BOSS High-Manager Warns of Free Crisis in Intelligent Driving! Charging vs. Flat-Rate, Which Business Model to Choose?

“We cannot continue to implement free promotion and intellectual property strategies for all car types’ combination-assisted driving functions must be implemented with charging.” Recently, at the World Artificial Intelligence Conference (WAIC), Boss Intelligent Driving China Zone General Manager Wu Yongqiang's speech has caused a stir in the industry.

Currently, the automotive industry is presenting different business models. On one hand, Tesla FSD (intelligent auxiliary driving) with a high price of 64,000 yuan occupies the market, while Huawei leverages its intelligent auxiliary driving technology to build an insurance barrier; on the other hand, many car manufacturers announce that they will provide free use of intelligent driving services, triggering the "Intelligent Driving Equality" wave.

Image source: Hexun reporter Zhang Jian photography (reference picture)

By charging, the OEM can earn revenue from the intelligent driving system and offset R&D costs. Without charging, the OEM can expand user usage of intelligent driving and obtain more data to push algorithm iteration.

“Left or right?”, this is the choice facing the OEM.

As of now, intelligent driving penetration rate is continuously increasing. According to data from JASCI Automotive Research Institute, by June, China's passenger car market NOA (leading auxiliary driving) function has achieved a benchmark rate of 24.1%, up from 9.5% half a year ago. In this context, the OEM needs to calculate "economic accounts" or perhaps it is not easy.

Difference in Parallel Competition

Since last year, leading car manufacturers such as BYD, Geely, Chery, and Guangqi have collectively launched the "Intelligent Driving Equality" strategy.

BYD was the first to deploy a high-end intelligent driving system with a price range of around 10,000 yuan. Geely released the "Hawk Intelligent Driving", which for the first time brought the lower limit of intelligent driving equality down to 6,000 yuan. ZeroRun Automobile announced that it would provide free software for vehicles with intelligent driving functions and even refund users who had already paid for the software.

In today's competitive environment, a strategy of free or low-price bundling intelligent driving seems to be a new way for car manufacturers to seek differentiation.

However, OEMs such as Tesla and Huawei have insisted on the software subscription charging model. Specifically, for the Chinese market, Tesla's Enhanced Assistant Driving (EAP) sells for 32,000 yuan per quarter, while its Full Self-Driving (FSD) is priced at 64,000 yuan. Cae similarly adopts an intelligent driving function subscription strategy, with a monthly package price of 380 yuan.

Regarding car manufacturers charging for intelligent driving, some consumers have expressed doubts: “When I buy a car, I already pay the hardware fee, why should I also pay software fees?”

In this competitive market pressure, these OEMs are likely to get involved in "price wars". Earlier, Huawei's HUAWEI ADS (Kaiyun Intelligent Driving) high-end functional package standard price was reduced to 32,000 yuan, with a valid period from July 1, 2025, to December 31, 2025.

Cost Conundrum: The Core Consideration of Intelligent Driving Charging

Cost is an important reason for OEMs choosing intelligent driving charging.

“I think everyone has not accounted for costs. If the OEM wants to make a profit, you need to calculate the costs. One car's annual communication and data fees are like warranties that require prepaid costs, which will definitely not be enough for several thousand yuan.” Li Bin, founder, chairman, and CEO of Cae, believes that intelligent driving should be considered a "service" rather than an automotive terminal "function", with annual fulfillment costs much higher than imagined.

In addition to annual communication and data transmission fees, the cost of the intelligence driving system itself is also enormous, including personnel, software, and hardware costs.

From a personnel perspective, the intelligent driving system requires a large number of talents to support iteration, including algorithm engineers, data annotators, scene test engineers, etc. These core positions have average salaries higher than industry averages. Zhao Changjiang, general manager of Tencent's Automotive Sales Department, emphasized at Tencent N7 Intelligent Driving Live that even BYD's 4,000-person intelligent driving team has a monthly personnel cost of over 10 billion yuan.

Hardware-wise, the intelligence driving function relies on lidar, high-performance chips, and millimeter-wave radar sensors, although these hardware costs will be reduced as production scales up. However, to maintain technology leadership, car manufacturers need to continuously invest in R&D for new-generation hardware.

A person from the intelligent driving field told reporter that the pressure on hardware costs is also transmitted to suppliers, “Domain controller cost, sensor cost, algorithm cost all relate to intelligent driving charging or not”.

Domain controller image source: Hexun reporter Huang Xingwen photography

“The cost pressure is very large. In recent years, the integration of entire vehicle architecture has been an effective way to reduce costs. For example, we have integrated independent driver monitoring controllers, electronic rearview mirrors, parking controllers, etc. into a single domain control system, which is a scheme for reducing technical costs.” Li Sihui, strategic vice president of Buick's Automotive Electronics Department, told reporter.

According to data from the National Bureau of Statistics, although China's automotive industry revenue increased by 7% year-on-year from January to May, passenger car sales grew by 14%, but overall profitability dropped by 11.9%. Wu Yongqiang revealed that excluding Huawei and Ningde Times' ability to maintain certain pricing power and insurance barriers for OEMs, most suppliers are deeply trapped in the ruthless price competition. Therefore, according to Wu Yongqiang: “If all high-end auxiliary driving functions are installed free of charge on all car types, it will bring a disaster to China's intelligent auxiliary driving industry”.

As of now, intelligent driving needs to find a balance between cost and experience. It also requires the market to form a consensus on "service payment". Finding a business model that allows car manufacturers, suppliers, and users to win together is essential for the development of intelligent driving.

Daily Economic News