PATEO Hopes to Build a Vehicle Eco-system

On Jan. 19 of 2015, Freeman Shen, Co-founder and CEO of PATEO, returned to his office slightly later than the scheduled time, and explained to the reporter that “an oversea investment organization with strong interest in our intelligent vehicle business has paid a visit to us just now”.

It happened to be Freeman’s 45th birthday and was also the start of his busy working life in PATEO. Five days ago, Freeman officially joined PATEO, serving as its co-founder and CEO as well as the CEO of its Intelligent Vehicle Business Unit. Previously, Freeman was Board Chairman and Vice-president of Zhejiang Geely Holding Group, the largest private auto group in China, and had once been Senior Vice President of Volvo Global and Board Chairman of Volvo China.

What attracts Freeman the most is PATEO’s dream to develop intelligent vehicle and to change the position of China’s auto industry in the world. Freeman said, “Intelligent vehicle is a future trend. I hope that PATEO can build itself into a benchmarking enterprise in the fields of telematicsand intelligent vehicle.” According to Ken Ying, Board Chairman of PATEO, PATEO is aimed not only to achieve the market value of RMB one trillion, but more importantly to “become an inspiring company in which the world takes pride, just like Apple”.

Establish a Perfect International Team

A near-perfect core management team gives support to PATEO’s ambitious dream.

Freeman plays a key role in PATEO’s internationalcore team. Large investment organizations in touch with PATEO disclosed that PATEO had established an international core management team, which consists of members having strong influence in the auto industry. PATEO’s founder Ken is said to be another Jobs in the auto industry, and its several other senior executives are competent at global auto operation. What’s more, PATEO owns the wolf-culture that is most needed in the Internet era.

Ken once disclosed that “We have 6 co-founders”, 3 of which are known to the public, namely, Ken himself, Freeman Shen taking charge of corporate operation and management, and Shen Ziyu heading PATEO Electronics and PATEO Network (CEO of the two companies). It is said that the other 3 mysterious co-founders, who are responsible for daily operation, finance, business, investment and financing respectively, have previously worked for famous oversea investment organizations or large multinational enterprises, and have rich experience in financing and running auto enterprises at home and abroad.

Nevertheless, PATEO is only a small company to the outside, especially when compared with large car manufacturing enterprises. Freeman responded to such saying by pointing out that “PATEO is anything but a small company”. In his eyes, PATEO is a big player in the segment—it is the first Chinese system integrator that provides such proprietary technologies as onboard hardware platform, embedded system and operation service system. Up to this day, PATEO has become the largest third-party telematics enterprise in China, taking the lead in the industryin terms of technological reserve and product development capabilities. On the B2B market, PATEO is now serving 13 car manufacturers, 16 auto brands and 64 auto models, including luxury brands like FAW-VolkswagenAudi and Volvo. In 2014, the Global Business of Porsche, a world-famous luxury car brand, actively invited PATEO to participate in its tendering.

What surprises investment organizations interested in PATEO more is its entrepreneurial culture. Although it has never received any financing, PATEO has successfully developed its telematics business solely relying on rolling development and is thus among the first group of winners in China. In 2009, Ken determinedly established PATEO Corporation when seeing business opportunities in telematics field. The company was profitable in 2013, but its profitability isn’t achieved by cutting R&D costs. On the contrary, during the 4 years from 2009 to 2013, PATEO has been a leader on the telematics market for several times—It has developed and produced 1) the world’s first onboard product that is based on 3G technologyand Android system and with OTA online upgrade feature, being 4 years earlier than Tesla; 2) the world’s first onboard product with active congestion avoiding feature, 1 year earlier than Baidu and Autonavi; 3) the world’s first onboard productwith natural language, 9 months earlier than the Chinese version of Siri(voice control feature of iPhone 4S designed by Apple); 4) thanks to rapid upgrade, the latest product that is comparable with iphone6 in terms of onboard internet access speed.

PATEO Plans to Build Intelligent Vehicle by Developing 3 Lines of Businesses Simultaneously

When PATEO’s past achievements and numerous patent certificates were mentioned, Ken said calmly “They only represent what we’ve achieved in the past. Now we hope to develop an intelligent vehiclethat can make the best of people’s life.”

PATEO still has a long way to go in order to realize such a dream. It is known that PATEO now runs 3 lines of businesses. Freeman told the reporter that “PATEO has 3 major business modules, namely, consumer electronics, telematics and intelligent vehicle.” The 3 lines of businesses have their respective objective: telematics CS, which is under the charge of Shen Ziyu and at the stage of rapid promotion, is aimed to attract 750 thousand users in 2015 and 3 million users in 2017 according to the plan; consumer electronics, which is at the stage of rapid upgrade and responsible for expanding business and providing optimal customer experience, is aimed to attract tens of millions of users per year; intelligent vehicle, for which early conceptual plan is designed and a dedicated team is built, is aimed to reach the annual sales target of about hundreds of thousands of vehicles. It is said that PATEO will launch its first model of intelligent vehicle by late 2017 or early 2018.

