Huawei does not build cars, who is the biggest winner?

Wen 丨 Bao Shuai Editor 丨 Du Hai

Source 丨Zhengjingshe(ID:zhengjingshe)

At the beginning of 2022, the first batch of "Huawei car owners" did not have a good time. The Xilis SF5 jointly launched by Huawei and Xiaokang has suspended sales in offline stores.

The outside world has questioned whether the SF5, which has only been on the market for 8 months, is going to stop production? The first car owners were "cut leeks"?

Although the official quickly came out to debunk the rumors, it still did not dispel the doubts of the outside world.

In addition to worrying for car owners, it is also because SF5 is the first electric vehicle promoted by China.

In the past three years, although Huawei has stressed that "I don't build cars" a total of 8 times, the "circle of friends" of cooperative car manufacturing has become larger and larger.

In addition to Xiaokang shares, cooperation with Changan Automobile, SAIC Motor, BAIC New Energy, GAC Group, BYD and other car companies has also been frequently reported.

So, what is the cooperation between Huawei and car companies? Why didn't he build cars but "go deep" into the automotive industry?

In fact, Huawei's layout of the automotive field can be traced back to more than a decade ago.

In 2012, Huawei established the IoV Lab, and a year later, in 2013, it released the on-board module ME99T, officially entering the IoV.

From 2014 to 2015, Huawei signed cooperation agreements with Dongfeng Motor, Changan Automobile, and China FAW on the Internet of Vehicles and Intelligent Vehicles, and received orders for Audi and Mercedes-Benz communication modules.

Since 2017, in addition to cooperation with car companies in the field of internet of vehicles, Huawei has begun to cooperate with BAIC BJEV to formally lay out the field of new energy vehicles.

After three years of exploration, in 2020, Huawei has released and upgraded a number of software and hardware products such as the MDC Intelligent Driving Computing Platform and HI intelligent vehicle solutions, and has also cooperated with Changan Automobile and CATL to create a high-end intelligent car brand.

The technical results must be implemented on the whole vehicle to be more meaningful, otherwise it is all empty talk. 2021 is the year when Huawei's car circle landed.

1

Mixed feelings

However, in 2021, the pursuit of landing vehicles, for Huawei and the partners of the car circle, the heart must be mixed.

This mixed feeling is also fully reflected in the stock price of the secondary market.

Take Xiaokang shares as an example. This is a manufacturing car company integrating R&D, manufacturing, sales and service of vehicles and parts, and reached a cooperation with Huawei in early 2021, and launched a new energy vehicle with Huawei in depth cooperation with Huawei in April - Xilis SF5.

SF5, an electric vehicle product that is not "fresh", has entered the Huawei online mall and some offline showrooms with the image of "Huawei Smart Choice", and has become the first electric vehicle product that Huawei's official channels help sell.

Driven by Huawei's huge influence and topicality, Xilisi successfully "broke the circle", and while traffic and popularity rose sharply, the stock price also rushed all the way.

In April alone, Xiaokang's stock price rose from a low of 22.5 yuan to 48.46 yuan, an increase of 108%.

In the following two months, the news of the sharp increase in SF5 orders was full of news, and the stock price was even more "oblivious", and finally in June, it reached the highest price of 83.83 yuan in 2021, up 548% from the lowest price of 12.93 yuan at the beginning of the year.

The secondary market is crazy. However, reason after passion is not absent after all.

Although the publicity of the Cyris SF5 is overwhelming, and Huawei boss Yu Chengdong personally stands, it is still difficult to hide the embarrassing sales.

In the first month of listing, the Xilix SF5 sold only 13 units, with the peak of 2205 units in a month. According to the statistics of industry organizations such as the Association of Passenger Vehicles, in the past six months, the monthly sales of Xilisi have remained at a three-digit ultra-low level.

In the context of less than expected sales, the stock price began to fluctuate, and in the ups and downs of trading, the market was looking for a new time to break out.

Unfortunately, the final "outburst" gave investors and consumers a "head-on blow".

