redefined?

When Apple, Baidu, Xiaomi and other tech companies enter the car-making field under the banner of redefining the automobile, the first thing to be redefined may be the term "automobile OEM".

While in the 3C electronics field, OEM is a routine operation, but in the automotive field, OEM is not the mainstream form.

Once upon a time, when the ancient car-making new forces represented by "Wei Xiao Li" entered the automobile industry, OEM was regarded as an "unreliable" model.

At that time, there were not only various online azure car owners keyed off the "JAC" car label paragraph, the same as the new car-making forces in the Weimar Automobile founder Shen Hui even said at the conference, "If you choose OEM, I will not be able to sleep every day".

Now, a few years have passed, the initial choice of OEM car-making new forces, Azure across the questioning, Xiaopeng, Zeropeng, etc. turned to build their own factories, OEM mode of right and wrong is still inconclusive.

However, one thing is certain, when Baidu, millet and other technology companies to kill into the field of car-making, and set a more aggressive delivery plan - three years to achieve mass production, OEM is gradually becoming a popular mode .

And with the popularity of this model, driven by new players and new goals, OEM also began to show new qualities.

1

Big Brother's Entry, Redefining OEM

Once mentioned "OEM" factories, the first thing that comes to mind may be JAC, Haima, Yangtze River ...... in the last round of competition in the industry, these car companies' own products belong to the category is not favored. And this is one of the main reasons why the outside world has questioned the automobile OEM.

In the beginning, in order to break the outside world's inherent stereotypes of JAC, Azure spent a lot of effort in the production of cooperation with JAC.

For example, in order to ensure product quality, Azure not only spent 200 million yuan at the beginning to build a pilot line in Nanjing, and tried to run through all the processes themselves; even the later JAC Azure factory, which JAC spent 2.3 billion yuan to re-build, and all the production standards are set by Azure.

With all this effort, Azera has changed some of the doubts about the quality of its products under the OEM model. And when the companies responsible for production become first-tier automakers like Geely and BYD, the skepticism about product quality continues to diminish.

In Baidu announced a cooperation with Geely to build cars, drip announced with BYD *** with the production, no one ever worried about these vehicles in the quality of the hard.

Previously, in response to Shen Hui's assertion that "if I chose OEM, I would not be able to sleep every day," some industry insiders bluntly said, "If Toyota had given Weimar OEM, Shen Hui wouldn't have complained.

When the mainstream car companies involved in OEM, not only the outside world on the matter of OEM wind changed, in fact, the cooperation model itself is also changing.

In the former mode of cooperation, the relatively weak car companies are mainly leasing production capacity and production qualifications, simply OEM production, processing fees.

But in BYD's model of cooperation with DDT, Geely and Baidu, the cooperation between the two sides has become *** together to fund the establishment of a joint venture company, *** together to develop, *** together to operate, *** to enjoy intellectual property rights.

Publicly available information shows that in Tidoo Motors, Baidu accounted for 55% of the shares, Geely accounted for 45% of the shares. In the cooperation between BYD and DDT, the two sides *** with the establishment of the wonderful travel (Hangzhou) Automotive Technology Company Limited, in which BYD accounted for 65% of the shares, DDT accounted for 35% of the shares.

Technology companies with the help of traditional car manufacturers mature car manufacturing process to make the product quickly landing, the traditional car manufacturers with the help of technology company's software capabilities to accumulate intelligent transformation experience. This kind of cooperation is far more far-reaching than the former.

At the same time, due to the underlying platform architecture and complete supply chain, these car companies also have more say in the cooperation.

This model can no longer be called "OEM" in the view of Li Shufu, chairman of Geely Group, because of the huge difference from the previous OEM model.

In his words, Geely is cooperating with Baidu in the areas of automotive engineering, manufacturing processes, and cutting-edge automotive technology, and "Geely is helping Baidu to realize its great ideals [of building smart electric vehicles].

2

Challenges remain ahead of normalization

It's just that, with tech firms getting into the game, auto OEM, while being redefined, is not an easy model to expand compared to cell phone OEM.

First of all, it is the difference in the demand for cooperation between technology companies and traditional car companies.

Previously, after Apple's formal announcement of the car had repeatedly rumors of looking for OEMs around the world, Hyundai and Nissan were Apple's scandalous targets.

While the rumor mill was once involved in the details of where to build the factory, but then both Hyundai and Nissan directly denied the attitude, so that Apple's car so far have not really landed on the news.

The reason for the lack of cooperation may be rooted in the fact that Apple is only looking for a foundry rather than a strategic partner, according to Reuters, but in the eyes of most traditional car companies, simply becoming a foundry would damage their brand image.

Each party has its own calculations, and it's not easy to find a balance after all the games.

Even though the D1 model built by BYD and DDT is now on the market, in April, several sources disclosed that DDT had begun to launch a car-making project, led by Yang Jun, vice president of DDT and general manager of Xiaogang Auto Service, and had begun to poach people from car factories to form a team.

While there is no final conclusion on how to build a car for DDT, the twists and turns of a technology company working with a traditional car manufacturer are evident.

When Apple announced that it was building a car, Foxconn, which has made a name for itself by working with Apple, also began to significantly advance its own automotive OEM strategy.

But whether Foxconn can once again replicate its foundry saga in the cellphone field this time around has been put under a big question mark.

As the jewel in the crown of modern industry, the automotive industry has a long industrial chain, difficult equipment generalization and strong technical expertise compared with cell phone OEM. If the level of generalization of the foundry platform is insufficient, the foundry may need to create a dedicated assembly line for each brand. However, automotive production lines are high investment and highly specialized, and the development, manufacturing, and even installation and commissioning of production equipment is a professional and time-consuming process.

In the round after round of car-making boom, spending tens of billions of dollars have not made a car of the new forces are not a few. It's probably even harder to build a more versatile platform from scratch in one fell swoop, as Foxconn has done.

It can be said that in today's context, strength of the traditional car companies are not willing to be reduced to OEM, the barbarians who fancy OEM as a business and lack of technology, is still the current automotive OEM model rapid promotion of the problems faced.

In fact, if you do not consider other factors from the point of view of earnings alone, auto OEM itself is still a good business.

Take JAC for example. In the past three years, JAC has earned an average of 10,400 yuan in OEM costs and about 6,000 yuan in loss compensation for each Azera car it produces.

An investment of 2.3 billion yuan that JAC once put into rebuilding its factories to take on the business will pay for itself this year.

With such gains, it is not certain that more traditional car companies will turn to OEM.