Yu Chengdong stepped down as CEO of the terminal, Huawei's automotive business was adjusted, and a new layout will emerge?
Recently, Huawei released an internal personnel adjustment document, announcing that Yu Chengdong will step down as CEO of Huawei Device BG and remain Chairman of the Device BG. He Gang, former COO of Huawei's Device BG, took over as CEO of Huawei Device BG. This adjustment was interpreted by the outside world as Yu Chengdong will devote more energy to the automobile business. It is believed that this appointment is similar to the adjustment of Huawei's car BU in September last year, when Yu Chengdong stepped down as CEO of the car BU and became the chairman of the intelligent vehicle solution BU.
Yu's change in role at Huawei reflects the importance the company attaches to him. Since joining Huawei in 1993, he has served as Director of 3G Products, Vice President of Wireless Product Marketing, President of Wireless Product Line, President of Europe Region, and Chief Strategy & Marketing Officer. In 2011, Yu Chengdong became responsible for Huawei's device business, leading Huawei's mobile phone market share in China to exceed 50%, ranking second in the world.
Huawei's mobile phone business has been hit hard by the sanctions imposed by the United States on Huawei. In order to seek new growth points, in 2020, Yu Chengdong began to be responsible for the business of intelligent terminals and intelligent automotive parts. In May 2021, he was appointed CEO of Huawei's automotive BU and began to lead Huawei's automotive business development.
Under Yu Chengdong's leadership, Huawei's automotive business has made some progress. By the end of 2022, Huawei had launched more than 30 smart car parts and shipped nearly 2 million sets. Cooperate with car companies such as Cialis, Chery, BAIC, and JAC to launch four major Hongmeng Zhixing brands. In the seven months since its launch, the new M7 has exceeded 174,000 units, making it a popular model.
The development of the automotive business is far from what expected. According to Huawei's 2022 annual report, the revenue of the intelligent vehicle solution business is only 2.077 billion yuan, and the cumulative investment since its establishment has reached 3 billion US dollars. This means that the business is still in the red at the moment. In the first half of this year, the automobile business contributed 1 billion yuan in revenue, only half of the whole of last year.
Faced with the loss of the automobile business, Huawei is making adjustments. On the one hand, through personnel changes, it will inject new vitality into the automotive business; On the other hand, it has made adjustments in its business model. According to reports, Huawei will shrink its automotive business, which does not have a competitive advantage, and will focus its resources on more profitable areas such as intelligent cockpits and mid- and low-end assisted driving.
Huawei also plans to establish a joint venture with Changan Automobile to integrate core technology resources such as intelligent driving and intelligent cockpit, and bring in external investors to achieve profitable and sustainable development. This approach may become a new path for Huawei's automotive business transformation.
Yu Chengdong's resignation as CEO of the terminal this time is aimed at allowing him to devote more energy to the automotive business. We can expect Huawei's automotive business to make breakthroughs in the new layout, achieve profitability as soon as possible, and bring new growth momentum to the company."
The adjustment direction of Huawei's automotive business is mainly reflected in three aspects.
Spin-off of the Smart Vehicle Solutions business. At present, Huawei's automotive business mainly includes intelligent driving, intelligent cockpit, Internet of Vehicles and other fields, covering a wide range of fields. In order to improve efficiency, Huawei plans to split it into several independent business units, each responsible for different technology areas.
Adjustment of cooperation model with car companies. In the past, Huawei mainly cooperated with car companies on a "hardware + software service" model. However, this model has a low profit margin and is easily constrained by car companies. Huawei will adopt different cooperation models according to the strength of different car companies.
For first-tier car companies, Huawei will adopt the "Smart Car" model, in which Huawei will provide core technologies such as intelligent driving and intelligent cockpit, and the car companies will be responsible for vehicle manufacturing and sales. Under this model, Huawei can obtain a higher profit share.
For emerging EV manufacturers, Huawei will adopt the "HI model", in which Huawei will provide vehicle solutions, including chassis, battery, and intelligent driving, and the company will only be responsible for brand marketing. This model is risky, but if successful, Huawei can reap greater benefits.
The third is to bring in external investors. Due to the huge investment in the automotive business, Huawei plans to bring in external investors to ease the financial pressure. For example, a joint venture will be established with Changan Automobile, with Changan providing vehicle manufacturing capacity and Huawei providing intelligent technology, and the two parties will jointly invest in the company.
Huawei will also seek cooperation with upstream and downstream enterprises in the industry chain to form ecological alliances. By partnering with companies such as batteries, chips, and sensors, Huawei can obtain more technical support and resources.
There are still many uncertainties about the development prospects of Huawei's automotive business.
On the one hand, Huawei's advantages in the field of ICT technology are expected to bring opportunities to its automotive business. As vehicles become more intelligent, the demand for ICT technologies such as communications, computing, and storage will increase. As the world's leading ICT company, Huawei's technology accumulation in these areas will give its automotive business wings to take off.
Specifically, Huawei is expected to make breakthroughs in the fields of intelligent driving and intelligent cockpit. In terms of intelligent driving, Huawei can leverage its advantages in 5G, cloud computing, and big data to provide high-precision positioning and real-time traffic updates for vehicles to achieve high-level autonomous driving.
In terms of intelligent cockpits, Huawei can use its technologies in artificial intelligence and virtual reality to create intelligent voice interaction and virtual cockpit technologies for cars, bringing a new driving experience.
On the other hand, the development of Huawei's automotive business also faces many challenges. Financial pressure. The upfront investment in the automotive business is huge, and the return cycle is long, so how to continue to obtain financial support will be a big test. Talent shortage. The automotive industry is quite different from the communication industry, and how to attract and cultivate compound talents is a major problem.
Huawei also needs to face the dual competitive pressure from both traditional car companies and emerging car manufacturers. On the one hand, traditional car companies have rich experience in manufacturing and marketing; On the other hand, emerging car manufacturers are in a leading position in intelligent technology. How Huawei finds its own position between the two will be a huge challenge.
The success of Huawei's automotive business will largely determine the company's future development direction. If a breakthrough can be made in the automotive field, it will bring new growth momentum to Huawei. On the contrary, it may fall into multiple difficulties such as capital, talent, and technology. There is reason to take a wait-and-see attitude towards the development prospects of Huawei's automotive business.