At the end of December 2021, Xiaokang co., Ltd. and Huawei's second car, the Inquisitive M5, were officially unveiled and positioned as a technology luxury intelligent electric drive SUV.

Interestingly, the lively new car launch did not bring excitement to the market, and on the day of the conference, Xiaokang's stock price fell by 7.8%.

Subsequently, Xiaokang announced that the store would suspend the acceptance of the pre-ordered Xilix SF5 to fully guarantee the listing of the new car.

The rumors of "SF5 production in disguise" sensationalized the market, and consumers instantly felt like they had been "cut leeks". A new car, from release to "falling out of favor", is only 8 months.

Although Xiaokang shares have repeatedly come forward to explain, investors who voted with real money and silver do not seem to buy it, and in just half a month, the stock price fell from 70 yuan to near 48 yuan, a decline of more than 30%, and there is no sign of stopping the fall.

The same scene, the same technique, the same Yu Chengdong platform, in just 8 months, SF5 from the "stars arch moon", instantly to "eclipsed", became "the child raised by the harem".

And the capital market and consumers, I am afraid it is difficult to be "impressed" anymore.

Whether the SF5 product failed or whether it was a short-lived transition, we don't know.

Looking back on the past year, analysts from Zhengjingshe believe that Xiaokang shares have been supported by Huawei's soft and hard technology and sales channels, rubbing Huawei's traffic, walking from the "horns" to the middle of the market, enjoying a brief rise in stock prices, and finally "falling down", the total sales volume is not only unsatisfactory, but also triggers dissatisfaction and disappointment among customers and investors.

02

It's hard to tell

As one of the car companies with in-depth cooperation with Huawei, the experience of Xiaokang shares seems to be very "oolong". However, behind this seemingly "oolong", it also reflects the "inseparable" between Huawei and cooperative car companies.

There are many partners in Huawei's industrial chain, and the whole can be divided into two categories, one is vehicle cooperation, and the other is parts cooperation.

We focus on companies that cooperate with vehicles. There are two modes of vehicle cooperation: one is to use Huawei's Inside full-stack solution, and the other is to use MDC's intelligent driving computing platform.

The so-called Huawei Insider full-stack solution is that Huawei provides intelligent driving full-stack solutions such as intelligent driving application software, computing platforms, and sensors. The implication is, "You car companies can do a good job of traditional hardware work, and I Huawei will do all the software and hardware services related to intelligence for you." ”

The so-called MDC intelligent driving computing platform is that Huawei provides hardware based on Ascend SoC, autopilot operating system AOS and vehicle control operating system VOS, as well as AutoSAR middleware to support car companies to develop intelligent driving software. It can be understood as, "I Huawei is responsible for giving each of you a 'laptop', and you can do the rest of the work yourself." ”

Behind these two cooperation programs, in fact, there is only a difference in the degree of cooperation. Compared with Huawei, the IoV technology, experience, products, and solutions accumulated in the past decade of research can be increased and monetized through cooperation with car companies.

For traditional car companies, through cooperation with Huawei, it is possible to reduce the investment in research and development funds and time, as if it can absorb Huawei's ten years of "internal strength" in an instant, so that the "martial arts skills" of car companies can be instantly enhanced.

However, behind the seeming "combination of pearls" and inseparable, it does not mean perfection. Chen Hong, chairman of SAIC Motor, made it clear that he would not cooperate with third-party companies such as Huawei to drive autonomous driving.

Why?

Analysts from "Zhengjing Society" believe that electric vehicles are different from traditional fuel vehicles, and the core of electric vehicles has three: batteries, electronic control systems, and chips. None of these three are the advantages of traditional car companies, so new players like Xiaopeng, Weilai, and Ideal dare to enter the market.

In Huawei's cooperation plan, the electronic control system and chip are basically included, although for the cooperative enterprises, it is indeed much easier, but behind this ease, in fact, the loss of core competitiveness.

