Traditional car companies want to do a good job in self-development of automatic driving, almost only two ways to choose: the first way, the automatic driving team independent, so that they can get the same degree of freedom and marketization as the new car-making forces; the second way, the acquisition of a mature automatic driving research and development team.
Because the organizational structure and corporate culture of traditional car companies based on supplier integration fundamentally determine that it is difficult for them to transform like the new forces of car manufacturing, especially for European car companies that have strong internal roots.
For example, Mercedes-Benz and Jaguar Land Rover have chosen Nvidia's "turnkey" autonomous driving solution supply, but compared with the previous full closure of Mobileye, NVIDIA has at least opened up data center training, testing, verification and source code modification.
However, whether it is Mercedes-Benz or Jaguar Land Rover, the high brand value determines that they do not need to invest heavily in the self-development of autonomous driving, and they need to invest more resources in places where the brand value perception is stronger.
But for Volkswagen, which is dominated by mainstream models, his sense of crisis, or more directly, herbert Dies's sense of crisis, is much stronger than that of several luxury brands. What's more, this is a giant with nearly 40% sales in the Chinese market, and it must go head-to-head with the players who have done the best job in the Chinese market and the global new energy + intelligent transformation.
Therefore, Volkswagen must develop its own autonomous driving, and must raise the software to a very high status. Moreover, the stubborn Germans have proved that the first way is not feasible, and the only way to go is the second way - acquisition.
The subject of this acquisition may be Huawei's autonomous driving department.
Emotionally speaking, it is difficult for public opinion to accept that the autonomous driving department will leave Huawei in this way, but from a business point of view, Huawei does have a reason to sell the automatic driving department. Behind the rumors of this potential deal, it may be another change in Huawei's positioning of the automotive business.
Huawei's intelligent driving worries are not just "soul theory"
Many underestimate the impact of U.S. sanctions on Huawei.
Americans are not stupid, and who they sanction, how they sanction, and the effect of sanctions are far from being as understated in some "boiling" remarks.
Huawei has three major businesses - carrier business, enterprise business and consumer business, of which consumer business is the absolute "cash cow", and Huawei's most determined "car-making faction" Yu Chengdong is the head of the consumer business, and also huawei in the United States for four consecutive rounds of sanctions, mobile phone sales directly from the world's second (2020 second quarter or even to the world's first) after the most want to switch tracks, as soon as possible to complete the revenue supplement of the person.
But at the top of Huawei, building cars is something that is "resolutely not allowed." This is not allowed, which is reflected in the fact that Huawei will neither launch its own brand cars, nor will it invest in car companies in any form. Huawei's smart car solution BU (referred to as car BU) has always been to play the role of "incremental component supplier", that is, almost all the components of a smart electric vehicle except the mechanical layer, Huawei can be provided as a Tier1 supplier. One of the most critical is undoubtedly intelligent driving.
Huawei has a strong vertical integration of software and hardware, and also has a high starting point for the research and development of information and communication technology, which is Huawei's innate advantage in intelligent driving. However, since the exposure of the "amazing" automatic driving test video of the Polar Fox Alpha S Hi version last year, Huawei's progress in the field of intelligent driving in the past year seems to be always thunderous and rainy, and the only prototype at present, the Polar Fox Alpha S Hi Version, has been repeatedly delayed.
The car companies' concerns about Huawei's intelligent driving supply are not only the so-called "soul theory", because no matter any other intelligent driving Tier1 supplier, it will face the same problem. There are two other core problems that car companies do not say:
First, Huawei's current potential risk of sanctions. You never know how much inventory Huawei has in the core chips used in the intelligent driving computing platform under the current unreasonable sanctions of the United States, and whether it will be cut off because of sanctions in the future, just like you never know how much Kirin 9000 Huawei still has to use after four consecutive rounds of sanctions from the United States.
Second, there is no data without loading, and there is no loading without data. This is a dead cycle, and Huawei car BU close cooperation of the three, the Polar Fox Alpha S last year sold 2,112 vehicles, while Huawei's deeply involved in the delivery of the Hi version has been delayed, the other two product landing is still some time away, so Huawei's actual road conditions under the trainable data source, far less than other intelligent driving Tier1 and head car-making new forces.
