How will Huawei survive the cold winter in the automotive industry?

"Make survival the most important guideline, shrink and shut down all marginal businesses, and pass the cold air to everyone." An internal letter from Ren Zhengfei set the tone for Huawei's development in the next few years.

In October 2020, Huawei made it clear in an internal document that it would not build cars. But at the end of the document there was a line of small print: "This document will take effect from the date of publication and will be valid for 3 years." Now, more than half of the 3-year period has passed, and an internal letter from Huawei has spread the chill to every corner.

1. The second day of the cold weather

“It’s comparable to BMW and Porsche!”

“No company in the world can install hundreds of thousands or millions of apps on mobile phones into cars!”

"The only drawback is that it's too cheap and not enough to reflect one's status!"

8月24日，在任正非“把寒气传递给每个人”的第二天，素以大嘴著称的华为常务董事、终端BG CEO、智能汽车解决方案事业群CEO余承东在问界M7的交付仪式上再一次冲在了营销第一线，金句频出。

"The best smart cockpit in the world, bar none." While praising his own Hongmeng cockpit, he also did not forget to criticize competitors, "Some car manufacturers use the Hongmeng operating system, but make their own human-machine interface. When I tried it, it was rubbish."

In the internal letter, Ren Zhengfei clearly stated that under the requirement of "pursuing profits and cash flow", the intelligent vehicle solution business, which had been invested heavily, "should reduce the research budget, strengthen commercial closed-loop R&D... focus on several key components to make competitiveness." Some people say that this represents the internal competition for the automobile route of Huawei, and the Huawei Smart Selection model represented by Yu Chengdong, which is light on investment and heavy on operation, won.

However, in the more than one year since announcing its goal of "helping enterprises build good cars", Huawei has launched five new cars in cooperation with Seres, BAIC and Changan Automobile, but the results have been different. The sales of the Alpha S HI version of the Polar Fox were dismal, the cancellation storm of the Avita 11 (parameters | inquiry), and the sales of the Seres SF5 (parameters | inquiry) were even worse and even had its logo removed, etc. Huawei, which shouts "helping enterprises build good cars", has a hard time achieving the "industry first" boasted by Yu Chengdong; it is even more difficult to achieve consumer recognition.

In the face of the cold wind, Huawei, which only wants to "survive", can it still rely on Yu Dazui's few "firsts" in the unfamiliar automotive industry?

2. Hitting a wall in the automotive industry

Looking at the cooperation between car companies and Huawei, there are mainly three modes: HI mode, Huawei smart selection mode and Tier 1 mode. Based on the above modes, Huawei has successively cooperated with Jinkang Seres, BAIC Arcfox, Changan Automobile and GAC Group. However, it seems that except for the M5 (parameters | inquiry) which barely passed, the other models are not very good.

· Avita 11: Cancellation controversy

In-depth cooperation with Huawei and CATL is an opportunity for Changan to elevate its brand. It allows Changan, which has never had experience in developing high-end models, to empower its brand through a strong alliance.

In the words of Wang Jun, COO of Huawei Intelligent Automotive Solutions BU, Avita 11 is a "high-end boutique model that the teams of both sides spent three years carefully polishing" based on the HI (HUAWEI Inside) model. With the support of the big guys, Avita 11 also lists a long list of armed configurations: CATL high-density ternary lithium battery, Huawei DriveOne dual-motor four-wheel drive system, smart cockpit developed based on HarmonyOS, Huawei AOS smart driving operating system, etc.

However, even with these "black technologies", Changan Automobile did not expect that after showing off its "muscles", it would soon be caught in a cancellation storm because car owners were dissatisfied with the rights and interests of the first batch of car owners formulated by Avita 11. The lack of sincerity in the rights and interests of the first batch of car owners, the long delivery cycle, the short warranty period for the whole vehicle and the three-electric system, the low cost performance, the UI design of the car machine is not high-end, and the "quality" is not high, which are the reasons for the dissatisfaction of most of the intended deposit users.

Despite the halo of Huawei, the Avita 11, which was born with a silver spoon in its mouth, failed to achieve success as soon as it was launched. This is obviously not an optimistic signal for Huawei.

