The electric vehicle (EV) market in China has become a battleground, with traditional automakers trying to reposition themselves amidst a wave of innovation and competitionOne of the notable collaborations in this shifting landscape has been between Huawei and Chery Automobile, marked by the unveiling of their new electric sedan, the Zhijie S7. This partnership has the potential to reshape perceptions of both brands as they navigate the complexities of the high-end EV sector.
Huawei's entry into the automotive world has made significant waves, especially with the success of their AITO brand in collaboration with Seres, a lesser-known player that enjoyed a boost in market visibility thanks to this partnershipBeyond Seres, Chery has also aligned itself with Huawei to bolster its offerings in the rapidly evolving electric vehicle segment, particularly with the pre-sale of the Zhijie S7 set at a price that is expected to rival established models like the Tesla Model 3.
On November 9, 2023, during a significant launch event, Huawei's Executive Director Yu Chengdong extolled the virtues of the Zhijie S7, claiming it would surpass the Tesla Model S in various aspects such as intelligence, safety, comfort, and performanceAs the anticipation builds, Yu’s enthusiastic pronouncements on social media have only added to the buzz surrounding the releaseChery, for its part, has been in dire need of a high-end offering to change its longstanding image within the EV market, caught as it has been in the low-end segment for far too long.
Chery's predicament in the EV space is rather ironic, given that it was an early mover in the clean energy vehicle landscape, establishing its first clean energy team back in 1999. Fast forward to 2023, and the company finds itself outmatched by rivals who not only caught up but sprinted aheadWhile Chery's production of over 200,000 EVs in the past year was commendable, it stood in stark contrast to the sales of competitors like BYD and Geely, who have created an extensive range of desirable electric vehicles.
This raised an eyebrow among industry observers, as Chery's focus on small electric models left it vulnerable at a time when larger, more sophisticated vehicles are in high demand
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CEO Yin Tongyue’s comments at the 2023 Chery Technology Day event reflected a deep frustration with their current trajectory, emphasizing that while the company entered the electric vehicle race early, it ended up late to the finishing line.
The competitive landscape for EVs in China has shifted dramaticallyCar manufacturers recognized the necessity of having a presence in the high-end market, where margins are thicker and brand image strongerBrands like Geely's Zeekr, Changan's deep blue, and GAC’s Aion have all launched their own premium sub-brands aimed at attracting consumers away from the likes of Tesla and other foreign carmakers that have dominated this spaceMeanwhile, Chery’s slower pace of innovation highlighted its struggle to break free from an image bolstered by low-cost, entry-level vehicles, a perception that could deter potential buyers looking for quality and status.
Even with ambitious targets in place, such as achieving sales of half a million EVs by the end of 2023, the company’s execution has fallen short, especially with the micro-electric vehicle segment experiencing an ongoing slumpIn September 2023, Chery’s first-hand figures indicated dismal performance, with only 13,000 EVs sold that month, translating to less than 7% of their total car sales.
However, the arrival of the Zhijie S7, developed in partnership with Huawei, offers a glimmer of hope for CheryThe Zhijie S7 is not just any vehicle; it is an electric sedan that integrates Huawei's high-tech features, including the latest HarmonyOS 4 and advanced driving systemsThis collaboration aims to establish a new model for the future of smart vehicles, combining technological prowess with traditional automotive manufacturing strengths.
The implications of this partnership extend beyond technological collaborationBoth companies are looking at co-developing products, optimizing the supply chain, and enhancing market reach, thereby embracing a more holistic approach to tackle the competitive market together
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This could lead to more innovative offerings as they share resources and expertise in ways that previous single-company strategies failed to achieve.
The potential success of the Zhijie S7 could not only redefine Chery’s standing in the EV market but also serve as a blueprint for future venturesLearning from the success of Huawei’s collaboration with Seres, which saw sales skyrocket and market equity increase dramatically, Chery is hoping that the Zhijie S7 can do the same for their brand image, elevating it away from the low-end associations that have plagued it for years.
In recent months, the automobile industry has seen persistent interest in high-performance EVs that promise not only sustainability but also luxury and advanced technologyAs noted by industry analysts, Chery must capitalize on every opportunity it has to prove itself as a player in this marketWith a commitment from its leadership to invest 20 billion yuan annually over the next five years into research and development, alongside establishing an expansive laboratory rumored to house over 25,000 personnel, the company is taking significant steps toward reinventing itself.
This year’s Chery Technology Day served as a clear testament to this shiftThe unveiling of the stars such as the all-new Star Epoch product line under the premium Exeed brand illustrates a pivot towards innovation and a willingness to embrace the rapidly changing market dynamicsAs the competition in the energy vehicle market continues to heat up, Chery's ability to penetrate the high-end market will be crucial for its long-term sustainabilityYu's declaration that the company would pursue a more aggressive approach in the EV realm moving forward reflects a degree of optimism in how Chery can reclaim its spot among China's automotive giants.
In this race, the success of the Zhijie S7 stands to have far-reaching implications not just for Chery and Huawei but for the broader landscape of the automotive industry as it evolves
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