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China’s Xpeng in the race to automate EVs with lidar

By Rita Liao

Elon Musk famously said any company relying on lidar is “doomed.” Tesla instead believes automated driving functions are built on visual recognition and is even working to remove the radar. China’s Xpeng begs to differ.

Founded in 2014, Xpeng is one of China’s most celebrated electric vehicle startups and went public when it was just six years old. Like Tesla, Xpeng sees automation as an integral part of its strategy; unlike the American giant, Xpeng uses a combination of radar, cameras, high-precision maps powered by Alibaba, localization systems developed in-house, and most recently, lidar to detect and predict road conditions.

“Lidar will provide the 3D drivable space and precise depth estimation to small moving obstacles even like kids and pets, and obviously, other pedestrians and the motorbikes which are a nightmare for anybody who’s working on driving,” Xinzhou Wu, who oversees Xpeng’s autonomous driving R&D center, said in an interview with TechCrunch.

“On top of that, we have the usual radar which gives you location and speed. Then you have the camera which has very rich, basic semantic information.”

Xpeng is adding lidar to its mass-produced EV model P5, which will begin delivering in the second half of this year. The car, a family sedan, will later be able to drive from point A to B based on a navigation route set by the driver on highways and certain urban roads in China that are covered by Alibaba’s maps. An older model without lidar already enables assisted driving on highways.

The system, called Navigation Guided Pilot, is benchmarked against Tesla’s Navigate On Autopilot, said Wu. It can, for example, automatically change lanes, enter or exit ramps, overtake other vehicles, and maneuver another car’s sudden cut-in, a common sight in China’s complex road conditions.

“The city is super hard compared to the highway but with lidar and precise perception capability, we will have essentially three layers of redundancy for sensing,” said Wu.

By definition, NGP is an advanced driver-assistance system (ADAS) as drivers still need to keep their hands on the wheel and take control at any time (Chinese laws don’t allow drivers to be hands-off on the road). The carmaker’s ambition is to remove the driver, that is, reach Level 4 autonomy two to four years from now, but real-life implementation will hinge on regulations, said Wu.

“But I’m not worried about that too much. I understand the Chinese government is actually the most flexible in terms of technology regulation.”

The lidar camp

Musk’s disdain for lidar stems from the high costs of the remote sensing method that uses lasers. In the early days, a lidar unit spinning on top of a robotaxi could cost as much as $100,000, said Wu.

“Right now, [the cost] is at least two orders low,” said Wu. After 13 years with Qualcomm in the U.S., Wu joined Xpeng in late 2018 to work on automating the company’s electric cars. He currently leads a core autonomous driving R&D team of 500 staff and said the force will double in headcount by the end of this year.

“Our next vehicle is targeting the economy class. I would say it’s mid-range in terms of price,” he said, referring to the firm’s new lidar-powered sedan.

The lidar sensors powering Xpeng come from Livox, a firm touting more affordable lidar and an affiliate of DJI, the Shenzhen-based drone giant. Xpeng’s headquarters is in the adjacent city of Guangzhou about 1.5 hours’ drive away.

Xpeng isn’t the only one embracing lidar. Nio, a Chinese rival to Xpeng targeting a more premium market, unveiled a lidar-powered car in January but the model won’t start production until 2022. Arcfox, a new EV brand of Chinese state-owned carmaker BAIC, recently said it would be launching an electric car equipped with Huawei’s lidar.

Musk recently hinted that Tesla may remove radar from production outright as it inches closer to pure vision based on camera and machine learning. The billionaire founder isn’t particularly a fan of Xpeng, which he alleged owned a copy of Tesla’s old source code.

In 2019, Tesla filed a lawsuit against Cao Guangzhi alleging that the former Tesla engineer stole trade secrets and brought them to Xpeng. XPeng has repeatedly denied any wrongdoing. Cao no longer works at Xpeng.

Supply challenges

While Livox claims to be an independent entity “incubated” by DJI, a source told TechCrunch previously that it is just a “team within DJI” positioned as a separate company. The intention to distance from DJI comes as no one’s surprise as the drone maker is on the U.S. government’s Entity List, which has cut key suppliers off from a multitude of Chinese tech firms including Huawei.

Other critical parts that Xpeng uses include NVIDIA’s Xavier system-on-the-chip computing platform and Bosch’s iBooster brake system. Globally, the ongoing semiconductor shortage is pushing auto executives to ponder over future scenarios where self-driving cars become even more dependent on chips.

Xpeng is well aware of supply chain risks. “Basically, safety is very important,” said Wu. “It’s more than the tension between countries around the world right now. Covid-19 is also creating a lot of issues for some of the suppliers, so having redundancy in the suppliers is some strategy we are looking very closely at.”

Taking on robotaxis

Xpeng could have easily tapped the flurry of autonomous driving solution providers in China, including Pony.ai and WeRide in its backyard Guangzhou. Instead, Xpeng becomes their competitor, working on automation in-house and pledges to outrival the artificial intelligence startups.

“The availability of massive computing for cars at affordable costs and the fast dropping price of lidar is making the two camps really the same,” Wu said of the dynamics between EV makers and robotaxi startups.

“[The robotaxi companies] have to work very hard to find a path to a mass-production vehicle. If they don’t do that, two years from now, they will find the technology is already available in mass production and their value become will become much less than today’s,” he added.

“We know how to mass-produce a technology up to the safety requirement and the quarantine required of the auto industry. This is a super high bar for anybody wanting to survive.”

Xpeng has no plans of going visual-only. Options of automotive technologies like lidar are becoming cheaper and more abundant, so “why do we have to bind our hands right now and say camera only?” Wu asked.

