(Report produced by CITIC**).
Review: Huawei's automotive business has been continuously iterated along with the organizational structure
Huawei's car business has three modes: Tier 1 model for parts (2013), HI (2020), and Zhixuan (2021). In May 2021, Yu Chengdong became the CEO of Chebu and vigorously promoted the intelligent selection mode, and in September 2023, the new Cialis AITO M7 exceeded expectations, and the inflection point of the intelligent model cycle is clear. In December 2023, Changan and Huawei signed a memorandum of understanding (MOU), and we believe that the open equity HI model of car bus is expected to accelerate.
Comparison of the three modes: In the smart mode, Huawei has the deepest degree of participation
Tier 1 model of components: similar to traditional parts suppliers, providing standardized products. HUAWEI Inside mode: Jointly developed with car companies, it provides full-stack solutions for autonomous driving hardware and software, and intelligent vehicles. Smart selection: Deeply involved in product definition and vehicle design, and products are sold through Huawei's channels.
Huawei's organizational structure: The automotive BU and consumer BG are currently the first-level departments
According to Huawei's 2022 annual report, the automotive BU and consumer BG are currently parallel first-level departments, with revenue of 2.1 billion yuan in Huawei's intelligent vehicle solution business in 2022. According to Changan Automobile's announcement, Huawei Auto's proposed spin-off businesses include: automotive intelligent driving solutions, automotive intelligent cockpits, intelligent vehicle digital platforms, intelligent vehicle clouds, AR-HUDs, and smart lights.
Product line: It has covered five major sectors of smart electric vehicles
Huawei's early automotive products mainly focused on in-vehicle communication modules in the field of Internet of Vehicles, and then launched products such as intelligent cockpit full-stack solutions, Huawei HICAR, MDC in-vehicle computing platform, lidar, 4D radar, 3-in-1 & all-in-one power system, and HICHARGE, achieving full coverage in five major areas: intelligent driving, intelligent cockpit, intelligent electric, intelligent networking, and intelligent vehicle cloud.
Huawei's capabilities in consumer and technology are in line with key competitive elements in the automotive industry
"Soft power" – a number of capabilities accumulated in the field of consumer electronics, such as reusing smartphones. "Hard power" - intelligent driving and intelligent cockpit are in the first echelon of the industry.
However, it still took ten years to lay a foundation for research and development, and three years to go deep into the industry to establish a Xi curve
In 2013, it began to do research and development of on-board components (Internet of Vehicles products, etc.), and established a complete intelligent car product line in ten years. In terms of product definition, channel operation, and chain management, Huawei has spent three years in the industry to establish a learning Xi curve from "HI (2020)-first-generation smart model (Wenjie M5 M7, 2021-2022)-M7 facelift (2023)". The Hi model cannot give full play to the ability to transform C-end demand insight and technology into selling points, so it launched the intelligent selection model to participate in vehicle development at a deeper level.
The Zhixuan generation model has become a hit with the blessing of Hongmeng car machine and Huawei brand, but it has exposed a certain deviation in Huawei's understanding of the automobile business. The marketing volume is large but the lack of product power can not bring long-lasting sales: the intelligent mode of the first generation of models ask the M5 M7 product force itself is insufficient, but in the M7 space and wheelbase publicity ("EFF", etc.) with their own shortcomings to compete on the long board, the essence is the wrong judgment of the attributes of the car vs consumer electronics business, consumer electronics products and car ASP difference of 10 times, the latter purchase decision is longer, family decision-based, consumer in-depth experience under any obvious flaws will be in the test ride, test drive The process was **. There are strong requirements for the ability of sales personnel: due to the large evaluation system of the car and the long car purchase process, the sales staff need to have a very professional quality, and the person who sells the mobile phone to sell the car is a mistake made by Huawei in channel marketing.
In 2022, after the M5 M7 opened high and went low, and the sales volume of the M5 intelligent driving version of the M5 intelligent driving version in 23 years was too high, the M7 mobile phone traffic exceeded expectations, and there were also many reflections from Huawei and Cialis behind it, showing strong error correction capabilities. Product definition: 6 seats to 5 seats, the competition from the ideal L8 to L7, the existing hand to maximize the use. Channel Transformation: Huawei's direct-sales model of training sales dispatch to store operations has improved the quality of sales personnelAITO sales service team opens up the middle office management. Pricing strategy: Compared with M5 intelligent driving, M7 intelligent driving reduces ADS 2 in the form of equity0 optional threshold (by 180,000 yuan dropped to 3,000 yuan), driving the proportion of intelligent driving versions.
However, the problems exposed by the low sales volume are: product strength, fast channel laying, but there are certain problems in management
The 2022 version of the M7 (six-seater) is a car that benchmarks against the ideal ONE, but in the face of the L8's weak performance (appearance, wheelbase, power, range, and comfort configuration are fully crushed). The M5 has more direct competitors in the 25-300,000 yuan SUV race lane (Model Y, Tang, VOYANT, and traditional gasoline car brand large five-seater SUVs), and it is greatly affected by the pressure of the Model Y after October 2022. Channels: The management of the Cialis user center and Huawei stores has not been connected, and there is a certain amount of internal friction.
