Alibaba, SAIC say will launch Internet car in 2016

May find it hard to get favorable market reception

China's e-commerce giant Alibaba Group Holdings and State-owned SAIC Motor Corp jointly announced on Thursday that they would launch their first Internet car in 2016.

The car is expected to adopt Alibaba's Yun operating system, enabling drivers to obtain timely traffic information, music service and fast route options based on Alibaba's Internet services such as cloud computing and big data, according to a press release that Alibaba e-mailed to the Global Times on Thursday.

This decision came after the two signed an "Internet Car" agreement on July 23, 2014.

Analysts said Internet cars can be a promising market, which does not just refer to a vehicle connected to the Internet, but is expected to be a next-generation tech product that can communicate with other such products and lead to better traffic management as well as self-driving.

But Feng Shiming, an executive director with Shanghai-based auto consultancy Menutor Consulting, thinks the market is far from taking off and is skeptical about the prospects for SAIC's Internet car.

"I do not think the two companies' first networked car will have a great market reception, because the Internet car is still regarded as a concept by most consumers, who may think about buying one only after at least 5 years," Feng told the Global Times Thursday.

Feng also said he questioned the car's reliability and user experience, citing the quick launch date.

Meanwhile, the two said in the press release that they will set up a 1 billion yuan ($160 million) fund that will also be open to other companies, in an attempt to further integrate their own respective advantages as well as jointly lead the development of China's Internet car industry.

"The establishment of such an open fund will attract more companies' participation and then fast-track the promising Internet car sector in China," Zhang Yi, CEO of Guangzhou-based iiMedia Research, told the Global Times Thursday.

An Internet car may be something that SAIC, China's leading domestic carmaker, can bank on to draw some limelight away from overseas auto brands, which are still widely preferred in China due to advanced technology and high brand value, said Zhang.

China sold 1.47 million domestic brand vehicles during the two months through February, while the overall sales stood at 3.43 million, according to data released by China Association of Automobile Manufacturers on Tuesday.

After the disclosure of its latest cooperation with Alibaba, SAIC's listed arm on the Shanghai bourse saw its shares rise by 4.79 percent, closing at 24.71 yuan on Thursday.

SAIC and Alibaba came together after similar joint ventures were formed by overseas companies.

Apple Inc and carmakers including Ferrari, BMW and Mercedes-Benz introduced an in-car networking and multimedia platform, dubbed as CarPlay, in March 2014, according to information on Apple's website. Three months later after Apple's move, Google Inc announced on its site a similar platform named Android Auto, which is expected to be built in Audi, Hyundai, and Nissan cars.

Alibaba's archrivals in China - Baidu Inc and Tencent Holdings - have also made similar moves. In April 2014, Baidu said it launched an in-car networking system CarNet, featuring location-based services and voice-driven navigation with the advantage of Baidu's mapping technology. A similar product by Tencent called Lubao Box, released at the Global Mobile Internet Conference held in May 2014, offers real-time safety and maintenance information as well as discounted roadside assistance via cooperation with People's Insurance Co of China, according to a statement e-mailed to the Global Times in August 2014.

Both Zhang and Feng think the cooperation between SAIC and Alibaba will likely allow the two to stand out from fierce competition.

Alibaba's advantages, especially in online shopping platforms, can help SAIC's Internet car win over female drivers, which account for a large proportion of Internet cars' potential buyers as they seem to consider the safety and technology of cars more than male drivers, said Feng.

In addition, Alibaba's active expansion into the navigation industry can contribute a lot to its Internet car development, he noted.

In February 2014, Alibaba announced the acquisition of AutoNavi Holdings, which iiMedia in November estimated would seize 50.6 percent of the Chinese mobile mapping and navigation market in 2014, followed by Baidu's mapping services with 39.3 percent.