“We have a lot of respect for Elon and his company. We wish them all the best. But we will, as Xiaopeng [founder of Xpeng] said in one of his famous speeches, compete in China and hopefully in the rest of the world as well with different technologies.”

5G, coupled with cloud computing and cabin intelligence, will accelerate Xpeng’s path to achieve full automation, though Wu couldn’t share much detail on how 5G is used. When unmanned driving is viable, Xpeng will explore “a lot of exciting features” that go into a car when the driver’s hands are freed. Xpeng’s electric SUV is already available in Norway, and the company is looking to further expand globally.

Nuvemshop, LatAm’s answer to Shopify, raises $90M in Accel-led Series D

By Mary Ann Azevedo

The COVID-19 pandemic has led to people everywhere shopping more online and Latin America is no exception.

São Paulo-based Nuvemshop has developed an e-commerce platform that aims to allow SMBs and merchants to connect more directly with their consumers. With more people in Latin America getting used to making purchases digitally, the company has experienced a major surge in business over the past year.

Demand for Nuvemshop’s offering was already heating up prior to the pandemic. But over the past 12 months, that demand has skyrocketed as more merchants have been seeking greater control over their brands.

Rather than selling their goods on existing marketplaces (such as Mercado Libre, the Brazilian equivalent of Amazon), many merchants and entrepreneurs are opting to start and grow their own online businesses, according to Nuvemshop co-founder and CEO Santiago Sosa.

“Most merchants have entered the internet by selling on marketplaces but we are hearing from newer generations of merchants and SMBs that they don’t want to be intermediated anymore,” he said. “They want to connect more directly with consumers and convey their own brand, image and voice.”

The proof is in the numbers.

Nuvemshop has seen the number of merchants on its platform surge to nearly 80,000 across Brazil, Argentina and Mexico compared to 20,000 at the start of 2020. These businesses range from direct-to-consumer (DTC) upstarts to larger brands such as PlayMobil, Billabong and Luigi Bosca. Virtually every KPI tripled in the company in 2020 as the world saw a massive transition to online, and Nuvemshop’s platform was home to 14 million transactions last year, according to Sosa.

“With us, businesses can find a more comprehensive ecosystem around payments, logistics, shipping and catalogue/inventory management,” he said.

Nuvemshop’s rapid growth caught the attention of Silicon Valley-based Accel. Having just raised $30 million in a Series C round in October and achieving profitability in 2020, the Nuvemshop team was not looking for more capital.

But Ethan Choi, a partner at Accel, said his firm saw in Nuvemshop the potential to be the market leader, or the “de facto” e-commerce platform, in Latin America.

“Accel has been investing in e-commerce for a very long time. It’s a very important area for us,” Choi said. “We saw what they were building and all their potential. So we pre-emptively asked them to let us invest.”

Today, Nuvemshop is announcing that it has closed on a $90 million Series D funding led by Accel. ThornTree Capital and returning backers Kaszek, Qualcomm Ventures and others also put money in the round, which brings Nuvemshop’s total funding raised since its 2011 inception to nearly $130 million. The company declined to reveal at what valuation this latest round was raised but it is notable that its Series D is triple the size of its Series C, raised just over six months prior. Sosa said only that there was a “substantial increase” in valuation since its Series C.

Nuvemshop is banking on the fact that the density of SMBs in Latin America is higher in most Latin American countries compared to the U.S. On top of that, the $85 billion e-commerce market in Latin America is growing rapidly with projections of it reaching $116.2 billion in 2023.

“In Brazil, it grew 40% last year but is still underpenetrated, representing less than 10% of retail sales. In Latin America as a whole, penetration is somewhere between 5 and 10%,” Sosa said.

Nuvemshop co-founder and CEO Santiago Sosa;
Image courtesy of Nuvemshop

Last year, the company transitioned from a closed product to a platform that is open to everyone from third parties, developers, agencies and other SaaS vendors. Through Nuvemshop’s APIs, all those third parties can connect their apps into Nuvemshop’s platform.

“Our platform becomes much more powerful, vendors are generating more revenue and merchants have more options,” Sosa told TechCrunch. “So everyone wins.” Currently, Nuvemshop has about 150 applications publishing on its ecosystem, which he projects will more than triple over the next 12 to 18 months.

As for comparisons to Shopify, Sosa said the company doesn’t necessarily make them but believes they are “fair.”

To Choi, there are many similarities.

“We saw Amazon get to really big scale in the U.S.. Merchants also found tools to build their own presence. This birthed Shopify, which today is worth $160 billion. Both companies saw their market caps quadruple during the pandemic,” he said. “Now we’re seeing the same dynamics in LatAm…Our bet here is that this company and business has all the same dynamics and the same really powerful tailwinds.”

For Accel partner Andrew Braccia, Nuvemshop has a clear first mover advantage.

Over the past decade, direct-to-consumer has become one of the most important drivers of entrepreneurship globally,” he said. “Latin America is no exception to this trend, and we believe that Nuvemshop has the level of sophistication and ability to understand all that change and fuel the continued transformation of commerce from offline to online.”

Looking ahead, Sosa expects Nuvemshop will use its new capital to significantly invest in: continuing to open its APIs; payments processing and financial services; “everything related to logistics and logistics management” and attracting smaller merchants. It also plans to expand into other markets such as Colombia, Chile and Peru over the next 18-24 months. Nuvemshop currently operates in Mexico, Brazil and Argentina.

“While the countries share the same secular trends and product experience, they have very different market dynamics,” Sosa said. “This requires an on the ground local knowledge to make it all work. Separate markets require distinct knowledge. That makes this a more complicated opportunity, but one that enables a long-term competitive advantage.”

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