China’s Tech-Driven Intelligent Connected Vehicles For The .

ENVIRONMENT SENSINGCOMPUTINGCONTROLThe AD platform market is highly fragmented and led byforeign tech and hardware playersFuture trendFour dimensions to evaluate AD platformsProcessor Kit The AD platformmarket in China ishighly fragmented.Tech companies andhardwaremanufacturers showthe most strength.Most leadingplatforms andhardware suppliersare foreigncompanies. Thistrend will continue inthe next 5-10 years. High performance, low energy consumption and multi-scene applicability are believed to bean evolving trend of processors.Platforms’ R&D capabilities for processors are also deemed essential considering selfdeveloped chips may better adapt to platforms for optimal functioning.The processors of NVIDIA and Intel-Mobileye are widely adopted by other AD-relatedproducts (e.g. Audi’s zFAS). Google, Baidu and Tesla have shifted from using external chipsto self-developed chips.Key AD platform playersTech GiantsHardware ManufacturersSensor Kit Most platforms use a combination of LiDAR (optional) radar camera.Most platforms use 6-15 cameras (e.g. NVIDIA uses 7, Tesla uses 8, Intel-Mobileye uses 12,etc.), but Google has 29 cameras with a detection range of 500 m.Auto Parts SupplierAlgorithm High scene compatibility and high road test performance (low disengagement rate) areperceived as must-haves for advanced algorithms.Baidu’s and Google’s algorithms are compatible with various scenarios, and theirdisengagement rates* were low (Baidu: 0.034 times/1000 km; Google: 0.047 times/1000 km).Auto Industry Experience Early and in-depth involvement in the auto industry (e.g. Tesla and Visteon) facilitateplatforms’ knowledge of car structures, use scenes and industrial pain points.16 ‒ Source: Ipsos AUTOMOTIVE china-s3@ipsos.comDMV 2019WHITEPAPERAutonomousVehicle Disengagement ReportsOEM

ENVIRONMENT SENSINGCOMPUTINGCONTROLOEMs are exploring different business models to developAD technologies and adapt to the increasingly competitiveindustry landscapeLessACQUISITIONALLIANCE BUILD-UPLeading OEMs have been involved in two kinds ofalliances to overcome AD tech barriers Cooperation with other OEMs to share R&D costsand exchange technologies Cooperation with tech companies to build acomprehensive development systemOEM OEMSince 2017, VW and Ford havecooperated in their global AD/EV R&Dand have utilised channels togetherOEM TechBMW and Intel-Mobileye starteddeveloping AD in 2016 and plan to reachmass production by 2021In 2020, Volvo and Waymo will cooperateto promote BEV application of AD tech17 ‒ Note: IpsosOEM AUTOMOTIVEWHITEPAPERmovementslisted china-s3@ipsos.comhere are caseNo. of OEMs involvedMoreSELF-DEVELOPMENTOEMs have acquired tech SMB/startups (including chip providers and ADservice firms) to leverage their techsavviness to expedite AD developmentA few OEMs have established newbusiness units or companies to developAD without cooperating with techcompaniesIn March 2016, GM acquired CruiseAutomation (founded in 2013), a self-drivingservice provider, for 600 million - 1 billion,asking it to run independently for further ADtechnology researchIn March 2018, Toyota invested 2.8billion to establish a new firm, ToyotaResearch Institute-AdvancedDevelopment, which will focus on ADsoftware R&Dstudies only; they are not exhaustive

ENVIRONMENT SENSINGCOMPUTINGCONTROLE/EA* integration and centralisation are evolvingalongside AD development; mass application for OEMs,however, may still be a long way offE/EA centralisation is believed to becritical for energy saving, especially forNEVs facing driving distance challenges1Distributed E/EA(Today) High energyconsumption due tolimited functions perECU, with every ECUprocessing its raw dataand communicatingwith others in thenetwork2Centralised E/EA(Future) Lower energyconsumption due toreduction in totalnumber of ECUs (e.g.from 30 40 to 3 5 fora NEV car) Replacing ECU withcloud computing willbe the ultimate goal18 ‒ Remark: Ipsos AUTOMOTIVEWHITEPAPER china-s3@ipsos.com*E/EA refersto Electrical/ElectronicArchitectureCompared with NEV start-ups, E/EAtransformation is more difficult andcostly for traditional OEMs to realise1NEV start-ups leadsE/EA integration NEV start-ups intend todesign car models andbuild plants adapted tocentralised E/EAstructure from the onset,thus building up theirkey competency in themarket2Seek short-termprofitability With majority marketshare, most traditionalOEMs still hold a waitand-see attitude for E/EAintegration givenprofitability concerns.Delayed implementationwill likely weaken suchOEMs’ futurecompetitiveness in ICV