In the words of Chairman Chen Hong, once it cooperates with Huawei, it means that the company has become a soulless "body". In the future, in the competition of new energy vehicles, these car companies are more likely to lose their independent competitive advantages.

Analysts from "Zhengjing Society" noted that in the face of consumers and investors' doubts, Huawei is constantly promising not to build cars, and Xiaokang shares are also desperately clarifying that they are not "foundries".

03

There are other hidden secrets

Many people will wonder, why doesn't Huawei build cars? Behind Huawei's non-construction of cars, what does it really want?

As mentioned above, Huawei has been establishing the Internet of Vehicles Lab for more than a decade since today. Since there are more than ten years of precipitation and accumulation, is it not more profitable to directly build cars?

Analysts from the "Serious Society" believe that this problem can be considered from the following perspectives.

First of all, from the perspective of the industrial chain, the chain of the automobile industry is both long and complex. The first is the manufacture of parts, technology research and development, product design, vehicle assembly, channel sales, post-service and maintenance. For Huawei, it is difficult to improve the probability of successful car manufacturing due to pure technical advantages.

Second, from a financial point of view, direct car manufacturing is not a high-profit business. Although the unit price of a car is high, the gross profit margin of the car is very low, for example: the gross profit margin of passenger cars in the second quarter of 2021 of GAC Group is only 3.73%, and the gross profit margin of SAIC's vehicle business is 6.57%, not to mention new energy vehicles.

Finally, from Huawei's own point of view, directly building cars is not something that must be done. When Huawei made mobile phones, a large part of the reason was a lack of money. In 2003, Huawei's advanced communication technology could not be applied to existing mobile phone products, and the financial deficit caused by research and development could not be compensated, and finally had to go down to make mobile phones himself. But there is no shortage of money now, and the cooperation with car companies is very good.

Therefore, Huawei's choice not to build cars is actually to increase a stable monetization channel, without having to sell products hard, you can close your eyes and make money, like Microsoft's Bill Gates.

At this point, we may wish to continue to go deeper, since Huawei does not build cars, why do we have to lay out new energy vehicles in a high-profile manner?

Before answering this question, you may wish to pay attention to several of huawei's main businesses.

The first is communication-related business. Huawei's 5G technology is the most advanced in the world, which makes it difficult for many American companies to match it. However, as we all know, Huawei's 5G business is greatly affected by the trade environment, and it is difficult for communication technology-related services to bring growth to Huawei in the short term.

The second is the mobile phone business. Huawei mobile phones have formed a perception among C-end consumers since 2017, although in recent years, the domestic market has gained a large market share, but overall, the mobile phone market has become a stock market, and it is difficult to have a big breakthrough in the short term.

The third is HUAWEI CLOUD. HUAWEI CLOUD is a "dark horse" in the cloud computing industry, although Huawei's entry time is short, but the growth rate is very fast, relying on strong capital, rich customer resources and mature sales system, in just three years, the domestic market share has reached a fairly high level, ranking second, surpassing Tencent Cloud.

In addition to these three businesses, Huawei's other business performance is not impressive. Therefore, Huawei urgently needs to find the next business that can grow rapidly before the growth of HUAWEI CLOUD is completely over.

Therefore, new energy vehicles are placed on high hopes. On the one hand, new energy vehicles are the future development direction, especially under the requirements of the double carbon target, and there is a lot of room for growth in this track. On the other hand, C-end users connected by new energy vehicles can use the car system and Huawei mobile phones to connect with each other, forming Huawei's unique ecosystem for the C-end and paving the way for the Internet of Things.

Overall, analysts from Zhengjing Society believe that Huawei does not personally build cars, but vigorously lays out the automotive industry, the fundamental reason is to solve the "long-term worries" of business growth, and to realize technology realization without taking major risks. 【Produced by "Zhengjing Society"】

Editor-in-charge | Tang Weiping| Du Hai Proofreader | Ranran

Disclaimer: The views expressed herein are for reference only and should not be used as investment advice. Investment is risky, and you need to be cautious when entering the market

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