In Depth: After Aito, What’s Huawei's Next Move in EVs? (AI Translation)
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文｜财新周刊 安丽敏
By Caixin Weekly's An Limin
9月10日，在万众瞩目下，华为终端有限公司（下称“华为终端”）董事长余承东发布了三折叠屏幕手机。问界M9五座版也在同一场合亮相。
On September 10, under the spotlight, Yu Chengdong, Chairman of Huawei Terminal Co., Ltd. (hereinafter referred to as "Huawei Terminal"), unveiled a tri-fold smartphone. The AITO M9 five-seater version also made its debut at the same event.
问界无疑是华为汽车业务的标杆，该品牌在2021年底问世，由华为终端和赛力斯（601127.SH）联合推出。赛力斯因此成为华为终端的第一个汽车合作伙伴，双方共同塑造了华为“智选车”商业模式。在这种模式下，华为主导产品定义、设计和终端销售，还要参与生产质量把关，整车公司近似于华为的代工厂。
AITO undoubtedly serves as the benchmark for Huawei's automotive business. The brand made its debut at the end of 2021, launched jointly by Huawei Terminal and Seres (601127.SH). As a result, Seres became the first automotive partner of Huawei Terminal. Together, the two entities crafted Huawei's "Smart Selection" business model. Under this model, Huawei leads product definition, design, and terminal sales, while also participating in production quality control. The automobile company functions almost like a contract manufacturer for Huawei.
余承东曾在华为内部战略讨论时力挺造车，却没有得到任正非及华为其他高管支持。余承东选择“曲线救国”，问界就是他的试水之作。问界车型在2022年一炮而红，智选车合作车企逐渐扩大至四家。2023年11月，智选车模式升级为华为鸿蒙智能汽车技术生态联盟（下称“鸿蒙智行”）。
Yu Chengdong once firmly advocated for car manufacturing during Huawei's internal strategic discussions but did not receive support from Ren Zhengfei or other top executives at the company. Yu opted for a roundabout strategy, with the AITO brand serving as his initial foray into the market. The AITO model became an instant hit in 2022, with the number of automakers partnering in the Smart Selection car initiative expanding to four. In November 2023, the Smart Selection model was upgraded to the Huawei HarmonyOS Intelligent Automotive Technology Ecosystem Alliance (henceforth referred to as "HarmonyOS Intelligent Mobility").
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- On September 10, Huawei unveiled a tri-fold smartphone and the AITO M9 five-seater version, highlighting their collaboration with Seres in the automotive sector.
- Huawei's smart vehicle business model under HarmonyOS Intelligent Mobility has sold 272,000 vehicles by August 2024, with AITO accounting for over 90%.
- Seres saw a significant financial turnaround in the first half of 2024, with an operating revenue of RMB 65.04 billion and net profits, largely driven by new energy vehicle sales.
On September 10, Yu Chengdong, Chairman of Huawei Terminal Co., Ltd., unveiled a tri-fold smartphone and the AITO M9 five-seater vehicle at an event. The AITO brand, launched in late 2021 in partnership with Seres, serves as the cornerstone of Huawei's automotive business. Under Huawei's "Smart Selection" business model, Huawei leads in product definition, design, sales, and quality control, while the partner automotive companies act as contract manufacturers [para. 1].
In 2022, the AITO brand quickly gained traction, prompting Huawei to broaden its partnerships to include Chery Automobile, BAIC BluePark, and JAC Motors, among others [para. 2]. By November 2023, the Smart Selection model evolved into the Huawei HarmonyOS Intelligent Automotive Technology Ecosystem Alliance ("HarmonyOS Intelligent Mobility") [para. 3].
The AITO brand is pivotal to the success of HarmonyOS Intelligent Drive. From January to August 2024, HarmonyOS Intelligent Drive sold 272,000 vehicles, 90% of which were AITO models. Richard Yu aims to replicate this success across other "realms" [para. 4]. However, the initial releases under the Jie series faced challenges, including production delays and market underperformance, leading to managerial changes and a reevaluation of strategies [para. 5].
To steer the ship in the right direction, Yu Chengdong has been focusing on the newly launched Zhijie R7, aimed at competing with Tesla's Model Y. Despite the crowded market for electric vehicles in the 200,000 to 300,000 yuan price range, Huawei Terminal hopes that the R7 will better position them in the pure electric segment [para. 9][para. 10].
