Chinese EV makers continue to enhance smart vehicle technology. As an emerging automotive tier-1 supplier, Huawei's car business profited in the first quarter of 2024. However, concerns about Huawei threatening automakers' authority are also growing.
Aito, Luxeed, and Stelato are EV brands that Huawei forms with automakers. Supply chain sources said sales of these brands are gaining traction.
Carmakers have to partner with Huawei because they need the company's advanced technology, but they also want to reduce their reliance. Although Huawei's name is not on these EV brands' nameplates, the tech giant possesses many critical technologies, a fact that could concern carmakers.
China-based Chery Automobile collaborates with Huawei on Luxeed. The pair have been rumored to have disagreements since the beginning of their partnership. Chinese media reported that Chery has established a sales department dedicated to Luxeed, creating another sales channel besides Huawei.
Automakers also try to diversify partnerships with other tier-1 suppliers to reduce dependence on Huawei or avoid working with the company. The results of these efforts still need to be determined.
DJI Automotive, another new tier-1 supplier, is attracting the market's attention with its competitive price-performance ratio. The company vows to realize level 2 vehicle autonomy for mass-produced models.
However, Chinese media recently reported that more time is required to see whether DJI can secure a foothold in the market. Car models that the company supports have yet to reach outstanding sales, such as those of Aito M5 or M7. DJI has collaborated with BYD, Volkswagen, and other automakers.
Industry sources said production and sales volume are the most important indicators given the fierce cutthroat price competition in China's car market. Xiaomi EV securing significant orders right after hitting the market represented the company's success. If sales do not grow, the carmaker will face more difficulties in tackling losses and raising funds.
As the automotive industry develops smart driving technology, China-based new tier-1 suppliers' advantages have become more evident. Chinese homegrown carmakers can reduce their costs efficiently.
Foreign and joint venture automakers have also deepened ties with new tier-1s to learn from them and add more flexibility to existing supply chains. Similar cooperation can be found between Volkswagen and Xpeng, Stellantis and Leapmotor, and Toyota and Huawei and Momenta. Some of these China-based car companies are also new tier-1s.
Leading Chinese automakers were cautious about Huawei and maintained limited collaboration with the company. Therefore, the tech giant partnered with Seres and has gained success with Aito M5, M7, and M9 this year.
Five months after its launch, Aito's M5 orders exceeded those of Mercedes-Benz, BMW, and Audi combined. In addition, the vehicle is the top-selling luxury SUV priced over CNY500,000 (US$685,000). The Stelato S9, which Huawei collaborates with BAIC BluePark, also targets the luxury segment.
