Autonomous driving level 2 urban NOA service emerges as a key axis in China's automobile technology competition
China's auto industry is expected to reorganize around companies supplying autonomous driving level 2-3 technology

Experts are predicting that Chinese companies will make all-out efforts to develop related technologies to meet the high demand from Chinese consumers for urban NOA services, which they call autonomous driving level 2.99, and to proactively provide such services.

In a report titled “Current Status of Autonomous Driving Technology Competition in China as Seen through Urban NOA,” Lee Seo-hyun, a senior researcher at the Korea Automobile Research Institute (hereinafter referred to as Hanjayun), predicted that Level 2 autonomous driving urban NOA will emerge as a key axis of technological competition among automobile manufacturers in China in 2023, and that urban NOA will continue to serve as a key axis of technological competition in China in the future.

NOA (Navigate on Autopilot) is a function that allows a vehicle to steer, stop, and accelerate on its own on the road, and Urban NOA (City NOA) refers to a navigation driving assistance function provided on city roads.

Since downtown NOA must reflect the complex and changing urban road environment in real time, it is evaluated that the difficulty level is several times higher than that of highway NOA due to the complex and diverse information that must be processed.

Each Chinese manufacturer defines the name and scope of their urban NOA service differently, and they use the term Level 2.99 to emphasize that the technology is very close to Level 3.It uses a current, which is known to be conceptually close to FSD among Tesla's autonomous driving services, regardless of actual performance and range.

However, Senior Researcher Lee Seo-hyun emphasized that caution is needed because the expression 2.99 does not indicate an actual technological level, but is a marketing slogan limited to the Chinese domestic market.

The reason why the technology development of downtown NOA has gained momentum is analyzed to be that with the abolition of subsidies for electric vehicles in China in 2023, price competition is intensifying, and Chinese automobile manufacturers are trying to differentiate their products, increase added value, and respond to the demands of Chinese consumers.

According to a local Chinese media survey, Chinese consumers place a high value on the act of purchasing a car with the latest technology rather than considering how much they need urban NOA technology when making a car purchase decision.

Accordingly, Chinese automakers and Tier 1s are competitively announcing their urban NOA service provision goals, and considering the influence on the market and industry, urban NOA can be seen as the core of China's autonomous driving technology competition.

As of the end of 2023, many Chinese companies have not achieved their goal of providing urban NOA services, but urban NOA is expected to continue to be a key axis of technological competition in China in the future.

Although manufacturers LiAuto, Xpeng, and HUAWEI are considered to be ahead in the development of urban NOA technology, they are also lowering their service provision goals, and the Chinese industry has pointed to two main reasons for the delay.

The first reason is that it is still difficult for domestic companies to provide urban NOA services without high-precision maps due to their technological level.

High-precision maps are high-resolution maps that include road information such as road curvature and lane location, environmental information such as road infrastructure, and real-time dynamic information such as traffic light status and traffic volume.This is an element that complements information limitations caused by procession sensor failure, bad weather, etc.

In the first half of 2023, Xpeng, HUAWEI, and others announced that they would develop autonomous driving systems that do not rely on high-precision maps, but questions were raised about whether Level 2 or higher autonomous driving services could be provided without using high-precision maps.

Local media also evaluated that the results of the NOA service test showed that in complex road environments or highway entrances and exits, human drivers often have to take over, and that autonomous driving that does not rely on high-precision maps requires improvement.

Second, Chinese companies' cloud computing and algorithm technology levels are still lacking.

The speed and accuracy of urban NOA technology are determined by factors such as the vehicle's own computing power, cloud computing capabilities for collecting, storing, and analyzing big data, and the level of algorithm technology for processing data.

The Chinese industry believes that its own companies' cloud computing and algorithm technology levels are about two to three years behind Tesla's.

Despite these development delays, Chinese consumers' demand for urban NOAs is very high, and the Chinese industry expects urban NOAs to become a key axis of technological competition among automakers over the next three years.

Although the gap in technological superiority between companies is not yet large, the Chinese industry is expected to focus on developing technologies related to urban NOA, as it believes that the winner who secures more users and data in the early stages will gain a significant advantage.

It is expected that manufacturers who initially mass-sell vehicles equipped with the downtown NOA service will take the lead in securing data, widen the technological gap with other companies, lead the market, and solidify their advantage by investing quickly in computing and algorithms.

Considering the current status of urban NOA technology competition and Chinese government policies, China's automobile industry is expected to be reorganized around companies that proactively provide reliable autonomous driving level 2-3 technology.

In 2024, Chinese consumers are expected to prefer vehicles that provide urban NOA services in various cities, and manufacturers such as LiAuto and Xpeng are expected to make all-out efforts to secure a comparative advantage in urban NOA over BYD.

Currently, BYD has an overwhelming market share (30% as of November 2023) in the Chinese domestic passenger car market, but LiAuto, Xpeng, etc. believe that the areas in which they can gain a comparative advantage over BYD are smart driving and autonomous driving.

BYD is evaluated as having strengths in electrification technology but relative weaknesses in technologies such as smart driving and autonomous driving. Attention is focused on whether LiAuto and Xpeng will be able to achieve the desired results commensurate with the cost invested in urban NOA.