E/EA integration is believed to be necessary for ensuringefficient interaction between computing and car controlwhile optimising energy consumption Currently, some OEMs suchas Geely and Tesla havetaken proactive steps on E/EAupgradingE/EA UPGRADINGTraditional distributed E/EAneeds to be further integratedin the next 3-5 yearsENERGY ALLOCATIONOPTIMISATIONCOOPERATIVE VEHICLEINFRASTRUCTURE SYSTEMTry to minimise energy/batteryconsumption to handlenormal/standardised trafficconditions, while saving reserveenergy for complex computingAvoid excessive use of datacomputing capacity by leveragingCVIS, which can allocate part ofdata computing to out-vehiclecloud19 ‒ Ipsos AUTOMOTIVE WHITEPAPER china-s3@ipsos.com To maintain competitiveness,it is critical for traditionalOEMs to complete thetransformation A clear roadmap/plan for R&Dinvestment, production plantmodification and productselection will be key

In the long run, the driver can sit back and let AI do the driving while communicating with the voiceassistant to invoke other functions and enjoy enhanced in-vehicle entertainment. Combined withMaaS, general transportation will reach a higher level of efficiency.Market Intelligence Director of a renowned mobility service provider20 ‒ Source: Ipsos AUTOMOTIVEWHITEPAPER china-s3@ipsos.comIpsos expertinterview

Over the next 5-10 years, seamless link-up scenario will bemainstream while MaaS-centric scenario will be popular;car ownership will continue with less actual usageDaily Commute (B2C) - Major Transport Scenario and FutureTrendsDescriptionPublic transportationLowTransport mode usage frequencyScenario A:Scenario B:Scenario C:Scenario D:PUBLIC-CENTRICSEAMLESS LINK-UPPRIVATE-CENTRICMaaS-CENTRICMainly use publictransportation (bus,metro, inner-city train)A combination ofMaaS* & publictransportationDrive private car fromone place directly todestinationMainly use MaaS todestination (ridehailing/car sharing)Seamlessly solve lastmile problem; highefficiency &convenienceOverall usagefrequency willdecrease but will bepreferred on weekendsWorry-free andconvenient forcustomersWeekdayWeekendStatus quo2030 trendDetailsContinue to receivemuch usage as beingmost cost-effective21 ‒ Remark: Ipsos AUTOMOTIVEWHITEPAPER china-s3@ipsos.com*MaaS hererefers tocar sharing andride hailing servicesMaaS*Private carHighChinese customers willnot give up on buyingcars, regardless of howdeveloped MaaS serviceis. In future the two willco-exist rather thancompete – Market IntelligenceDirector of a renownedmobility service provider

Full AD is not expected to be applied in MaaS until 2030;Non-OEM B2C MaaS model is expected to becomedominant and will provide high-quality servicesFull autonomous driving for MaaSwill be difficult to achieve by 2030While full autonomous testing have commenced in selectedpilot areas (e.g. Didi chose specific areas of Shanghai as pilotfor its test operations), nationwide application of fullautonomous driving for MaaS on open roads will be difficult toachieve in the next decade. Further technology developments,systemic regulations and consumer education / confidenceremain key areas to be addressedNon-OEM B2C MaaS model istrendingNon-OEM B2C MaaS model refers to drivers employed byMaaS platforms (e.g. Didi premium and luxe) B2C model will gain further market share and graduallytake over C2C in next 5-10 years:- Market standardisation will require moreprofessionally-trained drivers- The ultimate goal is for unmanned driving to replacehumans in the long-term; MaaS fleets will beoperated by platforms/companies instead ofindividuals OEMs may consider increasing the role from solelymanufacturing to cooperating with/offering MaaSFor MaaS, employment of a large number of drivers in Chinaposes as an additional barrier to its adoption Drivers will be concerned with “replacement by robots” andwill lobby the government to protect their jobsFrom the government’s perspective, AD adoption in MaaSmay also be controlled to maintain employment rates andensure social stability22 ‒ Ipsos AUTOMOTIVE WHITEPAPER china-s3@ipsos.com

