Li Bin of NEXTEV: Will Automobiles Shift From Being the Most Important Product of Mankind to an “Epidemic” in the Industrial Age? |The Shunwei Family

Shunwei Capital
Jul 28, 2017 · 14 min read

Shunwei Capital 2017–06–30 21:32

This article is an edited version of a speech made by Li Bin, CEO of NEXTEV, at Shunwei Capital’s annual CEO meeting.

I am very happy to be here at Shunwei’s annual meeting. As an entrepreneur, I have always been involved with the automobile and internet industries. I started NEXTEV in 2014. Today, I wish to look at the development of the automobile from NEXTEV’s perspective.

In the more than 100 years that have passed, the automobile has been one of the most important products of mankind.

There are many reasons here, and not simply because it is an expensive item. The automobile has been the first product that we can control by ourselves and which liberates us and gives us space and freedom of our very own. For many children, especially boys, their favorite toy is the toy car, because the automobile symbolizes for everyone the desire for freedom.

However, now that the automobile industry has developed to what it is today, I feel that the excitement that automobiles give to us is steadily decreasing. Today, the automobile has become an “epidemic” of the industrial age. It has already brought a number of problems and troubles, mainly in four areas.

First of all: traffic jams.

Traffic jam is already a global issue, and not just one limited to China. Today, a major city that is without traffic jams is a rare one. Traffic congestion causes tremendous productivity and time wastage. Every day, around the world, 130 billion minutes are wasted in traffic jams.

This is actually an incredible waste of our time. Unfortunately, China is one of the most congested nations in the world in this regard. On average, we spend 104 minutes a day on the road. What can we do with these 104 minutes? Why do we have to spend all this time in traffic? While we do not usually think about such waste of our time, when we start calculating, the numbers are shocking.

Second: environmental pollution.

Petroleum accounts for 20% of air pollutants among all factors of air pollution. Moreover, pollution is also a global problem that is not confined to China. Issues caused by pollution can be seen in many places around the world.

Third: road accidents.

Perhaps this does not appear to be a severe problem to everyone. Road accidents are actually a severe safety issue.

In fact, each year, 1.25 million people die in road accidents worldwide. This is not just a problem with the automobile, and often the driver is negligent, is inebriated, or is fatigued. Or perhaps the driver is not paying close attention, or the issue lies with the pedestrian. Or maybe, traffic facilities have not been designed well. In summary, so many road accidents occur in a year.

This image shows us the distribution of road accidents in the United States for the year 2015. This is a truly shocking image. While we do not have such detailed statistics for China, road accidents are indeed a key factor that affects our lives negatively.

Fourth: oppositional relationship with the user.

The task breakdown for the automobile industry was established more than 100 years ago. Today, such delegation of tasks and the mobile internet are completely different. Today, the moment we buy a car is the crowning moment of the user experience. Subsequently, we are looking at an endless stream of worries, repairs, refueling and insurance. In all areas and for a variety of things, we have to deal with black box-like suppliers and service providers. There is no brand that takes responsibility for the entire car user experience. No matter if you buy a luxury car or an ordinary car, the service that you get is actually the same. You have to go to the same gas stations. Even if you were to go to a “4S” integrated services shop for luxury gas it would just mean that you get ripped off a little more.

Today, we may think nothing of such service, when in fact things should not be this way.

Two days ago, my car had broken down on the expressway leading to the airport. I called the brand manufacturer, which told me to call the dealer instead. It would cost me more than CNY80,000 to have the car repaired at the dealer’s 4S shop. But if I went to someone I knew well, I would probably end up paying just over CNY30,000 instead. Such situations are highly common.

For the majority of people, cars are but cold, inanimate machines. Issues like these have already dampened people’s enthusiasm for cars, pushing them farther and farther away from children’s desire for freedom. The automobile no longer means happiness and relaxation for us.

On the other hand, electric cars and self-driving will bring massive changes.

What changes can we expect from the popularization of electric-powered vehicles and self-driving technologies?

Let us look at what changes will occur in terms of the issues I have outlined.

First: electric vehicles will “release” us from traffic jams

Electric vehicles equipped with self-driving technology may not resolve traffic jams, as traffic jams can only be resolved by means of the relationship between the road and the vehicle. Road widening is also not an effective measure. You will have to consider many factors. As long as there are still many cars on the road and there is traffic, road widening will still be useless.