Intelligent: Huawei is the first echelon of Kaicheng planning
According to the following table, the company's official WeChat*** product launch conference, etc., the head intelligent driving players have disclosed the rhythm of entering the city function, including Wenjie, AVATAR, etc., Huawei-enabled automobile companies, plan to enter all cities in the country by the end of this year. Xpeng plans to open 50 cities by the end of 2023 and 200 cities by 2024Ideal and NIO's city functions have also begun to be tested, and ZEEKR and Leapmotor have started to develop their own high-end solutions based on NVIDIA Orin chips. Some traditional car companies have quickly entered the market by cooperating with leading companies, such as BYD Denza and SAIC Zhiji, which are expected to land the urban NOA function in 2024-2025.
Split of the car BU: The HI and parts models are separated, and the smart business model remains in Huawei
According to the announcements of Changan Automobile and JAC, we judge that the HI and parts models will be spun off to the target company, and the Zhixuan business model will remain in Huawei.
From the perspective of the competitive landscape, we understand that the car BU liberalizes the equity
100,000-200,000 RMB: Huawei's open technology helps enhance the intelligent competitiveness of its own brands as the main battlefield of independent enterprises (state-owned enterprises + private enterprises). More than 200,000 yuan ** belt: Zhixuan to impact Mercedes-Benz, BMW, Audi and other luxury brands.
The biggest change at the business level may come from the acceleration of the HI model
We judge that the biggest change in the open equity of the car BU may come from the acceleration of the HI model. Previously, the main reasons for the unsatisfactory business cooperation were: 1. The problem of "the soul of car companies", 2. The high cost of Huawei's hardware solution in the initial stage of intelligent driving (after the launch of the ARCFOX Alpha HI is more than 100,000 yuan more expensive than the general version, the ** belt is a relatively unfamiliar battlefield outside the new forces, and it needs an operation model similar to that of the new forces, and the traditional OEMs are relatively lacking in this regard. The above three aspects have affected the rollout of the HI model, but they have also gradually changed under the wave of intelligent electrification: (1) Huawei's intelligent technology empowers intelligent models for all to see;(2) The cost of intelligent hardware is gradually decreasing;(3) Independent brands continue to explore new energy brand operation ideas. After the car-related business is spun off to the joint venture, we judge that the acceptance of the HI model by OEMs will increase, and we expect that the first band of the HI model will shine in the main sales range of 10-200,000 yuan before the independent brand.
In the end, the equity of the car BU will be similar to that of United Electronics
Referring to the joint electronic equity structure in the era of fuel vehicles, Changan Automobile may not be the only beneficiary of the cooperation model: the target company will most likely continue to open its equity in the future, and other independent car companies that have in-depth cooperation with Huawei are also expected to obtain shareholdings. We believe that the follow-up shareholding structure of the target company will be very similar to that of United Electronics, and the core cooperative car companies will be deeply bound through equity investment and enjoy the deep empowerment of Huawei's intelligent technology.
United Electronics: The first enterprise in China to engage in the R&D and production of engine management systems
In June 1995, in order to effectively solve the problem of automobile exhaust emissions, reduce energy consumption, and improve China's technical level, under the active promotion and strong support of relevant national ministries and commissions, 10 enterprises including Shanghai Automotive Electronics Wuxi Weifu Co., Ltd. Xi'an Kunlun Machinery Factory and Shanghai United Investment jointly funded the establishment of Zoomlion Automotive Electronics In July 1995, Zoomlion Automotive Electronics and Robert Bosch signed a joint venture contract in Bonn, Germany, to establish United Automotive Electronics The company mainly produces gasoline engine management systems and parts, and is the first enterprise in China to establish engine management system R&D and production. The total investment of the project is 266.8 billion yuan, with China and Germany each holding 50% of the shares. After 2008, Zoomlion's shareholding decreased from 50% to 49%.Judging from the number of key personnel on the board of directors of the company over the years, the German side accounts for a relatively large proportion.
Changan Automobile: The biggest beneficiary of the equity liberalization of the car BU, the reserve of new energy models in 2024 is abundant
The three major brands of Deep Blue, AVATR and Qiyuan undertake the current company's new energy transformation strategyIn 2024, it is expected that there will be 10+ main sales of new energy models, covering the range of 10-400,000**, with three power types: plug-in hybrid, extended range and pure electric. According to Changan Automobile's announcement, Huawei will set up a target company, whose business scope includes automotive intelligent driving solutions, automotive intelligent cockpits, intelligent vehicle digital platforms, intelligent vehicle cloud, AR-HUD, and intelligent car lightsChangan Automobile and its affiliates plan to invest in the shares, with the proportion not exceeding 40%;The biggest changes that may be brought about by our cooperation in the future will be the AVATR brand and the Deep Blue brand (and may even spread to Kaizen and V Standard), especially the Deep Blue brand is expected to become a new force in the future "Harmony Ecology".
This article is for informational purposes only and does not represent any investment advice from us. To use the information, please refer to the original report. ）
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