While the World Still Debates DSRC versus C-V2X, China Moves Ahead at the V2X Race and Plans Mass C-V2X Deployment by 2025

While the world still debates whether vehicles should communicate using Dedicated Short-Range Communications (DSRC) or C-V2X technologies, China quickly demonstrated a clear commitment to the C-V2X protocol and has developed a national strategic plan for V2X. Unsurprisingly, the country is now at the forefront of V2X implementations despite being a latecomer.

The China Society of Automotive Engineers (C-SAE) published a goal to increase the C-V2X On-Board Unit (OBU) penetration rate to 50% by 2025, which could be attainable if OEMs quickly deploy OBUs in a large part of their fleet, rather than just high-end models. Deployments are moving fast. In 2019, 13 car OEMs jointly released C-V2X commercial roadmaps. In December 2020, SAIC-GM launched the 2021 Buick GL8 Avenir, the first production vehicle in China to feature C-V2X. Earlier this year, Great Wall Motors launched the world's first 5G vehicle, the Haval H6. Hongqi's E-HS9, WEY Mocha, HiPhi X, and NIO ET7 are some of the models that are either already available in the market or will be launched by 2022.

The infrastructure side is moving slower. Currently, China has around 50,000 Roadside Units (RSU) installed. The national plan of infrastructure upgrades aims at an expansion to 200,000 to 500,000 units by 2025. Nevertheless, qualitative input from interviews with RSU providers suggests that the current number of RFQs is too low to meet the goal within the predicted timeline. Deployments have been hindered by contrasting government recommendations, rapidly changing standards requiring rewriting and cross-reference, lack of unified standards, and no definition concerning each governmental entity's responsibilities.

It is unlikely that the ambitious goal of mass C-V2X deployment by 2025 will be fulfilled on time. However, implementations are moving faster than in any other region due to national-level strategy and collaboration, which should be a reference for the rest of the world.

Despite starting late and being behind in the knowledge curve, China is moving aggressively and wants to be the first country to deliver V2X in mass. There is an action plan to build industrialization capabilities and form a complete industry ecosystem. China already has strong module players, such as Quectel and Fibocom, but competition is still nascent in the chipset and V2X application software segments, currently dominated by foreign players.

The barriers to creating a software stack are low, but because V2X is a dedicated solution, it requires problem-solving (e.g., hardware compatibility) and coding knowledge that cannot be transferred from other industries. Thus, global V2X software companies with years of experience, such as Cohda Wireless, Savari, and Commsignia, have a significant advantage over newcomers. Nevertheless, several local startups emerged in 2020, especially in the end-product segment, which will pose tough competition to incumbents in the midterm. Meanwhile, Qualcomm and Autotalks are the leading C-V2X chipset players in China, with the former powering the OBUs in all production vehicle models mentioned above.

As a nascent and fast-growing market with few established local players, China offers excellent opportunities for foreign third-party suppliers with V2X experience. However, the market singularities can pose formidable hurdles if not well understood.

V2X hardware and software competition comes primarily from foreign suppliers because China is a latecomer and still does not have strong players with the same level of experience and technical expertise. Nevertheless, to successfully operate in the country, foreign players must be willing to engage with the local ecosystem, including local research institutes, government bodies, silicon producers, software providers, and security and standardization vendors in relationships where they may share more than they get in return. Also, automotive suppliers must be prepared to make concessions and investments to close deals because Chinese companies often demand cutting-edge technologies at low price points.

The RSU technological barriers are considerably low. Nevertheless, the business barriers are high due to the very regional aspect of RSU deployments in China, requiring intense cooperation with each city's authorities and local players. As every regional ecosystem is unique, solutions cannot be easily replicated, and building relationships in each region is time-intensive, even for local suppliers.

Lastly, semiconductor companies must establish connections with strong industry players across all levels, including module makers, silicon producers, and software and security players in the standardization domain. Partnerships with local module makers are particularly beneficial because it gets local Tier Ones and OEMs to deal with a local player, giving them higher confidence in the product.