However, self-driving tech can return to you your time. You will no longer have to stare at the steering wheel the whole time you are in the car, and do not have to be on high alert the whole time. This is a grand liberation in terms of the individual user experience. In general, the industry prefers to classify self-driving technologies in stages using L1, L2, and L3. Let us use an image to illustrate this. We can use another indicator to see how much time can be freed up. Using today’s technologies, basically we can free up 20% of our time in the car. The ES8, a mass produced model that will be delivered next year, can essentially free up 50% of the driver’s time. For less complicated traffic conditions like traveling on the expressway and on the ring roads, self-driving technologies can certainly be safer than you driving the car.

We believe that from the technological point of view, by year 2025, self-driving technologies will be able to free up 100% of the driver’s time. This is actually a gradual process rather than a leapfrog one. The percentage of time that can be freed up from the wheel will increase over time until at a certain time it reaches 100%.

So, looking to the future this way, we will see that over the course of the evolution of the user experience, from the technical point of view, the automobile will once again free up the time that we otherwise spend driving.

And second, the electric car will be more environmentally-friendly.

Without a doubt, with the use of clean energy and with the popularization of electric vehicles, the automobile will be even friendlier to the environment. From the internet perspective, our only concern is that of the user experience. One very important reason is that the electric charging experience will be better than the fuel-tank top-up experience.

97% of those who have driven electric cars in the United States opt for another electric vehicle when they select a new car rather than a gas-powered car. One key reason here is that, with the electric car, the driver no longer has to go to the gas station. The topping-up of gas is the most commonly-seen scenario within the user experience. What would it feel like if one no longer has to head to the gas station? In the United States, many people have been robbed at the gas station. It is very unsafe. Furthermore, they have to spend a few hours at the gas station each week. If there is a charging dock at home, one would simply have to plug the car in after work and then unplug it the second day. The entire process becomes much more convenient and safer.

In China, the scenarios are not the same for us. In China, only very few people can install charging docks at home. However, we have the mobile internet logic. We can build a system that is based on the mobile internet and can make the electric car user experience better than the user experience with gas-powered cars. Judging from the charging experience and how long the electric car can go for on one charge, the year 2020 may be the year for electric cars. In China, where the environment is not so good in terms of the use of electric cars, the user experience with electric cars will become better than the experience with gas-powered cars.

We believe that the future popularization of electric cars is something that the global automobile industry agrees on.

If the entire world’s automobiles were to be all replaced with electric cars, and if clean energy were used, then 16 million tons of carbon emissions can be avoided each day. This is something that is worth our full efforts. I believe that this will also help to reduce smog here in China.

We see that the foundation of modern energy is oil. Of the top ten companies in the Fortune 500 list, six are oil companies. The Middle East has been so unstable because of conflicts over oil. If we can enjoy the convenience of clean energy, such as solar power, wind power, and nuclear power which make full use of local energy sources, there will be greater peace around the world.

Third: the electric car will be safer.

This image illustrates a more mainstream deployment for self-driving cars. Here, we see various kinds of sensors and chips. These sensors and chips respond more quickly and more reliably than man.

There is something that most of us have not really thought about, but which is very important: the electric car responds much more quickly than a gas-powered car. The gas-powered car is a machine with mechanical transmission and operation, while the electric car relies entirely on electricity. It takes 30ms for power to be transmitted for an electric car, compared to 500ms for a gas-powered car. 500ms is half a second. What is 0.5 second like? When a car is moving at 60 kilometers an hour, what does 0.5 second translate to in terms of distance. That is 5 meters.

This is actually a very big concept. We see that self-driving gas-powered cars are always slower and “run into” by Tesla. Why is this so? This is because when you give the gas-powered car a command, by the time it responds, the car ahead would have moved by 7 or 8 meters. Would the car behind not run into it? This is not a problem with the electric car, which is truly a fast tracker. Hence, this is also a very important reason for why the electric car is safer than the gas-powered car.

Fourth: with developments in artificial intelligence and voice interaction, the automobile will also become friendlier and understand you better.

The automobile is the best arena for applications of artificial intelligence scenarios. It is, relatively speaking, a more manageable space than the family scenario, which is far more difficult to organize and control. Comparatively speaking, the automobile is easy to organize. Hence, the automobile space is the first scenario with the large-scale application of artificial intelligence and voice interaction.

In addition, with the popularization of the mobile internet today, we can completely integrate all automobile-related services in a more effective way, and make the user interface simple. The user can thus complete operations on the mobile phone. It is just like how one places an order on the MI online shop and your item is then sent to you immediately.

Currently, self-driving cars are a very hot topic. We are often misled when we think about self-driving in the future. For instance, currently there are some visions that are based solely on technical standpoints, while others fail to consider the legal and social aspects.

