Huawei Not to Build Cars in 10 Years: Huawei Chair | Tipost Focus

photo source: Visual China

Huawei’s car-building dispute has been resolved for the time being.

On March 31, at the press conference on Huawei’s 2022 annual report, Xu Zhijun, Huawei’s Rotating Chairman, once again stressed that Huawei would not build cars, but would continue to adhere to the strategy of “helping enterprises build good cars.” He pointed out that this is an internal resolution issued by Ren Zhengfei, the founder of Huawei, with a validity period of five years. The reason for reiterating that no car will be built within five years is that the longest validity period of Huawei’s internal documents is five years. “In fact, Huawei will not build cars in ten years, and Huawei’s auto strategy will not be changed frequently,” Xu stressed.

Huawei decided not to build cars for three years in the same way in 2020. This time it is equivalent to an extension of the previous commitment and will extend the validity period to 5 years. This highlights Huawei’s resolve to be a good supplier of auto parts. It is also a reminder to Huawei insiders, because of the recent “HUAWEI AITO” logo incident, the outside world thinks Huawei is only one step away from building cars.

The outside world also thought that the sudden appearance of the “HUAWEI ” logo was the result of Huawei’s internal unity. But in fact it is not.

Xu pointed out in the press conference: “Huawei is investigating the abuse of the Huawei brand by some departments, individuals or partners. Huawei has built the brand for 30 years and the brand will not be abused by anyone. Huawei does not build cars or create any brand of cars. Huawei as a car brand is strictly prohibited. Promotional materials using the Huawei brand will be rectified. Huawei will return to the strategy of not building cars.”

Although he did not criticize by name, everyone with a discerning eye knew who he was talking about. At 8 p.m. after the conference, Yu Chengdong, CEO of Huawei Terminal BG and CEO of Smart Car Solutions BU, left a message in the Huawei Voice Community saying, “For an industry, only with a deep insight and deep understanding, can we choose the right direction! Mark it and revisit it in a few years!”  This seems to show how reluctant he was.  

Below this post is comments supporting Yu. One message reads: “No matter whether it is right or wrong to build a car, you should not diss Yu twice in the face of the world at today’s financial report conference, and your words are harsh.” In the view of the industry, this is a stinging rebuke to Yu.

screenshots from Huawei Voice Community

The “HUAWEI AITO” logo incident is also equivalent to putting the current situation of Huawei’s internal treatment of automobile business models with different camps in the public eye.

“HUAWEI AITO” Can’t Stop Sales From Falling

On the March 8 International Women’s Day this year, which emphasizes consumption, Huawei terminals and AITO cars all used the words “HUAWEI Ask the World” in the publicity copy of each publicity platform, replacing the previous “AITO Ask the World”. Subsequently, posters with the words “HUAWEI AITO” appeared on billboards such as Huawei’s offline stores, airports and high-speed railway stations.

Up to now, Huawei terminals and AITO cars have not been removed from their publicity copies involving the words “HUAWEI AITO” on their WeChat corporate account and other platforms. However, according to Tipost, Huawei stores will begin to remove all promotional materials containing the world “Huawei” on April 1. Huawei also said that “the decision was personally issued by Yu Chengdong, the CEO of Auto BU”.

Although the “HUAWEI AITO” logo incident finally ended up with Yu personally issuing a decision to obliterate it, the incident still reflects that Huawei’s current two most important automobile business models-HI mode and smart car selection mode-are still in the exploratory stage.

Shot: Titanium Media App

There is no need to elaborate too much on the HI model. Since the first car model using this business model, Polar Fox Alpha S HI, was released at the Shanghai Auto Show in April 2021, with the dismal market results over the past year, it has basically declared that the first show of the HI model ended in failure. At present, the prospect of HI mode is still supported by the second model Avita 11, but its person-in-charge, COO Wang Jun, BU department of Huawei’s smart car solution, was rumored to be suspended internally at the beginning of the year, which makes the prospect of HI mode uncertain.

However, the second mode, the smart car selection mode, has also encountered problems. After the sales peak in 2022, the brands that adopt this model not only failed to continue to grow after entering 2023, but also fell into a vicious circle of decline. In January, the sales volume of inquiry circles was 4475, down 55.88 percent from the previous month. In February, the sales volume of inquiry circles further dropped by 21.86 to 3535 vehicles month on month. According to the data of the insurance volume, the sales volume of inquiry circles in the fourth week of March was only 676, which indicates that its market performance in March is not optimistic.

In fact, in view of the sluggish sales volume, many methods have been tried. The first is to start the price reduction after 2023, with the highest price reduction for bicycles reaching 30000 yuan. But sales in January and February showed that price-for-volume didn’t work.

The sudden appearance of the “HUAWEI AITO” logo is the second way to ask the world to restore sales, trying to attract users to place orders in the store by increasing the “Chinese content” at the publicity level. But sales in March suggest that approach may still be useless.

