Summary of Key Points
Recently, netizens have been discussing the topic of "since license plate recognition technology is so advanced, why not simply eliminate ETC and instead link license plates with payment accounts for automatic fee deduction?" In response, the Ministry of Transport has clearly stated that ETC will not be abolished. Instead, a "mobile phone+" card-free payment system will be implemented from 2026 to 2028 as a supplementary option, to coexist with ETC and traditional manual toll booths for the long term. This debate about the future of ETC has unexpectedly brought Jinyi Technology, once a leader in the ETC industry, back into the public spotlight. During the nationwide rush to install ETC in 2019, the company earned nearly 900 million yuan in net profit, and its stock price soared by five times, making it one of the most successful listed companies of that year. However, as the demand for ETC installations declined rapidly, Jinyi Technology's performance plummeted by 90%, and it has suffered losses for several years, struggling to find a new growth strategy to replace ETC as its main source of revenue.
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Detailed and Easy-to-Understand Explanation
1. Why Did the Ministry of Transport Rule Out Abolishing ETC?
Many car owners have complained about the inconvenience of using ETC: the devices often run out of power, fail to recognize license plates, and additional devices on the windshield can obstruct visibility. They believe that directly deducting fees based on license plate recognition would be much more convenient. The Ministry's decision to retain ETC is based on practical considerations:
- License plate recognition has a much lower tolerance for errors; in bad weather conditions or with dirty license plates, or in cases of fraud, it is easy to make mistakes, leading to either incorrect fee deductions or missed charges. With annual toll revenues in the tens of trillions, even small issues can result in significant losses.
- The efficiency of ETC is far superior to license plate recognition. Before the car even reaches the toll booth, the roadside equipment communicates with the OBU (On-Board Unit) on the car, and the entire fee deduction process takes less than a second, allowing the car to pass without slowing down. License plate recognition, on the other hand, requires cameras to capture the license plate and then match it with the payment account in the background, which is much slower and can cause long queues during peak hours.
The new "mobile phone+" system is designed to provide an alternative for car owners who haven't installed ETC. They don't need to retrieve a card or scan a payment code; the fee is deducted directly from the account linked to their license plate. However, this system can only be used in mixed lanes for manual and self-service toll collection and cannot replace the dedicated ETC lanes. Therefore, ETC is not expected to disappear in the next 10 years at least.
2. The ETC Boom Was a Result of National Policy
The widespread adoption of ETC in 2019 was largely driven by government policies. Banks offered discounts to encourage installations, and even vendors at markets approached customers to promote ETC. This surge was not a result of natural market demand but a policy-driven boom. The government aimed to eliminate all provincial toll booths and achieve nationwide toll-free highway travel within one year, compressing the demand for 200 million ETC devices from a projected 3 to 5 years into just 12 months. As a market leader with nearly 50% of the market share, Jinyi Technology benefited greatly, selling over 36 million ETC devices that year, earning more than the company's total profits from the previous 10 years, with its stock price rising by over 500%.
However, this boom was unsustainable. By the end of 2019, half of all vehicles in the country had ETC installed, and new orders plummeted by 90%, leading to significant financial losses for Jinyi Technology.
3. The Hardship of Jinyi Technology Since the ETC Boom
After the ETC boom faded, Jinyi Technology has struggled to recover. In the first half of 2026, its total revenue was only 183 million yuan, less than the profit of a single month during the peak period in 2019, and it even incurred a loss of 39 million yuan. The company is facing several challenges:
- Its traditional ETC-related businesses are declining, while new initiatives in automotive electronics and vehicle-road integration are still in the development stage and are costing money. Research and development expenses increased by 64% year-over-year, but no significant revenue has been generated.
- The company has been experiencing negative cash flows for three years, with more money leaving than coming in. Inventory takes over seven months to sell, and revenue from transportation projects is slow to generate.
- Despite having considerable funds, the company has made controversial investments, such as spending 100 million yuan on private equity funds and acquiring a company specializing in vehicle networking, which resulted in a significant impairment of goodwill. These moves reflect its difficulty adapting to a slower growth environment after years of rapid profit growth.
4. Three Transformation Attempts, None with the Same Success as ETC
Jinyi Technology has tried three new directions based on its technical expertise in vehicle recognition and connectivity:
- Pre-installed ETC: Cars are manufactured with ETC built-in, eliminating the need for customers to install it later. Sales of this service increased by four times in 2024, but this business is highly dependent on car manufacturers' decisions. If a manufacturer's sales are good one year, they may not be the same the next, making it unlikely to replicate the previous nationwide adoption boom.
- Vehicle-road cloud integration: This involves installing cameras and radar along roads for real-time communication between cars and the road to provide traffic updates. While this business is growing rapidly (with a year-on-year revenue increase of over 800%), it currently accounts for less than 1% of total revenue due to the lengthy approval processes and slow payment collection.
- Electronic license plates for electric bicycles: This market has potential, but policies have not yet been fully implemented, resulting in limited revenue.
Together, these new businesses account for only 2% of Jinyi Technology's total revenue. Many companies that benefited from policy-driven booms have faced similar challenges: they grew rapidly but struggle to maintain growth once the initial momentum fades. It remains uncertain whether they can find a new nationwide demand that can sustain their success.
In summary, the era of easy profits from ETC has truly passed, and companies that relied on such policies must adapt to a slower growth environment.