In my opinion, when we think about self-driving cars in the future, we cannot think solely of the technologies. Speaking purely from the technical standpoint, technologies have matured much faster than expected; we are seeing extremely fast iteration in the areas of computing, software, and Big Data. However, we must consider the social aspects of the matter: there are already certain issues with the use of drones. Irresponsible drone operators have frequently caused issues for airlines. Hence, we need to think about the social aspects more.

Previously, a number of terrorist incidents in Europe have been related to automobiles. Vehicles have been driven into people, or used for explosions. Hence, the automobile is actually an industrial product for which supervision is highly complex. Supervision of automobiles is far more complicated than the supervision of mobile phones or other industrial goods that we use from day to day.

In my opinion, there will be the following three principles with regard to the future of self-driving cars:

First, we believe that no matter how self-driving car technologies develop, and no matter if these technologies can free up the driver’s time by 100%, there will always be someone onboard. Take for instance Uber’s vision: will there be a day where a vehicle that is driven by no one is sent to pick us up for a leisure trip? This may never be realized, as poor management would bring a number of risks in such a scenario.

Second: speaking on the level of basic technologies for self-driving cars, the vehicle will never be remotely controlled, but only driven by the ‘self’. Whether the vehicle can be taken over by a hacker is another matter altogether. However, from the design perspective, we can never allow remote vehicle control. This is also a very social issue.

Third: Self-driving cars will be subject to mandatory local supervision. This is bound to happen. We should pay attention to these three principles when we imagine business models for self-driving cars.

I’m sure you are all curious about how major players are doing in terms of their development of self-driving car technologies.

In my opinion, Ford, though regarded as the “Big Brother” of the automobile industry, has never truly “serviced” users. This is the issue with Ford in term of user experience as I talked above.

Tesla has a good chance in the United States. This is why the market value of Tesla is far higher than that of Ford, which is worth over USD10 billion. In my opinion, the Tesla experience in the United States is excellent. However, it would be very difficult for Tesla to replicate the same kind of experience in China, because self-driving cars will rely even more on localized data. Local companies will have an advantage.

It will also be quite challenging for Google. In the area of self-driving car technologies, there is no way one can make it simply by creating a third-party platform. The most important thing is belonging, for it is related to the issues of quality and one’s life.

Tesla’s approach is introducing continuous iterations and improvements, and freeing up the driver’s time bit by bit, first by 20%, then 30%, 40%, 50%… and this figure will soon reach 85% one day. I feel that this is the correct path to take, and the user can also adapt over the course of this process.

Whoever first deploys this model, collects data on user behavior, learns on a continuous basis, updates the car continuously by OTA, and is first to complete this process will win. We have a rather radical goal, which is to build a complete circulation system on the car that is due for delivery at the beginning of next year. I believe that we can beat the others by a fair margin in accomplishing this.

Local companies that make electric cars have a far better chance than foreign brands. I strongly believe that foreign brands do not have a chance in the Chinese smart electric car industry. It is just like how Apple’s market share in China is declining by the year. There is actually a reason to it: innovation in the area of applications has been underestimated, and thus local enterprises have a greater chance.

And now, we look at where NEXTEV is in the process:

On 28 June 2015, we won the first-ever FormulaE championship. We won the driver’s championship of the year in what was the historic inaugural season. World champion Li Ning made a comment on this occurrence. He said that our win made us “the first-ever world champion in China’s industrial sporting history”. While it sounds a little awkward, it is a concise description.

We have already proven that we are at the front of the pack globally when it comes to self-driving controls.

On 10 March this year, NEXTEV launched its concept car EVE. At the same time, we released our vision for the future of self-driving cars and smart cars: we hope that the car of the future would be a mobile living space and a smart partner that would understand you even better.

EVE actually also represents our imagination of the future. We believe that technological advances will enable automobile to bring more entertainment and joy to us, and that the problems we are facing today will be resolved one by one.

Although we have yet to sell a single unit, we firmly believe that such efforts will certainly bring new changes to the automobile industry and the entire tech industry. Thank you!

Shunwei Capital was founded in 2011 by Mr. Lei Jun and Tuck Lye Koh, managing three US Dollar funds totaling 1.75 billion dollars and two renminbi funds totaling 2 billion yuan. The funders mainly come from sovereign wealth funds, family funds, fund of funds and university foundations and other international top investment institutions.

Shunwei Capital focuses on the Internet, mobile Internet, the high-tech industry and the transformation brought about by the integration of the Internet with other industries. We hope that through investing in companies with dreams, we can make our life better.

Shunwei Capital

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Early stage VC founded by Lei Jun (Xiaomi CEO) and Tuck Lye Koh. Manages $2 billion USD with over 200 portfolio companies invested.

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