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Alibaba Introduces Smart Car, Offering Chinese Answer to Apple, Google

July 7, 2016
Jack Ma: “We believe in the future that 80% of the car’s functionality won’t be related to transportation. The car will become a kind of robot you communicate with on a daily basis.”

Billionaire Jack Ma is taking the challenge to Apple Inc. and Google by pushing Alibaba Group Holding Ltd. into the car business, joining the global battle to control the automobile dashboard.

The Chinese e-commerce company’s YunOS operating system, which connects phones, tablets and smart watches, is now on its way into car dashboards, touch screens and advanced rear-view mirrors. Alibaba showcased its OS’Car technology in an SAIC Motor Corp. Roewe RX5 SUV model — starting price 148,800 yuan ($22,275) — that allows drivers to book a parking space, order a coffee and pay for it all using the company’s Alipay system.

“We believe in the future that 80% of the car’s functionality won’t be related to transportation,” Ma, who is Alibaba’s chairman, said at the event introducing the vehicle in Hangzhou, China. “The car will become a kind of robot you communicate with on a daily basis.”

Alibaba is staking its claim on a segment of the global car industry that researcher IHS Automotive projects will grow by about 19% per year to become a $4.2 billion market by 2021. Whereas Google’s Android Auto and Apple’s CarPlay systems are enabling drivers in much of the rest of the world to extend connectivity from their phone to their car screens, they’re running into stiff competition in China, the world’s largest auto market.

Alibaba and SAIC have been building their positions in the connected car space for years. Ma, 51, acquired China’s most-popular mobile mapping service in July 2014, when Alibaba bought AutoNavi Holdings Ltd. in a deal valuing the company at about $1.5 billion. 

SAIC, China’s largest automaker, started a 1 billion yuan ($149.70 million) fund with Alibaba in March 2015 to develop a connected car. The state-owned company has joint ventures with China’s top-selling global carmakers Volkswagen AG and General Motors Co.

“Alibaba has wide-ranging Internet-based services and YunOS could be a starting point for their cooperation, especially due to the fact that lots of Google services are blocked in China,” said Michael Liu, an analyst at IHS Automotive in Shanghai. “Foreign brands are not likely to use the Alibaba system at least in the next several years.”

Sales of the OS’Car-enabled Roewe RX5 began Wednesday. Alibaba slid 0.4% in $78.64 in U.S. trading, while SAIC Motor was unchanged at 21.14 yuan in Shanghai.

Alibaba is in talks with several automakers about forming alliances to use YunOS, according to Wang Jian, chairman of Alibaba’s technology steering committee. The company also is working on certifying the system for vehicles in the U.S., he said.

“This is a car run on the Internet; it’s not a car that has some Internet capabilities,” he said in an interview. “iPhone made the first generation of phone that was part of the Internet, just like the PC. This car is the first generation of cars that are becoming a new member of the Internet.”

Researcher IHS Automotive has forecast Apple’s CarPlay and Google’s Android Auto will become leading platforms for car connectivity, with the exception of China. Regulatory barriers including Internet censorship regulations likely will fend off competition for Alibaba and Baidu Inc.’s CarLife.

Representatives for Apple in Beijing and Google in Singapore didn’t immediately return calls and e-mails seeking comment.

Apple’s CarPlay will be used by more than 40 auto brands to integrate the iPhone into the car’s telematics system for navigation, music playback and phone calls. Google’s Android Auto is available in models from at least 17 car brands, including Chevrolet, Honda, Hyundai and Mercedes-Benz, and is adding the traffic program Waze to its navigation offerings.

Ma hopped into a white SAIC Roewe RX5 with his counterpart at SAIC Motor. Earlier, he thanked SAIC chairman Chen Hong for offering the SUV at a cheap price.

“The pricing is shockingly low,” he said to the audience. “SAIC faces a lot of pressure to roll out the car at such prices.”

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