COMPETITIVE COOPERATIONIn a high-tech-driven industry, cooperation (alliance and M&A),especially for core technologies such as AD, AI and cloudservices, is believed to be the more viable solution (as opposedto self-development) for developing a competitive edgeEvaluate internal talents/resources and optimise organisationalstructure (talent recruitment vs. development) to ensuresmooth/efficient development and effective transitionE/EA INTEGRATION AND PRODUCT UPGRADINGAlong with ICV development, E/EA integration will be a necessityfor OEMs. A roadmap with a clear timeframe for E/EA integrationand a product strategy for E/EA application is of the utmostimportanceIMPLICATIONSFOR OEMs23 ‒ Ipsos AUTOMOTIVE WHITEPAPER china-s3@ipsos.comOn the other hand, emissions reduction/energy saving will still bekey directions for product improvement in areas such ascomponent weight & size reduction

SHIFTING CUSTOMER FOCUSWith MaaS becoming increasingly mature, new mass segmentcar sales will be mainly driven by mobility service providers.OEMs should reconsider their target customer groups andincrease marketing efforts on MaaS fleet operatorsOEMs should also assess internal resources and capabilities todecide if they should venture into offering their own MaaSservices or cooperate with MaaS operators via customisedofferingsCONSUMER-TAILORED ICV DESIGNIn addition to driving behaviour, it is also critical to understand incar HMI behaviours such as voice interaction and AOS functionpreferences to achieve smart human-machine interactionsIMPLICATIONSFOR OEMs24 ‒ Ipsos AUTOMOTIVEDoc Name WHITEPAPER china-s3@ipsos.comOEMs should aim AOS and application ecosystem effortstowards specific target audience groups (e.g. B2C-individualdrivers and B2B-mobility service platforms) to increase value-addand differentiation

An IntroductionA brief introduction to Ipsos Strategy3, a businessand growth advisory firm powered by the researchand data capabilities of Ipsos Ipsos AUTOMOTIVE WHITEPAPER china-s3@ipsos.com

Strategy3 is Ipsos’ business and growth advisory firmWe believe that in order for any business strategy, marketing plan, brand positioning, or new innovation to be successful, it must dothree things: be rooted in the organisation’s strategy, be informed and inspired by customer research, and drive through to actual inmarket activation. While there are many firms that advise on growth, very few deliver on all three: traditional managementconsultancies rarely delve deep enough into the world of the customer; creative firms don’t truly leverage the power of data; researchagencies can sometimes lose the big picture in the midst of analysis. That’s why we are Strategy3.We approach every challenge through three used26 ‒ Ipsos AUTOMOTIVE WHITEPAPER china-s3@ipsos.com

What WeDoDrawing from our global networkof consultants across four practiceareas, we work with clients toBuild Grow CompeteCorporate/Business StrategyDetermining the right markets in which to play, and how to winMarket Sizing Go-to-Market Strategy Distribution/Channel Strategy Competitive Benchmarking Due DiligenceBrand StrategyDeveloping strategies to help your brand and products stand outBrand Stretch Brand Architecture/Portfolio Optimisation Brand Positioning Brand Purpose Brand Valuation and Investment ROICustomer/Consumer StrategyUnderstanding and reaching the right customersStrategic Segmentation Customer Prioritisation Consumer Journey Omnichannel Strategy Value Proposition DevelopmentInnovation StrategyPlanning for and conceptualising new products and offersTrends/Futures Scenario Development Early Stage Innovation Development Innovation Scouting Innovation Strategy and Process Development27 ‒ Ipsos AUTOMOTIVE WHITEPAPER china-s3@ipsos.com

A B O U TO U RT E A MWho We AreWe are a diverse, multi-disciplinary team who bringsour unique backgrounds and expertise together onevery challenge. We believe that approaching everysubject from different angles gets us a moreaccurate picture. Our team has consultants whohave in prior lives been: Management ConsultantsQuantitative ResearchersSociologistsBrand Strategists Start-Up EntrepreneursMarketing ExecutivesJournalistsSocial Media ExpertsWhat we all share is a passion for businesses, theirstrategies and customers, understanding behaviour,transforming organisations, and telling great stories.28 ‒ Ipsos AUTOMOTIVE WHITEPAPER china-s3@ipsos.com

Please contact usWijaya NgHead of Consulting, ChinaKate GaoPrincipal, ShanghaiWijaya.Ng@ipsos.comKate.Gao@ipsos.com 86 21 2231 9598 86 21 2231 962729 ‒ Ipsos AUTOMOTIVE WHITEPAPER china-s3@ipsos.com

