Summary of Key Points
Jiushi Intelligence (a team from Baidu Apollo, which has integrated Cainiao's autonomous vehicle business) has entered into a deep partnership with Dongfeng Motor to launch the "Dongfeng OpenVAN" autonomous logistics brand. They have simultaneously released four L4-level autonomous vehicles capable of handling various scenarios, ranging in capacity from 2 to 60 cubic meters, and have received over 4,000 orders on the initial release. The cooperation model between the two companies is similar to that of Huawei and Saisis: Jiushi provides the autonomous driving system, while Dongfeng manufactures the vehicles, representing a partnership on equal terms. This marks a significant milestone in the autonomous delivery industry, as it signifies the transition from being able to operate autonomously to operating efficiently on a large scale. The reduction in costs by 68% has proven the commercial viability of this approach. However, there are still three major challenges to overcome: vehicle standardization, large-scale operations, and road access regulations.
Jiushi has built a competitive advantage through its technology (fully self-developed L4 autonomous driving system), data (a fleet of 25,000 vehicles with 130 million kilometers of operation), and substantial assets (integration with Cainiao and Dongfeng). As a result, a duopoly in the industry has begun to emerge, with Jiushi holding 53.2% and Xinshiqi holding 36.2% of the market share. Vehicle standardization is expected to become an inevitable trend in the future.
Cooperation Model: The "Huawei Approach" for Commercial Vehicles
The partnership between Jiushi and Dongfeng mirrors that of Huawei and Saisis, where Jiushi focuses on the "intelligence" (the autonomous driving system) and Dongfeng on the "hardware" (vehicle manufacturing). Jiushi's "Zelos Inside" model involves integrating its autonomous technology into Dongfeng's vehicles to create a joint brand like OpenVAN. This collaboration is based on equality, rather than the traditional supplier-supplier relationship where one party makes all the decisions. The reason for this approach is the increasingly strict regulations: national autonomous vehicle traffic laws will take effect on July 1st, and previously modified vehicles will need to meet standard production requirements (passing more than 1,000 tests). Dongfeng's 57 years of experience in vehicle manufacturing and Jiushi's advanced L4 technology complement each other, ensuring compliance.
Cost Reduction by 68%: The Key Advantage of Autonomous Vehicles
The biggest advantage of autonomous vehicles is their cost-effectiveness, which can reduce costs by up to 68% compared to traditional fuel-powered vehicles. This is achieved through several factors:
- Labor savings: The cost of delivery personnel is significant, and autonomous vehicles eliminate the need for salaries and social insurance while operating 24/7.
- Higher efficiency: Autonomous vehicles do not require rest, and route optimization is more precise.
- Long-term benefits: Although the initial investment in purchasing vehicles is higher, the long-term operational costs are lower.
For example, companies like SF Express and China Post purchase autonomous vehicles not as individual units but as a service that offers 68% lower transportation costs compared to manual labor. This is crucial for the logistics industry, as transportation costs account for 14.5% of China's GDP, which is much higher than in Europe and the United States (6%-8%).
Three Major Challenges: Vehicle Standardization, Operations, and Road Access Regulations
The current issues in the industry are not about the ability to produce autonomous vehicles but whether they can be managed efficiently on a large scale. The main challenges include:
1. Vehicle standardization: Previously, autonomous vehicles were modified from existing vehicles; now, they must be designed and produced according to official standards (similar to regular cars). The collaboration between Jiushi and Dongfeng is a step towards overcoming this hurdle.
2. Large-scale operations: Managing a fleet of 25,000 vehicles requires sophisticated systems for scheduling, maintenance, and remote control in case of issues. While Jiushi has experience with these aspects, scaling this up tenfold is still a challenge.
3. Road access regulations: Different cities have varying rules for autonomous vehicles; quickly adapting to these regulations will determine the speed of industry expansion. After the national traffic laws take effect on July 1st, companies without the necessary qualifications will be eliminated, raising the entry barriers.
Jiushi's Competitive Advantages
Jiushi's success is due to three unique factors:
1. Technological sovereignty: The team comes from Baidu Apollo, one of the earliest pioneers in L4 autonomous driving technology in China, and has developed a fully self-developed system that does not rely on high-precision maps, reducing costs and making it suitable for large-scale operations.
2. Data strength: A fleet of 25,000 vehicles with 130 million kilometers of real-world data provides valuable insights for algorithm optimization, helping to handle various road conditions effectively.
3. Substantial asset base: By integrating Cainiao's autonomous vehicle capabilities and collaborating with Dongfeng, Jiushi has gained the necessary expertise in vehicle standardization for mass production. It is also expanding globally, having obtained licenses in countries like Singapore and the Middle East.
Future Trends
In the next two to three years, all medium and large-scale autonomous vehicles are expected to be standardized. Small-scale modifications will become obsolete. Jiushi and Xinshiqi currently hold 89.4% of the market share, establishing a duopoly. Companies without the necessary technology, production capacity, or access to roads will be marginalized. Jiushi's next step is to expand its services from urban logistics to intercity and trunkline transportation. Although trunkline operations are more challenging at present, urban logistics are already profitable. As for an IPO, Zhou Qing suggests that it will happen when the time is right, as investors value commercial viability. With a large number of orders and a proven business model, Jiushi is well-positioned for an exit.
In summary, the autonomous delivery industry has moved beyond the stage of hype and is now focused on practical capabilities: compliance with regulations, cost-effectiveness, and the ability to manage large-scale fleets efficiently. The partnership between Jiushi and Dongfeng represents a significant milestone in the industry's transition from technical validation to commercial implementation.