· Alpha S HI Edition: A self-entertaining mascot

The reason why the Alpha S Huawei HI version has become a hot topic is because it is Huawei's first inside smart car. In order to build a good car, Huawei chose to cooperate deeply with some car companies, and used the "Huawei inside" method to support car companies in building their sub-brands, and designed a brand LOGO called "HI", which stands for HUAWEI Inside. However, not all cars that cooperate with Huawei can be marked with the HI LOGO. Only cars that use Huawei's autonomous driving solutions can be marked with the HI LOGO. Therefore, HUAWEI Inside is a car production model of in-depth cooperation between Huawei and automobile companies.

The Alpha S Huawei HI Edition is a high-end version of the Alpha S. It is equipped with Huawei's assisted driving hardware and can achieve high-level assisted driving functions in cities. It represents Huawei's achievements in the field of smart cars to a certain extent, and even represents the industry achievements in the field of smart driving to a certain extent.

However, even if the intelligence, battery life and even power are all online, the price is still high. The price of 400,000 yuan is not something that ordinary new energy users can easily accept. The sales data also truly reflects this point. According to the BAIC Blue Valley Production and Sales Express, the total sales of multiple models including the Polar Fox S, Polar Fox S HI, Polar Fox T, and Beijing EU series in July 2022 were only 3,640 units, which is a considerable gap compared with the leading new car-making forces.

· SERES SF5: Discontinued model

With its strong brand premium, Huawei has indeed attracted a number of domestic car companies to cooperate with it, and Xiaokang Shares is a representative example. When it comes to Xiaokang Shares, the car that impressed me the most is the Dongfeng Xiaokang produced in cooperation with Dongfeng Motor. Back then, with Wang Baoqiang's endorsement, it also brainwashed many people.

The Seres Huawei Smart SF5, a joint venture between Huawei and Xiaokang Shares, was unveiled at the 2021 Shanghai Auto Show. The two-wheel drive version is priced at 216,800 yuan, and the four-wheel drive version is priced at 246,800 yuan. The car can be ordered through both Seres and Huawei channels. Perhaps out of trust in Huawei, Seres SF5 was ordered for more than 6,000 units within a month. Such a result is absolutely amazing for a brand-new brand of electric vehicles.

It was thought that with the support of Huawei, Seres SF5 could compete with new car-making forces in the sales rankings, but sales have almost stopped. 8,169 vehicles were delivered in 2021, and only 40 vehicles were delivered in the first half of 2022. There is also a huge gap between this data and the current sales of tens of thousands of new car-making forces in China.

At the same time, what the owners of the SERES SF5 did not expect was that the model they bought might be the last generation of the out-of-print model. Because many owners paid the deposit but have not received the car yet, the brand was given to the company's new brand AITO, and Xiaokang Shares also focused on the Wenjie M5.

· Ask M5: What does it mean to scratch my car logo?

Next, let's talk about the out-of-print SF5 model. In December 2021, Huawei and SERES jointly launched a new brand AITO. The first model, the AITO M5, is equipped with Huawei's Hongmeng OS smart cockpit for the first time. The entire design process is led by Huawei. Huawei is deeply involved in every link, from product design, quality control, marketing to store sales.

If we have to pick a candidate, the M5 is barely qualified. The M5, which has soared in "Chinese content", has received more than 150,000 orders in the first five months after its launch. However, after the monthly sales exceeded 7,000 in June this year, the sales in July did not exceed 10,000 as expected, but remained basically the same as in June. As of July 31, the cumulative delivery of this car was 26,000. Yu Chengdong, who once boasted that he would "beat Tesla in one year", admitted that the goal of selling 300,000 M5 vehicles a year is no longer possible.

In terms of the degree of involvement, this is the car in which Huawei has the deepest involvement, so it is regarded as Huawei's "favorite son" by the car circle, and the only thing missing is to put a Huawei logo on the car. However, the majority of consumers did not disappoint Huawei. Many car owners removed the SERES logo on the rear of the car and replaced it with the Huawei logo, so that the Huawei logo has been selling well on Taobao recently. For the topic of removing logos, please refer to: "From "face" to "recognition" the story behind removing logos".

3. It is difficult to keep things even

As mentioned at the beginning, the areas of cooperation between automobile companies and Huawei are currently mainly divided into three modes: HI mode, smart selection mode and Tier 1 mode.

The HI model is a full-stack solution for smart cars. Car companies provide vehicle design and manufacturing, and Huawei is responsible for providing intelligent solutions. Car companies use Hongmeng OS car machine operating system and car-grade Kirin chips, and the front-end UI that directly interacts with users is designed by the car companies themselves. In other words, the car company's shell is Huawei's soul. Such as Avita, Polar Fox, etc.