Huawei's automotive business operates under the Vehicle Business Unit (BU). The high-end smart electric vehicle brand Avatr is a significant strategic partner, investing 11.5 billion yuan in the new automotive BU company, Shenzhen Yinwang Intelligent Technology [para. 12][para. 18].
Seres, Huawei's initial partner in the automotive endeavor, has seen a dramatic turnaround, achieving a 489.6% year-on-year increase in operating revenue to 65.04 billion yuan in the first half of 2024. This success is attributed largely to increased sales of new energy vehicles, particularly from the Wenjie series under AITO [para. 22][para. 29].
The journey hasn't been smooth, but the success of the AITO M9 model has created a strong demonstration effect in the industry. By July 2024, the M9 led the luxury car segment priced above 500,000 yuan [para. 30][para. 31][para. 33]. Moreover, the close collaboration between Seres and Huawei has further validated the "Smart Selection" model, turning once-critical skeptics into believers in Huawei's capabilities [para. 40][para. 42].
The different cooperation models between Huawei and various automotive partners have introduced complexities. When working with Seres, collaboration was seamless, but challenges arose with Chery Automobile due to differing production standards and motivations [para. 44]. The inconsistencies between Huawei's quality controls and Chery's production capabilities led to delays and consumer dissatisfaction, prompting eventual personnel changes [para. 46][para. 48].
To mitigate these issues, Huawei reverted to its initial collaboration strategy and is building a dedicated factory for Zhijie, expected to begin operations in February 2024 [para. 51][para. 55]. Despite setbacks, the overarching goal remains to scale the HarmonyOS Intelligent Drive system, targeting a fleet size of one million vehicles equipped with AI by 2026, an ambitious plan given the crowded market and rapid technological advancements [para. 61][para. 71].
As the automotive BU prepares to operate independently, Huawei aims to streamline its multiple autonomously operating brands to ensure market competitiveness. Independent operation will also help in aligning strategic goals and fostering deeper partnerships [para. 88][para. 89][para. 90].
Overall, Huawei is poised to become a key player in the smart car industry, leveraging its existing technological prowess to outpace competitors like Tesla, and continually refine its strategies to navigate the challenging landscape [para. 91][para. 99].
- Huawei Device Co., Ltd.
华为终端有限公司 - Huawei Device Co., Ltd., under the leadership of Chairman Richard Yu, introduced a tri-fold screen smartphone and unveiled the five-seater AITO M9. The AITO brand, launched in late 2021 in collaboration with Seres, exemplifies Huawei's "Smart Selection" car business model, involving product definition, design, terminal sales, and quality control, with automakers serving as contract manufacturers for Huawei.
- Seres
赛力斯 - Seres, formerly known as Sokon, partnered with Huawei in 2021 to launch the AITO brand "Wenjie." The success of the Wenjie series, particularly the M7 and M9 models, helped Seres achieve significant revenue growth. In the first half of 2024, Seres reported revenues of 65.04 billion yuan and net profits of 1.625 billion yuan, marking a turnaround from previous losses.
- Chery Automobile
奇瑞汽车 - Chery Automobile partnered with Huawei under the "Intelligent Selection Car" (智选车) model and launched the first model, the S7, in November 2023. Production issues caused delays, resulting in consumer dissatisfaction. The S7's challenges highlighted differences in cooperation dynamics compared to Huawei's previous partner, Seres. Despite this, Chery continues to work with Huawei to develop and improve subsequent models.
- BAIC BluePark New Energy Technology Co., Ltd.
北汽蓝谷 - BAIC BluePark New Energy Technology Co., Ltd. (BAIC BluePark, 600733.SH) is a partner of Huawei in the automotive industry. Under the "HarmonyOS Intelligent Automotive Technology Ecosystem Alliance" (Hongmeng Zhixing), BAIC and Huawei jointly launched the Enjoy Series (享界). BAIC BluePark's Enjoy S9, however, faced lower-than-expected orders, impacting its stock prices.
- JAC Motors
江淮汽车 - JAC Motors (Jianghuai Automobile Co., Ltd) is one of the four car companies collaborating with Huawei under the "Intelligent Selection" (智选车) model. Known for its brand Zunjie (尊界), JAC integrates Huawei's full intelligent driving solutions and operations under the HarmonyOS Smart Car Alliance (鸿蒙智行). This partnership aims at leveraging Huawei's technological strengths to enhance JAC's vehicle offerings.
