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Internet of Vehicles and Intelligent Driving Cockpit in the 5G Era

S
Report Outline

1 Some conclusions and judgments

2 C-V2XThe scale of pre-installation in the Chinese market

3 Changes in the Internet of Vehicles Business Model

4 The evolution of the Internet of Vehicles value chain

5 The evolution of smart cockpit form

May 28, 2020 Strategy Analytics, Inc 2

Some conclusions and judgments

01
C-V2X/5GThere is still a long way to go to achieve universal deployment in the automotive industry

- -Judging from the perspective of supply and demand in the automotive industry, without policy incentives, the deployment rate of C-V2X will be less than 20% by 2025

02
5GThe era will be an era where content is king

-- Car companies and telecom operators should pay more attention to how to make it easier for users to obtain valuable content

03
The core of the travel-related value chain will be closer to the user side

-- The boundaries of the automotive industry are changing and new roles are constantly emerging.

04
5GThe era of smart cockpits may weaken the need for smart interaction

- -As the level of autonomous driving increases, the interactive capabilities in the car may evolve towards meeting only the most basic travel information interaction.

April 2018 Copyright© Strategy Analytics 2018 3

 C-V2XThe scale of pre-installation in the Chinese market: Judging from the perspective of supply and demand in the automotive industry

Source: Strategy Analytics, Q4 2019 Source: Strategy Analytics, Q4 2019

Scenario 1: Let the industry develop naturally Scenario 2: Policy-driven (assuming that the C-V2X incentive policy is released in 2020 and implemented in 2021)

• In this prediction, Car-to-X carried by LTE-V2X Uu (4G) is also included in the category of C-V2X. Its characteristic is that the cloud processes crowdsourced data from • The deployment of C-V2X will mainly be LTE-V2X PC5, and will show rapid growth starting from 2021.
vehicle sensors in real time and distributes it according to certain location logic. For related vehicles, representative car companies: Audi and Daimler
• It is estimated that by 2025, the C-V2X deployment rate will be approximately 29.5% (including LTE-V2X Uu)

• In 2023 and before, C-V2X applications will be mainly based on LTE-V2X Uu (4G). Typical services include real-time traffic sign information, hazard

warnings, roadside parking and traffic light guidance, etc.

• Dominance of C-V2X network access technology: before 2021 (LTE-V2X Uu), 2021-2025 (LTE-V2X PC5)

• LTE-V2X PC5 will begin to be deployed in small batches by some car companies in 2020. It is expected that by 2025, the C-V2X deployment rate will be approximately
• The main difference between Scenario 2 and Scenario 1: Scenario 1 will mainly be V2X applications driven by existing 4G networks before 2024. Scenario 2
will be driven by policies, and LTE-V2X PC5 will grow rapidly after 2020; from Looking at the overall penetration rate, Scenario 2 is about 5% more than
23.6%. Excluding the number of LTE-V2X Uu, the actual C-V2X deployment rate is only 17.5%
Scenario 1. Comparing only from LTE-V2X PC5, Scenario 2 is more than 10% more than Scenario 1.
• Dominance of C-V2X network access technology: before 2024 (LTE-V2X Uu), 2024-2025 (LTE-V2X PC5)

Refer to AIT report for detailed analysis:C-V2X Development in China: Opportunities & Challenges

May 28, 2020 Strategy Analytics, Inc 4

Telecom operators’ traffic management trends on mobile phones

Three major operators4GofDOU(Dataflow of Usage) Change rate of unit price of mobile Internet data traffic of the three major operators

12,000 0.0%
2015 2016 2017 2018 2019
- 10.0%
10,000
- 20.0%
8,000
unit:MB/User/month

- 30.0% - 29.6% - 30.6%

- 32.8% - 32.7%
6,000 - 35.4%
- 40.0% - 38.4%
- 42.0%
- 45.9% - 47.7% - 46.2%
4,000 - 50.0%
- 52.8%
- 60.0% - 59.2%
2,000
- 63.4%
- 70.0% - 68.4%
0 - 73.9%
2015 2016 2017 2018 2019 - 80.0%

China Mobile China Telecom China Unicom China Mobile China Telecom China Unicom

Market operation data from the mobile phone side: In the past5during the year (2015-2019), the demand for data traffic by a single user is growing, but the unit price of data traffic is stillDecline faster

• Average monthly per household from the three major operators4GInternet trafficDOULook, from2015year's lowest748MB,increase to2019The highest in the year10.7GB

• Judging from the change rate of the unit price of mobile Internet data traffic of the three major operators,2015New Year's Eve2019The annual decline is generally distributed in30%-60%Between, China Unicom2016-2017The annual decline reached73.9%

• Under the interaction between increase and fee reduction, operators will not be able to avoid the situation of shrinking profit margins through pure traffic management.