Wijaya NG黄其伟Head of Consulting, ChinaCONSULTING EXPERIENCE:15 YearsCONSULTING SPECIALTIES:Market entry and expansion strategy,competitive strategy, market segmentation andforecasting, distribution channel strategySECTOR SPECIALTIES:Automotive, TMT, Industrial Wijaya heads up the consulting practice for Ipsos in China and takes the lead formajor clients and multinational engagements relating to growth consulting. Leveraginghis extensive international experience, Wijaya helps clients develop their regionalmarket expansion strategies. Prior to his transfer to China nine years ago, Wijaya was the senior manager of IpsosSingapore’s consulting practice where he worked on multiple regional engagementsacross Asia-Pacific for six years. With a strong focus in the Automotive, Industrial and Technology sectors, Wijaya haspartnered with industry-leading clients to support a full spectrum of solutions rangingfrom the prioritisation of market opportunities, to the development of key valueproposition and actionable strategies for clients’ 5-year business planning, to theimplementation of key initiatives. Wijaya speaks fluent English, Mandarin and Cantonese, and holds a Bachelor ofCommerce degree from the University of British Columbia in Vancouver, Canada30 ‒ Ipsos AUTOMOTIVE WHITEPAPER china-s3@ipsos.com

CONSULTING EXPERIENCE:12 YearsCONSULTING SPECIALTIES:Market entry strategy, industry benchmarkingand analysis, voice of customersSECTOR SPECIALTIES:Automotive and TMT Kate joined Ipsos Business Consulting in 2016, following 7-plus years working for amultinational consulting company with a key focus on market entry development,industry benchmarking analysis and voice of customers.Kate GAO高夙晔Principal, Shanghai As a Principal, Kate is primarily in charge of project planning, client internal highmanagement stakeholder interviews, project bottleneck break, deliverable qualitycontrol and client communication. Kate has a rich consulting experience in the automotive industry. She has been workingfor auto/transport-related clients (such as OEMs, auto parts/system suppliers, IAMplayers, mobility service giants and logistics service providers) since 2010. In addition,Kate has led a number of TMT (Technology, Media and Telecom) projects in the pastfour years, along with the rapid development of the industry. She is also the ClientOfficer of one of the leading tech giants for business in mainland China. Shesynthesises auto industry experience and TMT knowledge to support clients in findingcutting-edge solutions in the current changing era. Kate speaks fluent English, Japanese and Mandarin and holds a Bachelor’s degreefrom Shanghai International Studies University, China.31 ‒ Ipsos AUTOMOTIVE WHITEPAPER china-s3@ipsos.com

CONSULTING EXPERIENCE:20 YearsCONSULTING SPECIALTIES:Brand and communication research, new productdevelopment and business opportunitiesidentification and realizationSECTOR SPECIALTIES:Automotive Jack started marketing research career in 2000 and he joined Ipsos China as theManaging Director in 2017. He is responsible for development of automotive businessin Shanghai office. Before joining Ipsos, Jack was the Head of Brand and Productresearch of TNS China who was in charge of automotive business in both Beijing andShanghai.Jack CHIU邱清儒Managing Director,Ipsos Automotive China Jack specialises in brand and communication research, and was responsible for drivingbest practice brand & communications research, through training and coaching as wellas working directly with key clients. Jack also has focused on new product developmentand has worked extensively on large-scale strategic studies, helping clients not justidentify opportunities but also realise them through relevant innovations andcommunications. Recently, Jack shifts his focus on a few disruptive developments in automotive industry,including the new energy vehicles, connected cars, autonomous driving, mobility andsharing economy. Jack also specialises in workshop facilitation, regularly executingactivation workshops, which helping the clients to turn insights into business plans. Jack holds a MA Degree in Business Management from the University of Birmingham,UK.32 ‒ Ipsos AUTOMOTIVE WHITEPAPER china-s3@ipsos.com

Hello.Let’s start aconversation.Whether you already have a clearly defined brief,or have a broad business challenge you’d like us towork with you to frame, we’d love to have aconversation with you.From helping you to better understand your marketfrom a customer lens, to deciding whether to entera new market with your business, to building andevaluating your innovation pipeline, to painting apicture of how your category is evolving, we thriveon thinking about these ch

4. Connected Infrastructure To collect data from vehicles, pedestrians, weather, etc. with sensors, cameras and radars 2. Autonomous Driving To achieve full autonomous driving in the long-term through AI, machine learning and hardware with high computing capacity V2I V2V V2P V2N 3. V2X To