Latest Cover Story | How Huawei Replicates the AITO (AI Translation)

最新封面报道｜华为怎样复制问界

Richard Yu, Chairman of Huawei Device Co., Ltd., unveiled a new tri-fold screen smartphone and the AITO M9 five-seat version on September 10, highlighting Huawei's foray into automotive ventures, notably through the AITO brand in collaboration with SERES since 2021. This initiative leverages Huawei's expertise in product definition, design, and quality control, while collaborating manufacturers serve as OEMs [para. 1].

AITO rapidly became successful under the Smart Selection car model, expanding to four companies by 2023 and evolving into the HarmonyOS Intelligent Automotive Technology Ecosystem Alliance [para. 3]. AITO holds significant importance within this alliance, as underscored by Yu's focus on cross-industry collaboration. However, attempts to unify products from multiple collaborative manufacturers under the AITO brand faced regulatory challenges, leading Huawei to partner with Chery, BAIC BluePark, and JAC Motors under the brands Zhijie, Xiangjie, and Zunjie respectively [para. 4].

The HarmonyOS Intelligent Cockpit succeeded largely due to the AITO brand, which accounted for over 90% of 272,000 vehicles sold in the first eight months of 2024 [para. 3]. Despite the initial success with AITO, other collaborations have faced challenges, most notably with the Zhijie brand’s S7 model, marred by production delays and friction with Chery, leading to management reshuffles [para. 7]. Similarly, the launch of the Xiangjie brand's S9 model also underperformed, impacting BAIC BluePark's stock [para. 8].

Efforts are ongoing to replicate AITO's success across other brands, with Yu Chengdong pushing the Zhijie R7 to compete with dominant models like Tesla's Model Y [para. 11]. Meanwhile, the Car BU, chaired by Yu, has formed strategic alliances with multiple manufacturers, notably Avatr and BYD, to leverage Huawei's intelligent driving systems [para. 12].

Huawei's partnership with Seres has transformed the latter's fortunes, turning a net loss into a significant profit in the first half of 2024, thanks to rapid sales growth in their new energy vehicle sector driven by AITO-branded models [para. 73]. To build on this success, Seres is investing further into Huawei's technologies [para. 74].

The competitive landscape in China's automotive market is fiercely competitive, driven by predictions from industry leaders like XPeng’s chairman, who forecasts reduced numbers of mainstream manufacturers by 2026 [para. 42]. For Huawei, scaling its joint ventures is crucial for market presence, with brands deeply integrated with Huawei's systems initially enjoying competitive advantages that may diminish as more brands adopt similar technologies [para. 14].

Yu Chengdong's strategy emphasizes coping with market pressures by pushing collaboration and product innovations. However, managing multiple collaborative ventures stresses Huawei's capacity to maintain consistency and quality amid differing partner dynamics [para. 134]. The Car BU's spin-off and its anticipated funding will also pivot Huawei's automotive business towards a supplier-customer model [para. 220].

With the domestic automotive sector evolving rapidly, Huawei aims to utilize its comprehensive internal industrial chain advantage encompassing "chips, hardware, software, and cloud" to maintain competitiveness [para. 301]. The industry's landscape could be drastically transformed by whoever hits the critical mass first in intelligent driving technology. Huawei's agility in addressing setbacks and leveraging data for innovations positions it well in this ongoing competitive shift [para. 361].

The ultimate challenge for Huawei lies in contending with global leaders like Tesla, which currently surpasses Huawei in Full-Self Driving capabilities. However, Huawei welcomes this competition, seeing it as an opportunity to enhance consumer recognition of smart driving technology's value [para. 400]. This competitive spirit drives Yu Chengdong's vision, hoping to position Huawei alongside, or perhaps beyond, the industry leaders [para. 401].