• If we regard the traffic management trend that occurs on the mobile phone side as being ahead of that on the car side,2arrive3Year, so is this trend also happening on the vehicle side?

Data source for this page: Annual reports of three operators in the Chinese market

May 28, 2020 Strategy Analytics, Inc 5

Chinese consumers’ willingness and scale to pay for content

Scale and penetration rate of digital music paying users in China from 2013 to 2020

User willingness to pay in various fields in 2018

8.0%
10000 8.0%

9000
7.0% Online video:51.5% Online music:46.3%
6.3%
8000
6.0%
7000 5.3%

5.0% online game:43.1% read online:42.7%

6000
6182.9
3.9%
5000 4.0%
3.0% 4771.9
Annual user payment unit price (ARPU) in 2018:116.6 yuan
4000
3.0%
3876.5
3000
1.7% 2.0% Users' acceptance of content payment and the unit price they are willing to pay are gradually changing.
2747.1
2000
0.8% 2017.4 annual increase.Users intend to pay for a better content experience. Under this trend,
1.0%
1000 0.4%
1138.2 The mobile Internet is ushering in the era of “content is king”
242 493.6
0 0.0%
2013 2014 2015 2016 2017 2018 2019 2020
Number of digital music paying users (10,000 people) Paid Penetration
Data source for this page: iResearch

May 28, 2020 Strategy Analytics, Inc 6

Development Trends of Internet of Vehicles Business Models

Internet of Vehicles business model for infotainment domain

The car company’s perspective Internet company’s perspective User's perspective

What is the ideal way to provide Internet of Vehicles services? How has the traditional Internet of Vehicles business been subverted? What does a perfect service experience look like?

• Traffic: Suppliers lower prices, annual reductions, traffic resale • Account system • Where am I going?

• Ecological content does not serve: free or low-cost access • Thousands of people and thousands of faces • How can I get there more easily?

• Service provision: stacking of functions • Find someone for service • Was it fun to drive there?

Solving the gap between supply and demand for Internet of Vehicles services requires a new business model

Based on reducing or even eliminating obstacles for users to use Internet services in the car

Transform from a business model driven by data traffic to a business model driven by content distribution

In the future Internet of Vehicles business model, car companies will likely play multiple roles such as "channel providers" and "original content aggregators"

May 28, 2020 Strategy Analytics, Inc 7

The evolution of the Internet of Vehicles value chain

The evolution of the Internet of Vehicles/automotive industry value chain

A value chain fully controlled by the automotive industry The automotive industry value chain penetrated by the mobile Internet Mobility-oriented value chain in smart cities

Chip Vendor Chip Vendor

OEM

Smart City
Tier 2/3 Tier 2/3 MaaS
Service
Provider
Operator

Tier 1 Tier 1

Software Internet
Internet Company
Company Company

OEM OEM
…

A structure with car companies as the core Decentralized structure user-centered architecture

The value depends on the distance from the car company Internet companies not only bring new value, but also share existing value Industry boundaries are changing and new roles are emerging.

The value depends on the distance from the user

Refer to AIT report for detailed analysis:China: Automakers and Tier 0.5 Providers – At the Center of the Digital Transformation

May 28, 2020 Strategy Analytics, Inc 8

The evolution of smart cockpit form

PCinternet Mobile Internet

2G 3G 4G 5G

Internet of Vehicles (V2N) Connecting everything with cars (V2X)

2005 2010 2016 2022+ 2025+ 2035+

Level of autonomous driving

L2 L3 L4 L5

Electronic and electrical architecture istcloth

Dpoint ribModeuted Centralization based on functional domains Centralization based on location domain Collaboration between vehicles and networks

navigation Single-purpose navigation, 2D/3D effect enhancement Enhanced immersive and contextual navigation experience Weakened functions, irrelevant to the driver and passengers

wisdom

able
In-car entertainment Superposition of independent functional items Scenario-based services and content closely related to driving tasks Do not drive irrelevant content and services
drive

drive
The aggregation of perceptual levels (such as vision, speech, touch Multi-dimensional aggregation (such as scene, location,

seat Interactive interface Single tasks and interaction methods are independent of each other
sleep, biological signs, etc.) body posture, etc.)
orminimal interaction

cabin

The scope of user experience Only in the cockpit In the cockpit, outside the cockpit, between mobile phones or wearables, etc. Any scene that is not associated with people

Driven by new technologies voice gesture Vision intramembrane ideas AR/VR/MR Cross-domain calculations are not processed display technology collaborative computing

Strategy Analytics, Inc 9

 Thanks for listening

Li JianyuKevin Li

Automotive Industry Director China Market

kli@strategyanalytics.com

+86 186 0110 3697

Strategy Analytics, Inc 10