China is not only the biggest automotive market,
still more the frontline of innovation for connectivity technologies and business models.
As for telematics companies, besides our mission to ensure a large amount of telematics installation, we are also obligated to keep the daily active rate of our users high (e.g. more than 80%). It means if the products failed to offer ultimate user experience, the company won’t be able to create successful business models.
Car, in the past 130 years has been recognized as a transportation tool rather than a fun, intelligent mobile product. This old fashioned view is changing. Firstly, with latest connectivity technologies, changes are already seen in the fields of sales of new and used cars, repair and maintenance service, auto finance service. More still, PATEO is working with one of its automotive partners to bring a brand new business practice into the industry, which will include: 1. For end users, a brand new purchase experience enabled by an integrated Internet finance and telematics services; 2. A complete service life cycle by linking to car sharing and logistics markets; 3. New maintenance service experience via in-depth usage of repair service network; 4. Information service by linking phones, home and internet ecosystem together; 5. Consumption-credit loan service based on internet finance; 6. New possibility for automotive companies such as in-vehicle CPS campaign. This practice is aimed to assist automotive companies to expand their business possibilities by adapting a new business model where big data and internet finance services can generate value. The estimated software and data service revenue for the above mentioned partner is 40%, 55% of the gross profit.
Just as our need for power generators and wells will decrease when we can access to power grid and water supply network, high percentage of shared car usage implies less desire for new cars. As the result, the automotive companies will face a dramatic loss in new car sales. Automotive companies can compensate their loss by investing in the car sharing market as well. However, the gain won’t be enough to offset the loss.
The main stream method of automotive companies to set up sales channel is to establish a solid dealership network, which is, nowadays, unable to adapt to requirement of sharing economy and intelligent connectivity, let alone to help automotive companies to breakthrough their value chain barriers in short term.PATEO together with an automotive partner are innovating business mode in terms of telematics, Internet finance and sales channel. By setting up a mobility company, there is no need for users to purchase a car through the traditional way, but pay a few hundreds monthly rental to use a vehicle. Through integrating telematics positioning services and e-business credit services, PATEO can help mobility companies to identify a highly credible consumer group. And with Internet finance services, PATEO can offer mobility companies an innovative rental model, meanwhile may help to make purchasing easier for the credible group.At the same time, we can bind maintenance services with a certain dealer and share partial of the rental income with them to guarantee the interests of the traditional channels.
There will be couple of bottlenecks to face up to when automotive companies engage themselves in telematics.The first is: how can telematics business meet user’s demand of ultimate product experience, even though which may change swiftly, meanwhile minimize the cost? Many automotive companies refused to equip their telematics systems in all vehicles because of financial reasons, some even gave up their telematics plan.PATEO believes that the shortage of an optimized cost control solution on telecommunication operators as well as on T-service operation can be a reason, but the main reason lies in that the current telematics products can’t satisfy drivers with good user experience. Even those for premium cars, the slow responding time, and awkward UX design are far behind comparing with consumer electronics products such as mobile phone. At the same time, the lacking of OTA services is preventing new technologies and services from iterating into existing products, thus resulting in low user adhesiveness and activeness. Eventually, automotive companies can’t benefit from their telematics users.
In response to this problem, PATEO cooperate with partners in providing appropriate solution to guarantee their profits. For example, for low-end products, PATEO is committed to providing low cost but reliable products which won’t be easily replaced by other rapidly changing digital products, by combining smart phones, PAD and low-end IVI system into a PnP product, an electronic that can be regularly upgraded.
Another bottleneck is: how to balance the four-year R & D cycle and the yearly introduction of innovative digital technology?
Under the premise of not changing automotive electronics and telematics platform, while maintain up-to-date services, PATEO is developing new products with partners, so called SAA, an artificial intelligent product based on voice technology, software and cloud services technology, which is not overly dependent on hardware (which can guarantee a four-year development cycle without being affected), but allows its users to feel the advancing of services and technologies.