What excites the investment circle most is future development of intelligent vehicle business. Unlike what the outside world believes, PATEO intelligent vehicle business will not eat the lunch of conventional car manufacturers. Freeman said, “We hope to design intelligent vehicles that use new energy rather than traditional fuels. We sell services, not cars.” Furthermore, PATEO hopes to establish a platform for global car manufacturing enterprises to display their technologies. Freeman added that “In fact, intelligent vehicle is based on traditional vehicles, and we are more likely to cooperate with conventional car manufacturers than to compete with them”. Ken believed that “PATEO isn’t intended to develop a car from scratch. Instead, we hope to combine PATEO’s intelligent vehicle technologies on the international auto platform, and to develop an intelligent vehicle that can make the best of people’s life.”

It is known that PATEO doesn’t take conventional auto brands as the benchmark when developing the intelligent vehicle. Freeman said, “We are an asset-light service provider rather than an asset-heavy company. When it comes to brand, we will take Tesla as reference but set a higher sales target; with regard to production scale and customer experience, we will take Apple as reference, in the hope of providing optimal customer experience; in terms of business mode, PATEO hopes to open up the road of whole-value-chain operation and build a vehicle eco-system.” In the eyes of many investors, establishment of a vehicle eco-system will lead to the birth of auto giants as powerful as Alibaba and Apple.

Freeman also disclosed that “Rapid development of telematics requires the financing of about RMB 15 billion while developing intelligent vehicle requires the financing of RMB 22 billion or more.” It is known that financing for telematics and intelligent vehicle business will be conducted in several stages, and in the first stage, PATEO plans to get the financing of RMB 2 billion for telematicsprogram and about RMB 3 to 7 billion for intelligent vehicle program. At present, some large investment organizations have initially decided to make investment. With more and more investment organizations showing interest, PATEO is in a good position to choose partners. Freeman said that “We prefer industrial and Internet investment organizations.”

Ken is not concerned about funds. In his eyes, what matters most is to “stick to our innermost dream and develop products capable of presenting optimal customer experience”. As a defender of universal value, Ken emphasized that “Dreamers never live for making more money, but for improving people’s living standards. Market value and profits are extra bonus coming together with success.”

■Related links

At 2010 Beijing Auto Show, Chang Xiaobing (Board Chairman of Unicom) and Hu Maoyuan (former Chairman of SAIC Motor) jointly unveiled the world’s first connected car based on 3G technology and Inkanet1.0 (the latter is developed by PATEO). 2010 is thus called the first year of telematicsera.

In 2010, PATEO launched the world’s first intelligent travel system based on Google Androidoperating system, which ushers in intelligent operating system in the auto industry. By far, iVoka os designed by PATEO is the only Android system that complies with vehicle regulations.

In 2010, PATEO launched Inkanet1.5, the first product with OTA online upgrade andonline update feature in the world, which is 1 year earlier than online upgrade software applied in Apple smart phone, and 4 years earlier than the online upgrade technology of Tesla.

In 2011, PATEO launched Inkanet2.0,the world’s first onboard system that adopts the architecture of three screens (mobile phone screen, computer and PAD screen, and vehicle screen) and one cloud, and was 2 years earlier than BMW.

At the end of 2011, PATEO launched Inkanet2.4 and iVoka1.0 underits own brand, the first onboard product capable of receiving instructions in human language. The auto technology with natural language (with more design difficulties than similar technologies applied in smart phones), is the first of its kind in the world, and is 1 month later than the innovative English version of Apple Siri but 9 months earlier than its Chinese version.

At the end of 2012, PATEO launched iVoka2.0 with active congestion avoiding feature. The product is developed independentlyby PATEO based on navigation engine, software, algorithm and cloud computing, and is China’s first onboard navigation product capable of actively avoiding congestion. It not only greatly reduces fuel consumption and saves time, but is one year earlier than similar products designed by Internet enterprisesthat are known for rapid innovation (Baidu, Tencent, Autotonavi, etc.).

In 2013, PATEO launched Inkanet3.0 with brand-new hardware and user experience, with its Internet access speed equivalent to that of iphone 4. It is the first time that China’s auto industry has a product that can compare with consumer electronics in terms of Internet access user experience.

In 2014, SAIC RoeweMGpromoted two core selling points: the brand-new power system and Inkanet4.0, which is comparable with Iphone5S in terms of Internet access speed. At the end of 2014, PATEO unveiled iVoka auto under its own brand, which is comparable with Iphone6 in terms of Internet access speed and will be officially launched in June 2015. iVoka auto indicates that PATEO has further improved its R&D capabilities, evolving from pre-researching and developing one generation to pre-researching and developing two generations concurrently, and taken the lead in the world when it comes to building software and hardware platform.