Special Interview with Zhang Liqiang, General Manager of IAT: Startup OEMs

Source: Author: Date:2021-06-10 Read:283

"The new force of car-making based on Internet thinking has introduced a "breath of fresh air" to the auto industry, but it is also a "tornado" that has significantly impacted established OEMs." In an exclusive interview with the Securities Daily, Zhang Liqiang, general manager of IAT, the first vehicle design company on the A-share board, stated as much.

According to Zhang Liqiang, the new wave of new car-making forces represented by Huawei, Baidu, Xiaomi, and other technology and internet companies today are very strong and have a high probability of success. Furthermore, after five or six years of observation and reflection on the development of the new energy vehicle industry as well as their own resource reserves, they are actually rational in their decisions.

A Messenger Behind the Scene

The reporter noticed a revolutionary model of a concept car being showcased in IAT's Beijing headquarters office building.

According to Zhang Liqiang, all of these models were designed by IAT, whose traditional business advantage is vehicle research and development, which includes interior and exterior styling, engineering structure, performance enhancement, various tests after prototype production, and powertrain development and production, covering the entire vehicle research and development process, and R&D products can be directly put into production after delivery to OEMs.

The former company of IAT, Jingwei Quanneng, was founded in 2002 and specializes in the design and production of whole automobiles, automotive assemblies, and components. In 2007, IAT become the formal company name after investments from Sequoia Capital and GSR Ventures. IAT was the first independent automotive design firm in China to be listed on the Shenzhen Stock Exchange in 2020, becoming the first independent automotive design company in China and pioneering the development of full vehicles by independent automotive design companies. 

" IAT was the first independent automotive design company in China to be listed on the Shenzhen Stock Exchange in 2020, becoming the first independent automotive design company in China and pioneering the development of turnkey services and engine/powertrain manufacturing for independent automotive design companies.

"IAT is at the top of the automobile industry value chain, and OEMs are our downstream firms." Zhang Liqiang stated that, while vehicle R&D is important, "Behind the scenes," it is as much a component of the automobile industry as the design institute is of the construction industry. Because the overall competencies and R&D capabilities of major automobile manufacturers differ, IAT, an independent automotive R&D organization, can provide expert R&D design services for OEMs. 

As a result, the vehicle R&D company has established a credible presence in the automotive industry chain. Currently, IAT's clientele include domestic mainstream automobile manufacturers like as FAW, SAIC, BAIC, GAC, and others, as well as new car-making startups such as Nio and Xpeng.

What defies conventional wisdom is that not only do small and medium-sized car companies require the services of vehicle R&D firms, but among IAT's clients are numerous huge car corporations with research institutions, technological centers, and other complete strength. 

"Many car firms' R&D staff has thousands of employees who can scale quickly and have great R&D capabilities, but that doesn't mean they don't need us." According to Zhang Liqiang, automotive R&D covers several links; even large car companies are not strong in every relation, and IAT has been deep into automotive R&D for many years and has technical advantages; additionally, large car companies have multiple product series planning, and its workforce and resources are difficult to take into account each model.

The Emergence of New Automobile Manufacturing Forces 

This year, Apple, Huawei, Baidu, Xiaomi, Skyworth, and many more businesses have announced or are suspected to be developing a car. This is undoubtedly beneficial to IAT.

Zhang Liqiang told a Securities Daily reporter that IAT customers include Nio, Xpeng, AIWAYS, Weltmeister, and other car-making new forces; at the moment, a new wave of car-making new forces firms has made multiple contacts with IAT. "For the new car-making forces, their products have just recently entered the market, and if the first one or two products are not ideal at the outset, it may be the end of the road, with little prospect of a second chance. 

After all, established automakers have been in the market for many years; even if one model is subpar, the market will be more forgiving." According to Zhang Liqiang.

Unlike the first wave of new car manufacturers, such as Weilai, Xpeng, and Ideal, according to Zhang Liqiang, "This wave of new car makers has vital resources behind them, not from the future cars they want to make, but from the accumulation of these companies in their previous industries, and their motivation to build vehicles in the short term.

 Not merely to make money on the car, but also to improve its ecological. Furthermore, this wave of new car companies can gain additional expertise and lessons from past years' new car makers.

"After a lengthy time of observation and thought, they feel they should enter rather than follow the trend for this wave of car-making firms." According to Zhang Liqiang.

