The cooperation with Huawei has been postponed again. Is Changan Automobile also caught in the question of "technology or soul"?

What is it like to work with Huawei?

In 2021, Chen Hong, chairman of SAIC Motor, publicly stated that letting Huawei provide an overall solution would lose its "soul". But if someone questions it, someone will try.

In November 2023, Changan Automobile and Huawei signed a "Memorandum of Investment Cooperation", and Huawei's automotive BU was split and operated independently. Changan and its affiliates joined as partners, with a shareholding ratio of no more than 40%.

However, this cooperation now seems to have changed. On May 8, Changan Automobile issued an announcement that the target company between it and Huawei has completed registration, and Changan expects to sign the final transaction documents no later than August 31.

This is three months later than previously expected. So what changes have occurred in the transaction between the two parties?

After a delay of three months, has the cooperation between the two parties changed?

Among the leading domestic manufacturers, Changan is the one that is closest to Huawei. The two parties' cooperation in the fields of intelligence, new energy, and in-vehicle communications began as early as 2018.

In 2019, Huawei and Changan established a joint innovation center. At the end of 2020, Changan and Huawei joined forces with CATL to establish the high-end new energy brand Avita. Its current development is still good.

For this reason, when the news of Changan's cooperation with Huawei came out in November 2023, the outside world was not surprised. According to the statement at the time, the two sides will finalize the final transaction plan within 6 months. On January 16, 2024, Huawei officially completed the registration of the target company "Yinwang" established for the cooperation project, and everything seemed to be going well.

But it should be noted that Changan is not Huawei's only partner. Huawei established a joint venture to attract more partners. According to Yu Chengdong, FAW, GAC, BAIC, JAC and other manufacturers are likely to join, and Changan is just one of them.

This may explain why the cooperation between the two parties was postponed to August 31. This is a cooperation platform involving multiple parties, and the shareholding ratios and cooperation models of Huawei, Changan and other partners all require lengthy negotiations. Changan is a state-owned enterprise and a listed company, and it needs to sort out various relationships, so it does not seem strange that such a thing happened.

Why is it so difficult?

It is normal for strategic cooperation between large companies to have delays, delays, and repetitions. Changan is one of the leading domestic manufacturers, and Huawei is also quite large, so it is normal for the cooperation between the two parties to have some twists and turns. It is basically nonsense to say that the cooperation between Huawei and Changan has broken down.

The problem now is that the cooperation between Huawei and Changan seems to have more twists and turns than normal, which is one of the main reasons why it has aroused doubts from the outside world. Six months is not a long time, but for the ever-changing Chinese new energy market, a lot can happen.

Like other manufacturers, Changan Automobile also has such concerns when cooperating with Huawei: Will it lose the dominant position?

At the Changan Automobile Global Partner Conference on January 16, 2024, Changan Automobile Chairman Zhu Huarong first accused Yu Chengdong of having no bottom line in his propaganda and saying that being far ahead was empty talk. He then further criticized Huawei's smart car business, saying that it was not in line with industry laws, national industrial policies, or user interests.

These words do not sound like strategic partners at all, but more like two mortal enemies. In fact, this is a repetition of SAIC Chairman Chen Hong's "soul theory". Changan wants to use Huawei's technology, but emphasizes independence and does not want to become Huawei's OEM factory.

In a word, SERES can lie low when cooperating with Huawei, let Huawei take the lead in key links, and even let Huawei's executives become its own executives, but Changan cannot. Changan is a state-owned enterprise with a brand that has been accumulated over a long period of time. It is impossible for it to let Huawei take the lead. This is related to both interests and face.

On the other hand, Huawei itself seems to be a little hesitant.

From an objective point of view, Huawei's decision to split its automotive business by the end of 2023 was mainly due to the pressure of losses. In the past few years, Huawei's R&D investment in the field of smart cars has reached 30 billion yuan, with more than 7,000 R&D personnel, but the automotive business is the only loss-making business of Huawei in the past few years.

In fact, in the first quarter of 2024, Seres, which cooperated with Huawei, has turned losses into profits; at the same time, Yu Chengdong also said that Huawei's automotive BU is expected to turn losses into profits in 2024. Since there is an expectation of profitability, Huawei is naturally reluctant to transfer more shares to partners such as Changan.

Following closely, loving and hating?

To use Mr. Lu Xun's words: Huawei is the only one who has the ability to build cars but has not built them.

Huawei currently has various core components including the ADS3.0 advanced intelligent driving assistance system, Hongmeng smart cockpit, Kirin vehicle-mounted chips, Pangu large model, Tuling smart chassis, etc. Except for power batteries, Huawei has opened up all core links related to new energy vehicles.

No one will doubt Huawei's ability to build cars. As long as Huawei is willing, new energy vehicles with the Huawei logo will soon give its peers a little shock.

But the key is that Huawei has repeatedly promised not to build cars, but only to help customers build good cars; but if it does not build cars and only acts as a supplier, Huawei seems unwilling to do so. On the issue of building cars, Huawei can be said to be following suit.

For partners such as Changan, Huawei is a character that people both love and hate.

In terms of technical strength, BYD is probably the only company that can surpass Huawei. Apart from other things, in the field of intelligent driving alone, it will be difficult for other manufacturers to reach Huawei's level in the short term. Other manufacturers are still competing to see who has more cities with autonomous driving, while Huawei has already achieved nationwide operation.

But Huawei's strength is also well known. As the saying goes, a sharp sword in hand will lead to murder. With so many core components in hand, it may be difficult for Huawei to suppress its urge to build cars. This is also what its partners are most worried about. They want Huawei's core technology, but they don't want to lose their dominant position.

If nothing unexpected happens, more partners will join the company registered by Huawei, but the cooperation between these manufacturers will be more complicated than that of other peers. Changan and other manufacturers need to make a painful choice between technology and soul.

No one denies Huawei's leading position in core technologies, but partners such as Changan are not sure how much they will have to pay to obtain these technologies. So what changes will the cooperation between the two parties bring before the deadline of August 31? Let's wait and see.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.