In the new round of cooperation in the field of smart cars, the strategic alliance between Huawei and Lantu Auto has attracted great attention from the industry. The cooperation agreement between the two technology giants in key areas such as smart driving and car networking has dropped a bombshell on the market. Dongfeng Motor's stock price subsequently rose to the daily limit, and the price soared to 5.89 yuan per share at noon that day. The market's enthusiastic response to this marriage can't help but make people curious about the strategic meaning behind it.

What is particularly intriguing is that Lantu has previously worked closely with Baidu, and has now extended an olive branch again, choosing to join forces with Huawei, a technology giant that already has many strong partners. And why did Huawei choose to join hands with Lantu when it already has many powerful allies such as Changan Avita and BAIC Arcfox?

What kind of strategic considerations and market layout are hidden behind all this? This seemingly sudden alliance may be a more sophisticated strategic choice and interest consideration woven by both parties in the fierce market competition.

Such an important alliance is of great significance to Lantu.

Lantu, which is in trouble, urgently needs this shot of adrenaline

Against this backdrop, Lantu Auto’s current situation is particularly critical.

Lantu Auto, as a high-end new energy brand under Dongfeng Motor Group, has faced endless challenges and difficulties since its establishment in 2018. Although its annual sales in 2023 reached 50,552 units, a year-on-year increase of 160%, and achieved a breakthrough in monthly sales of over 10,000 units in December, in the fiercely competitive new energy market, Lantu's sales volume still seems to be inadequate compared with its huge investment and the rapid development of its competitors.

In terms of sales, although Lantu has achieved growth, there is still a big gap compared with the monthly sales of 40,000 vehicles of GAC Aion and Nezha Auto. Although Lantu has formed a relatively complete SUV, MPV and sedan line in its product layout, it has not produced a real hit model. Although its products are not inferior to its competitors in terms of control, power and materials, they are inferior in terms of intelligence, which has affected its market competitiveness and brand recognition to a certain extent.

In addition to market competition, Lantu also faces internal financial challenges. The net loss in 2021 was as high as 706 million yuan, and the net loss in the first half of 2022 exceeded the total of the previous year. The asset-liability ratio was as high as 88%, showing severe operating difficulties. Although Lantu Auto CEO Lu Fang expressed the pursuit of long-term benefits, the high losses and financial pressure in the short term cannot be ignored.

In terms of market expansion, Lantu has adopted a more aggressive strategy. By the end of 2023, Lantu will have nearly 300 service outlets around the world, covering 108 cities. Although this rapid expansion initiative demonstrates the brand's ambition, it may increase financial pressure in the context of tight finances, requiring more prudent market strategies and cost control.

As an important part of Dongfeng Motor Group's new energy and high-end transformation, Lantu needs to focus on long-term sustainable development while facing multiple challenges such as insufficient sales, financial pressure, and market strategy choices.

Lantu's market performance and financial situation are clearly key factors driving it to seek new partners. Faced with these challenges, Lantu's pursuit of cooperation with technologically advanced Huawei seems to be a strategic choice for it to cope with market pressure.

The strategic alliance between Huawei and Lantu Motors will also boost market confidence for Lantu. Dongfeng Motor's stock price rose to the daily limit that day, which also shows that investors have great expectations for this cooperation. Huawei's technological advantages in the fields of smart cockpits and autonomous driving are expected to greatly enhance Lantu's product competitiveness, which is a key step for Lantu to become a leader in the smart car industry.

But what follows is the dilemma of strategic choice. In 2022, Lantu has teamed up with Baidu Apollo on intelligent driving, and is now working closely with Huawei. This dual-line parallel cooperation model will test Lantu's resource allocation and strategic adjustment capabilities.

Looking ahead to 2024, Lantu said it would challenge the goal of annual sales of 100,000 vehicles, while expanding the international market and enhancing its influence in the global new energy vehicle field. The joining of Huawei will undoubtedly inject new vitality into Lantu's market competitiveness and brand influence. However, how Lantu can achieve a balance between technology integration and strategic operations will be an important challenge it faces. Success or failure will directly affect Lantu's foothold in the fierce new energy vehicle market.

While Lantu is seeking breakthroughs, Huawei's smart car strategy is also accelerating its layout, and Lantu Auto, which is full of expectations for cooperation, is likely to be just one of Huawei's options.

