Alibaba vies for control in reportedly rocky tie-up with China’s top automaker

By Jill Shen
2 min read
In this image from Alibaba, a car equipped with Alibaba’s vehicle operating system AliOS is parked outside a gas station in Beijing in February 2018. (Image credit: Alibaba)
In this image from Alibaba, a car equipped with the company’s vehicle operating system AliOS is parked outside of a gas station in Beijing in February 2018. (Image credit: Alibaba)

Alibaba is reportedly planning to spin off its team responsible for developing its AliOS Auto operating system and integrate it with Banma Network Technologies, a joint venture (JV) between the company and Chinese automaker SAIC, in a move to gain more control over the company.

Why it matters: The relationship between tech companies and automakers has been bumpy as both sides jostle for control in the development of next-generation vehicle technology, a major pillar of the government’s Made in China 2025 initiative to achieve global leadership in core technologies.

  • Automakers are unwilling to share data with tech companies over the risk of revealing proprietary intellectual property (IP) and production costs, and the Banma case is no exception, reported Caixin citing an anonymous car company employee.
  • Alibaba’s progress in selling its proprietary operating system AliOS to other clients has been hampered by internal resistance from SAIC, the country’s largest automaker, which wants to maintain an edge in competition, according to 36kr citing multiple former executives.

Details: The AliOS Auto team will be integrated into Banma, and Alibaba hopes to then pry more share from SAIC to lead the joint venture, according to 36kr citing a person with knowledge of the matter. The company declined to comment on the restructuring when contacted by TechNode on Wednesday.

  • Banma’s in-vehicle information service platform has been on pause pending an update for months according to some users, and top executives including the CEO, CTO, and CFO have left.
  • A Banma spokeswoman told TechNode that the company had updated its software more than 10 times for each car model over the past year to fix bugs and enhance user experience, although each update was not labeled with version numbers.

Banma issued a blanket denial to TechNode on Wednesday of all assertions in the 36kr report.

Context: Chinese tech giants are stepping up efforts to make their mark in the booming vehicle operating system industry. Vehicle OS are a key component for smart connected cars as they enable the delivery of innovative information and entertainment services to drivers.

  • Alibaba and SAIC partnered in mid-2014 and established Banma in late 2015. Banma released its vehicle connectivity solution the next year and SAIC said last June that it had sold 600,000 vehicles to date that were equipped with the AliOS in-car operating system.
  • Both companies initially held 45% share of the JV, and the 10% balance was granted to employees. Both sides reduced shares to 31.5% in July 2018 when Banma secured RMB 1.6 billion in funding from three external investors.
  • The two companies are said to have an exclusive partnership: Banma is only allowed to deliver in-vehicle infotainment system based on AliOS, while the Alibaba in-house team can only reach auto clients through Banma.
  • Baidu in late 2017 open sourced its vehicle information service technologies, including voice assistant and facial recognition. The launch of its Internet of Vehicles (IoV) solution platform followed a year later, which is now accessible on 300 vehicle models from upwards of 60 OEMs.
  • Tencent launched its in-car intelligent system solution Tencent Auto Intelligence (TAI) in November in partnership with a list of automakers including BMW, GAC Group, and Dongfeng Motor, and plans to offer voice-enabled WeChat services by the end of this year.