Therefore, perhaps in several rounds of development evaluation, Huawei has gradually realized that intelligent driving is a long-term, high-investment industry that needs to have a continuous rolling scale to continuously iteratively upgrade. Until then, smart driving had to be sustained by burning money.
A blueprint for the future, or a pragmatic immediate one?
Just last week, a video of Yu Chengdong's internal speech with a very high "mother's content" was exposed, causing a commotion in public opinion. Personal style aside, this speech revealed a lot of information, including Huawei's internal "entanglement" in car building.
According to Yu Chengdong, there are more than 5,000 People in Huawei's CAR BU, which costs $1 billion a year. Under such a huge investment, there has been no decent large-scale product volume so far, and high-end automatic driving is a futures that is difficult to make substantial profits in the short and medium term. For Huawei, which has no stock market financing and its cash flow is all supported by its own business, this is a big burden. In Huawei's recent financial report, the decline in revenue fully illustrates this point - Huawei needs cash flow.
In 2021, Huawei expects revenue to be 634 billion yuan, down 29% from 891.4 billion yuan in 2020, of which the consumer business, which accounts for 54% of revenue in 2020, is undoubtedly the biggest impact. In the first half of 2021, the share of revenue from the consumer business has fallen to 42%, even lower than that of the operator business.
The jurisdiction of the car BU was transferred from the ICT infrastructure business to the consumer business under the jurisdiction of Yu Chengdong in November 2020, and Yu Chengdong was also the director of the IRB (Investment Review Committee) of intelligent terminals and smart car components and the CEO of the car BU, which means that Yu Chengdong has the right to decide on the resource investment required for the automotive business.
Since automatic driving is still far away, the short-term and medium-term investment is too large, so Yu Chengdong chose the most pragmatic road - entering the car to build and sell cars. Even if there is no "Huawei brand" car in the short term, nor can it be invested in car companies, Yu Chengdong "helps" car companies to do a good job in the design and experience of cars through the way of curve to save the country, and then uses thousands of Huawei channels to "help" car companies sell cars well.
If you say that the previous Xilis SF5, Huawei is still slightly hidden, to the M5, Huawei has made no secret of its investment in this model. From pre-planning, product design to post-marketing, sales, Huawei are deeply involved in or even dominant, Huawei consumer business department of the industrial design team, software team, user experience team, are involved in the development of this model, the release of the model is not like the Cyrus SF5 by Huawei and Jinkang Cyrus two open once, but there is only one "Huawei Winter New Product Launch".
To tell the truth, on the M5 of the Q&A, KinconCelix has almost written the three words "foundry" on his face.
Yu Chengdong's goal is also very simple, to develop a model labeled by Huawei in the shortest possible time, and then use Huawei's brand power and channel power to sell. The Huawei label of the two models is mainly reflected in the electric drive and intelligent cockpit, but there is no intelligent driving of the car BU.
Previously, HiCar in-vehicle systems, on-board smart screens and other businesses belonged to the consumer department that Yu Chengdong was responsible for, compared with the intelligent driving responsible for the car BU, Yu Chengdong's management and resource coordination of the intelligent cockpit were more direct, not to mention that the current possibility of the realization of the intelligent cockpit was much higher than that of automatic driving.
It is not difficult to explain that whether it is the Cyris SF5 or the Q&I M5, there is no shadow of Huawei intelligent driving on the two models with more Huawei involvement, and Huawei intelligent driving only appears on three models with HI brands. In essence, this is the externalization result of the different leading organizations within Huawei, and it is also the inevitable result of Yu Chengdong's short-term scale requirements.
However, Kincon Cyrus sold 7,954 vehicles for the whole year last year, and the Q&I M5, which went on sale at the end of the year, sold 373 units, of which 363 were sold in December. No matter how it is calculated, there is still a dimensional gap between Yu Chengdong's "annual sales of 300,000 vehicles for both models".
