May 20th is a good day for confession and showing love. A successful confession must be a perfect match. Starting from this standard, Audi and SAIC announced a deepening of their cooperation. On this day, SAIC Audi launched the ADP intelligent digital platform under the theme of “Beauty and Sharing, Starting a New Chapter Together”. On this platform, multiple intelligent electric vehicles planned by Audi and SAIC’s cooperation will be born.
SAIC Audi, established for 3 years, struggled with sales. In December last year, monthly sales exceeded 7,000 units, reaching a historical high. Both sides agreed that Audi and SAIC must invest more strategic resources into their long-term partnership. The official announcement of “deepening cooperation” was made in July last year, when the two parties signed a cooperation agreement. Ten months later, significant progress in cooperation can finally be announced. On that day, the details of the ADP platform’s technology were not disclosed by both parties. However, at the press conference, Audi announced that Volkswagen executive Song Feiming would serve as the CEO of the project. This was an unusual personnel arrangement.
For product line + technology line projects, there is generally no CEO position. Even in a large group, there may be multiple business CEOs appointed, but at least a BU or BG will be established. This indicates that SAIC Audi views this project as a core business, and may even lead all future product lines. Therefore, it is logical for Song Feiming, who has served the public for 25 years, to be appointed. Another important factor is that in this project, the Audi, SAIC, and SAIC Volkswagen teams must collaborate, requiring an executive who can lead and coordinate across departments. From this perspective, establishing a CEO is also reasonable. In this “super-organizational” structure, the most important thing is to speed up. By using an efficient flat organizational structure, digital development tools, and IT-style project development concepts, SAIC Volkswagen has already reduced the project development cycle from 36 months to 24 months. However, for SAIC Audi’s “Project 1,” this speed should be increased. The speed and efficiency will be led by the localized SAIC Volkswagen, and Song Feiming’s task is to ensure that Audi’s DNA does not dissipate. SAIC Volkswagen General Manager Jia Jianxu stated, “Audi is Audi… He has a veto in the project.” This also means that the new energy models launched in China by Audi with the help of SAIC still carry the Audi genes, and the price should be reasonable. In fact, both parties are jointly developing new products on the basis of the new generation digital platform, previously planned to be implemented by 2026. Now, the “platform implementation” is not used as an assessment point, and the first new product based on the ADP platform is scheduled to be launched in 2025, which is a significant step forward. In the current industry background of rapid development of intelligent driving and E-E architecture digitization, Audi has no chance to take the lead, but by entering at a certain point in time, they can instantly catch up or even lead the industry frontier at that time, thereby regaining the initiative in product line and technological capabilities, and then winning the initiative in brand development. Aiming at Full Stack 3.0 It is reported that the Lingstrand Technology team under SAIC will play a key role in the development of the ADP platform. Although the development pace is fast, SAIC Audi did not use Lingstrand Technology’s off-the-shelf products. Previously, several mass-produced cars from Zhiji and Feifan have been equipped with the “Lingstrand Galaxy” full-stack 1.0 technology. The electric vehicles jointly developed by Audi and SAIC will be equipped with the full-stack 3.0 technology, claiming to achieve central computing power in the “cabin, driving, computing, and connectivity” four domains.
Both Song Feiming and Zero Technology CEO Li Jun did not reveal the details of the ADP platform. Although Jia Jianxu revealed descriptions such as “digital mobility companion,” it did not help outsiders deepen their understanding of the ADP platform. It can be speculated that the platform is likely not completely “centralized” in terms of computing power, with MCU and ECU modules being reduced and merged as much as possible, but not completely eliminated. This means that it has similarities with solutions launched by Huawei, but has significant differences from startups such as Zero Run. The reasonableness of this speculation lies in the Full Stack 3.0 technology, which has good inheritance from 1.0 and 2.0, thereby ensuring the reliability of engineering cycles and system design. This is also the reason why executives from SAIC and Audi show great confidence. The current joint venture framework has evolved from foreign parties simply playing the role of technical output to mutual authorization, joint development, and a tendency towards balance among all parties. Audi is responsible for overall product design, chassis, and other mechanical parts, while SAIC is responsible for E-E architecture and integrated hardware and software solutions. Although the latter’s position in product strength is becoming increasingly prominent, Audi still controls the product tone and style, and it cannot be said which role is more important. Complementary puzzle International brands do not have an advantage in the field of electric vehicles in China, and a series of electrified and intelligent products derived from the ADP platform are clearly expected to reverse the business situation. Based on this, Audi and SAIC attached great importance to this press conference, with all relevant executives present.
From a global perspective, Audi’s revenue and profit are not in the same league as Mercedes-Benz and BMW. In 2023, Audi’s delivery volume in China is not far behind Mercedes-Benz and BMW. Audi pays a higher cost in terms of pricing. However, Audi has the highest market share in China, making the Chinese market more important for Audi. At this time, Audi has internal drive to invest more in the Chinese market. Audi’s two Chinese partners, FAW and SAIC, have a complex and delicate relationship. FAW Audi, with its long establishment time, complete product line, and accumulated user and market reputation, cannot be compared to SAIC Audi. Now with the announcement of a new platform and product line, the introduction of FAW Audi’s PPE platform and the first product to be delivered by the end of the year, will there be direct competition between the two? This is something SAIC Audi must consider. Jia Jianxu did not directly answer the question, using the theme of the event “Beauty and Coexistence” to explain that Audi’s multiple platforms and product lines can coexist and excel individually. These statements are not entirely theoretical, as he also mentioned concepts like “differentiation” and implied that products on the ADP platform are more high-end. The definition of “high-end” largely depends on elements such as digitalization and intelligent connectivity, leaving room for imagination on how these new value elements will integrate with the Audi brand. Audi in China has been trying to achieve a dual-wheel layout and improve its dual partnership system. This aligns with Volkswagen’s strategy. However, SAIC Audi was born too late and missed the wave of rapid development in the Chinese automotive market, leading to a tough battle in the early stages of brand cultivation. This deepening strategic cooperation aims to fill the gaps in Audi’s Chinese business. With the necessary technological capabilities, Audi hopes that the Chinese side will lift the business up. SAIC Group urgently needs to open up new growth points and has the motivation to strengthen its joint venture business with Audi. After all, Audi, as a first-line or near-first-line luxury brand, is an indispensable part of SAIC Group’s brand puzzle. From the principle of mutual trust and win-win cooperation to entering a higher level of close strategic coordination, May 20th may be a turning point in the cooperation between Audi and SAIC. However, the execution aspects such as channels may still be a challenging communication process in the future.