- Avatr
阿维塔 - Avatr is described as a high-end intelligent electric vehicle brand and a strategic partner of Huawei's smart automotive solutions unit (car BU). It invested 11.5 billion yuan in the new company Shenzhen Yinwang Intelligent Technology Co., also known as Yinwang. Avatr is a subsidiary of Changan Automobile.
- Changan Automobile
长安汽车 - Changan Automobile, a subsidiary of which is the high-end electric brand Avatr, is a strategic partner of Huawei's car BU. Changan invested 11.5 billion RMB in the new company "Yinwang" established by Huawei's car BU. Changan has also entered into deep cooperation with Huawei for future production of new vehicles.
- Dongfeng Motor Group Co., Ltd.
东风集团 - Dongfeng Motor Group Co., Ltd. has a high-end brand, Voyah, which will launch new vehicles equipped with Huawei's intelligent driving system. This collaboration is part of Huawei's broader strategy to enhance its presence in the automotive industry through its "Huawei Inside" initiative and its intelligent vehicle solutions.
- FAW Group Corporation
一汽集团 - The FAW Group Corporation's Hongqi brand will have new car models equipped with Huawei's intelligent driving system launched successively. FAW is one of the strategic partners of Huawei's car BU, contributing to the collaboration between Huawei and various automakers to integrate advanced automotive technologies.
- BYD
比亚迪 - BYD's Fangchengbao brand is mentioned as one of the brands that will feature new cars equipped with Huawei's intelligent driving system. This collaboration indicates BYD's integration of advanced technology from Huawei to enhance its vehicle offerings.
- XPeng Motors
小鹏汽车 - XPeng Motors' chairman, He Xiaopeng, stated that intense competition in China's automotive market will persist until at least 2026. He predicts that the number of mainstream car manufacturers in China will reduce to seven within ten years, and that selling 1 million AI-capable vehicles annually will be crucial for a car company's survival.
- Li Auto
理想汽车 - Li Auto's founder, Li Xiang, has publicly praised Huawei's competitiveness multiple times. On August 28, during Q2 earnings, he emphasized that HarmonyOS Mobility (鸿蒙智行) is their strongest competitor, and Li Auto will continue to learn from Huawei's R&D and business management systems.
- Shenzhen Yinwang Intelligent Technology Co., Ltd.
深圳引望智能技术有限公司 - Shenzhen Yinwang Intelligent Technology Co., Ltd., referred to as "Yinwang," is a new company established following the independence of Huawei's Intelligent Automotive Solutions (carBU) division. It is currently in a financing phase, with strategic investments from partners such as Avita and Seres, aiming to enhance its role in providing advanced intelligent automotive technologies.
- Tesla
特斯拉 - Tesla is recognized as the leader in intelligent driving and was the first to adopt a groundbreaking electronic and electrical architecture for cars. Its Full-Self Driving (FSD) system, now in its 12th version, showcases the potential for fully autonomous driving. Tesla's CEO Elon Musk has announced the upcoming launch of a Robotaxi on October 10, with FSD expected to debut in China in Q1 2025.
- End of 2021：
- AITO brand was launched jointly by Huawei Terminal and Seres.
- 2022：
- AITO model became an instant hit with the number of automakers partnering in the Smart Selection car initiative expanding to four.
- November 2023：
- The Smart Selection model was upgraded to the Huawei HarmonyOS Intelligent Automotive Technology Ecosystem Alliance.
- November 2023：
- Zhijie brand S7 was launched.
- April 2024：
- Huawei relaunched Zhijie S7.
- April 2024：
- AITO M9 began deliveries.
- August 6, 2024：
- Shangjie brand's new car, S9, was launched.
- August 25, 2024：
- Seres disclosed financial report showing a year-on-year increase of 489.6% in operating revenue for the first half of 2024.
- August 26, 2024：
- Yu Chengdong revealed the design of the Zhijie R7.
- August 27, 2024：
- He Xiaopeng shared his assessment of the domestic automotive industry's intense competition.
- September 10, 2024：
- Yu Chengdong unveiled a tri-fold smartphone and announced start of reservations for Zhijie R7.
- September 10, 2024：
- Yu Chengdong announced that AITO's M9 had received 130,000 orders over eight months.
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