The poor start of the HI model and the high growth of the smart car model have been interrupted, making Huawei’s internal treatment of the automotive business model route dispute once again highlighted. This is why there are rumors that Wang Jun was suspended internally at the beginning of the year, and now Yu Chengdong is in an embarrassing situation of being publicly beaten in the face. Wang Jun is the main leader of HI mode, while Yu Chengdong is the main person in charge of Zhixuan car mode. Huawei is trying to keep the auto business going according to the established strategy through the balancing technique of “each playing a big board”-continuing to promise not to build cars, while no one is pleasing to the eye in HI mode and intelligent car selection mode.

However, after this series of farce that the public knows or does not know, Huawei’s automotive strategic rhythm is bound to be affected. Although Huawei once again reiterated that it will not build cars and will extend the validity period to five years, it is trying to unify its internal thinking. But external partners have begun to worry, and some have responded.

With AION Doing R&D on Its Own and Seres Unveiling New Brands, Automakers’ Cooperation With Huawei May Change 

GAC Group was the first to announce there may be changes in its cooperation with Huawei.

On March 27, GAC Group announced that the AH8 project of GAC, a subsidiary of GAC, was changed from joint development with Huawei to independent development, but stressed that Huawei would continue to participate in the development of the company’s own brand models as an important supplier after the change. This means that among the only three friends in Huawei’s HI model circle of friends, there is one heavyweight friend gone, and the two remaining are BAIC and Changan.

However, at present, the cooperation mode between BAIC and Chang ‘an and Huawei has a trend of switching to the smart car selection mode. It has been revealed that BAIC and Huawei will adopt the smart car selection mode in the next stage of cooperation. The two companies will jointly develop a new car and will not adopt the Polar Fox brand. The first new car is expected to roll out in 2024. Avita 11, which adopts HI mode, not long ago, it was also announced that it would enter 20 Huawei brick-and-mortar stores for sales in the first half of this year. Using the Huawei channel is the biggest difference between the intelligent car selection model and the HI model.

Therefore, Tipost App previously analyzed that Huawei may hope that GAC Group can also learn from BAIC and Chang ‘an and adopt the cooperation mode of intelligent car selection, given the unfavorable start of HI mode. GAC Group insiders also told Titanium Media App: “We did discuss the cooperation mode of smart car selection with Huawei before.”

The insider said that the core reason for the variables in the cooperation is that “GAC AION’s current development potential is booming, with sales in 2022 ranking the first among new forces. And last year the company released a new high-end brand — Hpyer — and there is no need to release a new brand”.

He also said that at present, GAC has a team of more than 1000 people doing research and development of automatic driving. “Relying on our own research and development, our automatic driving is originally a platform product, so just add a car application.”

It can be seen that for GAC EAN, which emphasizes self-research, they do not want Huawei to get involved too deeply. After all, Chen Hong, the chairman of SAIC Group, has long issued a warning: “to control the soul in their own hands.”

After GAC Group, Huawei’s first partner in the smart car selection model, and Selis Group, which is also the most deeply bound to Huawei, released another new energy car brand, Blue Power, in a low profile on March 30, and on the same day launched the first new car Blue Power E5, which costs between 13.99 and 151900 yuan. The “Chinese content” of the car is quite low. Only the cockpit part uses the HUAWEI HiCar3.0 car machine that can be seen on other brand models, but the power part uses BYD’s Fodi power hybrid system.

photo source: Blue Power

Insiders of the Seres Group also told Tipost App: “Blue Power brand and AITO brand are not directly related, they belong to different subsidiaries.” It is understood that the Blue Power brand is operated by Dongfeng Fengguang Sales Co., Ltd. and will build an independent sales channel, while the AITO brand belongs to Seres Automobile Sales Co., Ltd.

However, the advent of the Blue Power brand is still considered to be the layout action of “both Huawei and autonomy. Because of Huawei in the past two years, although the sales of Selis have increased, the brand awareness has not improved much, and the operating level is getting worse and worse. What’s more, it has been put on the hat of Huawei foundry.

With the release of the Blue Power brand, Selis seems to emphasize that as a serious car manufacturer with a history of nearly 20 years, it also has the ability to operate its own brand and sell cars independently, rather than who is the foundry.

It can be seen that whether it is HI mode or smart car selection mode, their essence is to emphasize cooperation. But a general truth that we all understand is that the premise that cooperation can be promoted must be that the cooperation can meet the respective interests of both parties at a certain time. However, with the progress of time and environmental changes, when the interests of the two sides conflict, even if it is a small crack, this cooperation will face the crisis of parting ways.

Therefore, it is very important to find one’s own position in cooperation, and to understand which red lines cannot be crossed. Just as Bosch has always adhered to its first-tier supplier positioning, it has never touched areas that do not match its own positioning. As for the grasp of its own positioning in cooperation, Huawei is obviously still in a difficult stage of exploration.

Although Huawei once again reiterated that it will not build cars, it does not mean that it has determined its true position in the complex automotive industry chain.

(This article is first published by Tipost App, author | Wang Ruihao, editor | Zhang Min)

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