Lantu is not only a patch package for Huawei HI mode

Huawei's strategic layout in the field of smart cars is becoming clearer. It has adopted three different cooperation models with car companies to deepen its presence in the automotive industry and promote the development of smart cars.

A picture to understand Huawei's smart car cooperation model (91che map)

The first is the standardized parts model, where Huawei provides partners with key parts such as Internet of Vehicles modules, LiDAR, and millimeter-wave radar cameras. This model focuses on hardware-level support and provides the necessary physical foundation for smart cars.

Secondly, the HI (Huawei Inside) model is more comprehensive. In this model, Huawei not only provides hardware support, but also includes software-level cooperation. The iterative upgrade of smart cockpit and smart driving technology has become the focus of cooperation, aiming to promote the overall improvement of the vehicle's intelligence level. For example, Changan Automobile's Avita and BAIC Arcfox have adopted this model.

The third model is the Hongmeng Smart Selection model, in which Huawei is deeply involved in product design, marketing and terminal sales. The characteristics of this model are that Huawei has a greater influence on the overall design and marketing of products, deepens the linkage with partners, and also creates an innovative ecological automobile model. For example, Hongmeng Smart Driving, Seres, Chery, BAIC, and JAC have adopted this model.

As an emerging smart car brand, Lantu Motors has chosen to cooperate with Huawei and will directly adopt the HI mode like Changan. This means that Lantu Motors' future products will be equipped with Huawei's Harmony OS smart cockpit and ADS2.0 smart assisted driving system, which will enhance the intelligence level of Lantu Motors.

However, as Lantu becomes a new partner of Huawei's automotive business, Huawei's internal competition in the automotive industry has become increasingly fierce. Although brands such as BAIC Arcfox and Changan Avita under Huawei's HI model have not performed well in the market, especially Avita, whose sales in 2023 only reached 27,700 units, far lower than Lantu Auto's 50,600 units.

Changan Automobile's data reveals the financial difficulties of its sub-brand Avita: between 2020 and 2022, Avita's losses were as high as 150 million, 210 million and 2.02 billion yuan respectively, and the loss in the first half of 2023 soared to 1.756 billion yuan, almost equal to the total loss of the previous year. The root cause of this ongoing financial vortex is that Avita's sales performance is far below expectations.

In 2023, although the sales target of Avita was set at 100,000 units, the annual sales reached only 27,700 units, with a completion rate of less than one-third. Faced with the sales target of 90,000 units set for 2024, the market is skeptical about whether Avita can turn the situation around. Avita's challenge is not just the huge losses in numbers, but more importantly, its ability to find breakthroughs in the fierce market competition is being severely tested. At present, the delays in the delivery of Avita that have been reported one after another are a straightforward expression of the challenges faced by Changan and Huawei's HI model cooperation.

It can be seen that Avita faces multiple challenges in the competition in the new energy vehicle market, including sluggish sales, cost control issues and dilution of brand influence. These factors work together to put Avita at a disadvantage in the fierce market competition.

In such a market and technological context, the alliance with Lantu becomes particularly important for Huawei. In the diversified cooperation and horse racing mechanism strategy, Huawei is obviously constantly seeking new opportunities to enrich its layout in the automotive field. As the saying goes, the more cards in hand, the stronger the game dominance.

The alliance between Huawei and Lantu Auto has created a stir in the new energy vehicle market.

This cooperation is not just a simple handshake between the two companies, but a well-thought-out strategic layout. Huawei chose to cooperate with Lantu, obviously because it saw its potential in the new energy field and the strength behind Dongfeng Motor. Although partners such as Avita and Polar Fox already exist, Huawei decided to place its chess pieces on Lantu, intending to occupy a more advantageous position in the fierce market competition. From Huawei's own significance, the emergence of Lantu is not only a patch package for the past HI cooperation model, but also an important upgrade and correction on the road to the future.

As an important part of Dongfeng Motor Group, Lantu Motors faces not only sales pressure, but also financial challenges. Huawei's joining has undoubtedly injected new vitality into Lantu and provided it with a new weapon for competition in the new energy market. In the future, how Lantu can adjust its strategy, optimize its products, and enhance its brand influence with the support of Huawei will be the key to its success.

In this game in the field of new energy vehicles, the cooperation between Huawei and Lantu is not only a strategic alliance, but also a decision made by both parties to jointly face market competition and technological challenges. In the future, whether this cooperation can bring the expected market breakthrough to Lantu and help Huawei consolidate its position in the field of smart cars will be the focus of the industry.

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.