As competition in the domestic NEV industry intensifies, the price war is becoming more intense. Apart from leading companies such as Tesla and BYD, which can cover all aspects of the market, the advantage of other companies fighting alone is gradually weakening. In this context, a strong alliance has become a strategic choice for many enterprises.

Recently, Changan Automobile and Huawei signed a Memorandum of Investment Cooperation, which aims to jointly promote the development of intelligent driving technology. This cooperation is certainly a huge step forward for Changan Automobile, because it has received support from Huawei, a leading company in the field of intelligent driving, and will help accelerate its development in new energy vehicles and intelligent driving technology.

However, for another Huawei partner, Cyrus, this collaboration could have a different impact. As a partner of Huawei in the field of new energy vehicles, Cyrus may face potential competitive pressure from the cooperation between Changan and Huawei.

Although this kind of cooperation does not necessarily directly impact Cyrus's market position, it does increase the complexity of Cyrus's competitive environment in the field of intelligent driving and new energy vehicles.

1. Changan and Huawei join forces

As an independent domestic brand car company, Changan Automobile's investment and efforts in the field of new energy vehicles are gradually showing results.

In January-October of this year, Changan Automobile's top three new energy vehicle brands — Deep Blue, Avita, and Changan Qiyuan — had total retail passenger car sales volume of 298,000 units and a market share of 5%, ranking sixth in the domestic market. The year-on-year growth rate of this volume was as high as 96.6%, ranking second in growth rate among the top ten companies in sales volume, second only to ideal.

Changan Automobile's diversification strategy in terms of power forms for new energy vehicles is one of its prominent features. Unlike new energy vehicle companies that focus on a single power form, Changan Automobile's product line covers various power systems such as pure electric, extended range, plug-in hybrid, and hydrogen fuel, demonstrating its determination and ability to comprehensively lay out the NEV market.

Despite this, in terms of intelligent driving technology, Changan Automobile does have a certain gap compared to some leading companies in the market, such as Xiaopeng, Tesla, and Wenjie. But it also gave a strong impetus to its collaboration with Huawei. Huawei's leading position in intelligent driving technology can help Changan Automobile make up for this shortcoming

Huawei's ADS2.0 system, using camera and lidar technology, does not rely on high-precision maps, and provides advanced intelligent driving solutions. Through the accumulation of such hardware equipment, multiple additions at the level of perception have been formed, providing a solid technical foundation for advanced intelligent driving.

The intelligent connected vehicle policy recently issued by the Chinese government provides more clear guidance on L3 and L4 level intelligent driving functions, which provides strong support for the commercial application and development of intelligent driving technology. The introduction of these policies shows that advanced intelligent driving is becoming an important and essential characteristic of new energy vehicles.

Changan Automobile's disadvantages in intelligent driving technology are expected to change rapidly through cooperation with Huawei. Huawei's advanced technology will place Changan Automobile's products on the front line in the field of intelligent driving and enhance its market competitiveness. Changan Automobile can use Huawei technology to quickly catch up, reduce the gap with competitors, and even take the lead in some areas.

2. How is Celis positioned?

The cooperation between Changan Automobile and Huawei has indeed changed the market's view of Huawei's exclusive partner Cyrus in the field of new energy vehicles. Huawei's intelligent driving technology will no longer be Cyrus's exclusive advantage, which may affect Celis' competitive position in the market to a certain extent. However, the impact may not be as great as expected.

The cooperation model between Huawei and new energy vehicle companies is mainly divided into three types — the Tier 1 model for the supply of component products, the solution model as a full-stack integrated solution provider, and the smart car model recently upgraded to Hongmeng Zhixing.

Apart from the first model, Huawei has collaborated with new energy vehicle companies such as Cyrus, BAIC, Jianghuai, Changan, and Chery. The cooperative models launched include the Polar Fox Alpha S, Avita, Wenjie, and Zhijie. These models can all use Huawei's intelligent driving configurations and technology.

However, up to now, judging from sales volume and estimated volume, the only model that has received market recognition in the true sense of the word has become a hit model in the true sense of the word. In other words, Huawei's leading technology is not the only reason for the success of Inquire.

In the industry where sales volume for new energy vehicles is king, the Quanjie M7, which was launched in the second quarter of 2022, achieved a breakthrough in sales from 3,000 to 10,000 vehicles in less than half a year. In the second month of launch, the main competitor's ideal sales volume was drastically reduced, and even surpassed the ideal sales volume over several months last year.

Meanwhile, the new Questionnaire M7 is another popular model that has become an extended-range model. As of the end of November this year, the cumulative total number of Quenjie M7 has probably exceeded 100,000 units, and the pre-order quantity of the Questionnaire M9 launched during the same period has also exceeded 33,000 units.

In stark contrast to this, the Polar Fox Alpha S, which has almost disappeared from sales in the NEV market, and the Avita, which sold in 1000-2000, is far inferior to that of the world, although the target volume of 20,000 units has been reached by the intellectual community, although it is expected to reach 20,000 units.

Therefore, as the current carrier of Huawei's intelligent driving, it undertakes the mission of vigorously promoting Huawei's intelligent driving technology. The increase in sales can only allow more consumers to experience the excellence of Huawei's intelligent driving, thus attracting more NEV companies to join. Huawei is bound not to give up its brand name and take on Cyrus. This was also reflected in the Cyrus announcement. Huawei invited Celis to take a stake in the new company.

As the competition for new energy vehicles shifts from electrification in the first half to intelligence in the second half, there is less and less time left for NEV companies to do their own full-stack research. Today, when intelligent driving is gradually being liberalized in China, is a precious window period for NEV companies to gain a foothold in the field of intelligence. There may be more powerful alliances in the future, and the era of all-in intelligent driving for NEV companies is accelerating.