Non-cash payment experience is united no matter it’s inside the internet ecosystem or offline commercial places. User can use one payment tool to get all kinds of purchasing done. However, in the automobile payment sector, payment for parking, fuel refilling, battery charging, road toll and insurance is still separated with different IC cards. PATEO co-worked with partners to create an in-vehicle non-cash payment solution which can replace the role of user’s transportation card, credit card, ETC card, fuel card, battery charging card and parking card, by integrating all these into a single piece of chip. This chip can be embedded into various products such as rearview mirror, IVI, ETC device, etc., and then be mounted into the car.This solution can help automotive companies to entertain their users with the enriched function, meanwhile improve sales volume as well as their brand awareness.
On the one hand, many large-scale enterprises in non-automobile sector or Internet enterprises are eager to enter into the fields of new energy vehicles, intelligent automobiles and shared car; On the other hand, the conventional car makers are facing a relatively surplus capacity. To change this imbalanced situation, PATEO integrated the advantages generated from big investment, high-tech, top talents and higher competitive barriers in automobile industry with the advantages contributed by channels, brands and users of large-scale conventional enterprises, so as to ensure conventional car makers increase their R&D fruit as well as sales of new energy and intelligent cars; More importantly, it ensures the large-scale non-automotive companies and Internet enterprises are capable to engage in business of intelligent automobiles and shared cars with hundreds of millions of investment (in RMB yuan), so as to increase enterprises' revenue and market value.
PATEO cooperates with an automotive company in innovating business model to enable the profitability of existing users. We will offer free telematics service aiming to activating one million existing vehicle owners. Meanwhile, we create a car sharing platform by connecting telematics service to O2O service platform. Take car sharing company as an example, if it is willing to own and operate this 1 million drivers network and happy to share 10% of the drivers' monthly earning as commission. It means 12 billion RMB revenue per year for the company, because in current Chinese market each car sharing driver can earn 10,000 RMB per month, which means each driver can contribute 12,000 RMB per year to the company. With a massive driver network, this can be lucrative business with a profit rate as high as 90%.
For a Chinese automobile insurance company, about 70% of its annual insurance revenue will be allocated to claims and the profit rate is around 10% after deducting operation cost. How to decrease claim rate for insurance company？
PATEO cooperates with its partners to facilitate UBI business. Since PATEO can precisely conclude whether the driving behavior of a driver is good or bad by analyzing their driving mileage, expressway driving frequency, times of sudden brakes and sudden speed-reducing, times of over speed, car health data, etc. we can sell the information to insurance company to enable usage based differential pricing strategy, so as to be a fundamental solution to the high-claim-rate dilemma. It is estimated according to the existing mode that 50% of claims can be reduced.
For core electronic manufacturers, they have accumulated vast data from engine, transmission, car body, battery, motor and electronic control modules. Whether they can be benefited from these data and how to transform the profit model from modules selling to data operation?
PATEO cooperates with one of its supplier to generate more commercial profits and keep competitiveness by fusing the data collected from those electronic modules together with data collected from PATEO telematics devices to unleash more data-based applications, thus create more business opportunities.
Heavy assets, high market value and relatively lower profit rate compared with Internet enterprises have made the market capitalization ratio of automotive groups very low. To solve this, PATEO jointly invests and cooperates with automobile groups in the emerging fields, such as intelligent connectivity, shared services and e-commerce. For example, PATEO joint with an automotive group on natural voice chip as well as cloud AI business. Joint venture such as this is Internet based can enjoy high-profit. On the other hand, the automobile group can obtain technology competitiveness as well as new financial.
500 million mobile phones are sold in China each year, however, the sales of PAD products is roughly 12 million. For the users of Chinese domestic auto brands (medium and lower-end brands), their demand for mobile phone products are low, let alone their demand for PAD products. PATEO cooperates with a domestic automobile brand to transform its PAD, mobile phone and IVI system. In this way, those users can gain the value of three products when purchasing a new car. And they can enjoy seamless experience on these devices as users in premium electronic market do.
The communication age has been replaced by experience age. To make users experience the unique features of a brand in their regular digital life, PATEO is cooperating with its partners to offer innovative connectivity services that will include smart phone, wearable device, smart home, and smart television all into the services. By integrating PATEO cloud, big data service and CPSP development ability, this innovative connectivity services will provide end user an AI-based intelligent experience with one user account and one software.