In Zhang Liqiang's opinion, the advantages of the new forces of automobile manufacture are obvious when contrasted to established automotive companies: they dare to attempt, take chances, and challenge. "Based on the open thinking of the Internet, the new forces are willing to attempt new ideas. They can take an idea that appears unfeasible, let all the software and hardware developers figure it out, and finally actualize it. 

And conventional OEMs may not do it for financial reasons." Zhang Liqiang argues that traditional OEMs assist car users in resolving travel issues, whereas new car manufacturers enter the auto market and address many of the consumers' spiritual demands.

Zhang Liqiang does not deny that the new car-making forces have drawbacks. After all, the auto industry retains its industry characteristics; in addition to the fresh experience, there are still high technical requirements in terms of performance, as well as the consistency of the production and manufacturing process, a relatively mature team, and so on, which are extremely difficult for new car makers. 

Of course, the new forces compensate in other ways. Nonetheless, achieving the required result will be difficult without a competent management framework and technical training planning.

Zhang Liqiang also observed the influence of new car-making forces on established car firms. "Many conventional manufacturers watched while the new car makers did not construct a car, but when their cars were built, it was no longer a watch but a benchmark. We are now serving some classic OEM customers; there are some in the benchmarking of new car makers, and there will be some product definition innovation."

 According to Zhang Liqiang, the advent of new car-making forces has also forced traditional host manufacturers to expand their investment in R&D.

"The inclusion of fresh forces for conventional OEMs is a wonderful thing; nevertheless, like a catfish joining in a pond, all the fish must fight the spirit and do not follow the norms. Some classic OEMs are also evolving, such as richer and brighter body colors, cool car interiors, and human-computer conversation has become standard. There is no productivity if there is no competition." According to Zhang Liqiang.

Embrace the Trend of "Software-defined Automobiles”

When discussing the present trend of "software-defined automobiles”, after several years of progress, Zhang Liqiang feels the automotive sector has a solid foundation in software. The ultimate goal of the software-defined car is to control the vehicle with software; in the future, the car may not only be a travel tool; the vehicle is no longer the only attribute but will be an intelligent terminal—a car's overall value, the value of software, could be more than 50% of the car's overall value.

Vehicle design firms such as IAT have also raised the bar in the "software-defined automobile" trend. "We already experienced the benefits of 'software-defined cars' three or four years ago; we laid out the control system, electrical and electronic architecture, SOA architecture based on software services five years ago, and have been put into the market, enhancing customers' ability in software, and creating greater value for customers. Value."

 According to Zhang Liqiang, the demand for "software-defined cars" has grown IAT's revenue scale and improved IAT's overall industry strength.

As a vehicle R&D and design firm, IAT's most valuable asset is unquestionably its people. According to Zhang Liqiang, IAT employs 1,700 people, with technical personnel accounting for more than 85% of the workforce. By 2020, the company's R&D investment will have increased by 40.16% to 82.6 million yuan, with the proportion of R&D expenditure in operational income reaching 10.06%. 

The company has shown success in areas such as autonomous driving, intelligent cockpits, hybrid powertrain, and E-PWT technologies.

In addition to vehicle R&D, IAT is investing in the manufacturing of innovative energy car parts. The first phase of technological reform projects for Liuzhou Lint's yearly production capacity of 50,000 sets of V6 engines. IAT recently updated the amended draft to the proposal.

According to Zhang Liqiang, the V6 engine designed and produced by Liuzhou Lint, which the firm controls, is one of the few V6 engines in China with independent intellectual property rights. Several automobile manufacturers have successfully tested Liuzhou Lint's V6 engine. It has been utilized in batches by several automobile makers, and the number will grow in 2021.

 Furthermore, Sichuan IAT New Energy, a holding subsidiary, is committed to developing and producing pure electric, plug-in hybrid, and other new energy power systems, which have been supplied in quantity to customers and achieved nomination from various OEMs.

"On one hand, automotive design is a labor-intensive business; once the number of personnel reaches a certain size, the marginal benefit diminishes, necessitating the development of new business; on the other hand, the core components produced by IAT have high technology content, and the company has such R&D design capabilities, so the rate of return will be higher. This is also consistent with the national strategy of growing the industry of new energy vehicles." Zhang Liqiang added.

"IAT intends to be a full-service provider of automotive development solutions. We are already on this path and will continue to enrich our business horizon and improve capabilities in the future." Zhang Liqiang stated emphatically to the reporter.

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