If you do a simple arithmetic problem: Huawei has about 5,000 stores nationwide, and the annual sales target of two models is 300,000 vehicles, then the annual sales of a single store and a single model are 30 vehicles, and the average is less than 3 vehicles per month. But obviously selling a car is not something that can be done well with paper and pencil. The pragmatic current Xilis has not gone, and the mobile phone business cannot return to normal within a few years, so Huawei must consider a more pragmatic issue - money.
Emulate glory and survive with a broken arm?
If Huawei wants to sell the intelligent driving division today, it is actually the same thinking as the overall sale of Honor in November 2020.
When Huawei itself cannot continue the normal operation of the mobile phone business because of chip supply, the sub-brand Glory is sold as a whole to strip away the connection with Huawei, which can not only ensure the stable operation of the downstream industrial chain such as the Glory brand and its related dealers and agents, but also harvest a cash flow calculated in hundreds of billions of yuan.
The same is true of the now rumored sale of the smart driving division. Autonomous driving for the time being there is no profitable business scenario, Huawei will not plan to burn money to build a car in the short term, in the case of revenue decline, cash flow tight, with this "sunrise department" in exchange for a considerable cash flow, into the more urgently needed business, may be Huawei's current consideration.
Moreover, since the middle of last year, Huawei's car BU has lost several senior executives, including Chen Qi, founder of the autonomous driving team, Jiang Jun, head of maps and data, Zhang Xiaohong, director of the intelligent driving product group, Peng Xueming, head of the fusion sensing department, and Su Jing, director of the intelligent driving product department. When Huawei has constantly made new assessments of whether to build cars or not, as time goes by and the development of the situation, it is inevitable that the team will be lost due to disagreements.
Therefore, if Huawei chooses to sell the intelligent driving division as a whole, if the new shareholders have clear goals and continuous investment, it will undoubtedly be beneficial to the stability of the team. After referring to the glory independence, honor CEO Zhao Ming even appeared at the Qualcomm new product conference, Huawei's intelligent driving team after the sale, can also be exempt from the restrictions of US sanctions, based on Nvidia, Qualcomm and other autonomous driving platforms for software development, with the team's ability, they are also fully likely to continue to remain in the forefront of the industry.
The potential buyers, at present, the most needed is undoubtedly this software capability. Especially in China, its largest single market, it is not only the most competitive market for smart electric vehicles, but also a market that pays more and more attention to data security and data localization protection. If you can't have a strong localization software research and development team in China, Volkswagen will most likely face the situation of boiling frogs in warm water, and the share of Volkswagen brands in China will fall from 13.25% to 11.41% in 2021, which is already a signal that is not optimistic.
For Huawei, perhaps it is a pity to abandon the intelligent driving department at present. But in the long run, with a lot of cash flow into more basic and urgent areas, as long as the company's roots, culture, talent mechanism is in, even if Huawei still wants to invest in the field of intelligent driving in the future, the return of personnel and the reengineering of the team are completely possible.
Therefore, joining Huawei and Volkswagen finally reached a deal on the intelligent driving part, which is essentially a business behavior that considers short-term and medium-term cash flow and medium- and long-term business development logic.
Write at the end
Huawei is very strong, strong in the basic field and core capabilities, and the unreasonable sanctions imposed by the United States on Huawei just prove this. But Huawei is not a god, especially when Huawei is not like those new car-making forces, in the stock market with endless money, Huawei must consider how to survive in a complex and turbulent environment, in the uncertainty brought by geopolitics, both to survive, get rid of the card neck, but also to maintain the advantage in the basic field and core capabilities.
Starting in 2019, Huawei entered the automotive industry as a supplier of incremental components for smart cars, which is actually a mapping of basic capabilities in the automotive industry. Now that Huawei is facing difficulties, his judgment of the future and the judgment of business priorities will also lead to a series of investment, sale, joint venture, cooperation and other actions. Not to over-interpret and not let public opinion traffic become a double-edged sword on Huawei's development path is the greatest support for this Chinese company.