This article is from WeChat public account: Auto Sankei (ID: autoreport) , author: Liang Qiumeng, editor: Yu Jie, title map from: Visual China
“Huawei is a big-name supplier, and its price is relatively high. If we want to cooperate with Huawei, we will find that there is basically no bargaining power.”
Recently, at a summit site, Xiao Yong, deputy general manager of GAC Aian, sharply complained about Huawei’s “high asking price”. Xiao Yong also added that car companies should comprehensively consider technological innovation and reasonable costs when making products.
Other companies cooperate with Huawei, at least on the surface, they are all hello and me, and there must be a lot of undercurrent emotions, but on the surface they are passable. The most blatant one was when SAIC Chen Hong (chairman of SAIC Group) said a “soul theory” without naming him.
This time, it is the first time for Huawei that the leaders of the cooperating car companies have named and complained in public.
Before, it was all Huawei complaining about others.
For example, at an internal meeting, Yu Chengdong (Huawei Managing Director, Terminal BG CEO) complained that domestic traditional auto factories “have no brand, no channels, and no retail.”
At the Guangdong-Hong Kong-Macao Greater Bay Area Auto Show on May 28 this year, Mr. Yu couldn’t hold back again, calling the work mode of traditional car factories “very stupid”. He also said that the poor experience of the car made according to this model made him “have 10,000 alpacas running in his heart”.
Originally, it was normal for two companies in different fields to cooperate for the first time, and it was normal for sparks to collide. But when the problem gets to the bottom, it’s worth discussing in depth.
Huawei entered the auto industry and directly broke into the heartland and soul of car companies. In GAC’s view, it still has to grab most of the profits. To put it bluntly, it means that car companies have no core technology and no profits.
This is definitely a fundamental issue involving the right to speak.
But in times of change, many fundamental problems arise.
Zhao Fuquan (Professor of Tsinghua University School of Vehicles and Transportation, Dean of the Institute of Automotive Industry and Technology Strategy) once pointed out that car companies always misunderstood that supply must meet demand before, “but now OEMs are not Party A, really not. Good to say.”
Today, the game between GAC and Huawei is a microcosm of the restructuring process of the auto industry.
GAC with a temper
Everyone in the car circle actually knows that everyone in GAC has a temper.
Last year, Gu Huinan (general manager of GAC Aian) publicly angered Ouyang Minggao for his remarks that “1,000 kilometers of battery life electric vehicles are impossible”.
Recently, “Tucao suppliers” has also become a commonplace for GAC.
In addition to Xiao Yong’s criticism of Huawei, last month, Zeng Qinghong (Chairman of GAC) bluntly stated in a forum that the cost of batteries is too high, and electric vehicle companies are working for the Ningde era. Panicked, Zeng Yuqun (Chairman of Ningde Times) hurried out to explain.
In short, there are executives with various temperaments in GAC, who are not active at all like people from traditional car companies.
Generally speaking, those with strength do not necessarily have tempers, but those with tempers basically have strength.
From joint ventures to building its own brands, to electrification transformation, GAC has explored a road of self-improvement almost purely on its own in the past ten years. This is the strength GAC has accumulated and the confidence to lose its temper.
When BYD’s executives communicated with the auto industry in private, they praised GAC: “Whether it is from the perspective of profitability or from the perspective of industrial layout, GAC Aian is still taking a good road.”
Why did Zeng Qinghong dare to complain about the Ningde era, because GAC has a lot of reserves in the battery field, and is not as highly dependent on Ningde as other car companies.
At first, GAC was also one of the first car companies that rushed to cooperate with CATL. The joint venture, the establishment of factories, and the production of products were all the same.
But in 2019, China Innovation Aviation replaced CATL as the first supplier of power batteries for GAC. In the second half of 2020, there are media reports that the Ningde era will no longer appear in the newly declared models of GAC Aian.
At that time, some netizens even commented that China Innovation Airlines could be said to be helped by GAC.
Later, as the number of customers of China Innovation Airlines increased and it was unable to meet the requirements of multiple car companies at the same time, CATL re-entered the supplier list of GAC.
In addition to mediating between suppliers, GAC also started battery self-research very early.
In the past two years, GAC has successively released magazine batteries, sponge silicon anode batteries, and microcrystalline super-energy iron-lithium batteries.
In November last year, GAC announced that Aeon would invest 336 million yuan to build a medium-scale production line for self-developed battery cells.
In August this year, GAC Aian cooperated with Ganfeng Lithium to solve the problem of the most upstream material end of new energy power batteries. So far, GAC has almost completed self-sufficiency in the battery field.
Regarding the cooperation with Huawei this time, a senior executive of GAC Group also expressed his views on the automobile industry.
In a certain exchange, we asked him whether Aion’s high-end road depends on cooperation with Huawei?
He was immediately excited and said, “Why do we have to rely on Huawei for high-end products? Don’t think that we can go high-end by cooperating with Huawei. Huawei can’t give the brand everything.”
Talking about autonomous driving technology, he said: ” You can cooperate with it, but you won’t rely on it, you have to rely on yourself. We have built a team of thousands of people with Dr. Chen Xuewen (Chief Professional Engineer of GAC Research Institute) as the core. , just focus on one thing – do autonomous driving.”
In other words, GAC plans to take a road of cooperation first, while promoting independent research and development.
Regarding the planning of electrification and intelligence, Xiao Yong said that GAC Aeon’s future plan is, “On the one hand, it is open to external cooperation, and on the other hand, we must develop our own internal skills, such as the core technologies of Sanden, ICV, domain Controllers, smart cockpits, etc.”
Therefore, despite the dissatisfaction, the current cooperation between GAC and Huawei is likely to be strong and wear-resistant.
In addition, a GAC grassroots said: “The country attaches great importance to the Hongmeng system, and GAC looks at Huawei’s operating system.” According to the automobile industry, the reasons for BAIC, Changan and others to choose Huawei are also inseparable from this.
They believe that the country is still restricting urban autonomous driving at the regulatory level, but it is actually considering whether the technology source is domestic. Cooperating with Huawei, using Huawei’s chips and using Huawei’s system, is the most secure layout with the least resistance in the future.
The game under the new supplier model
Huawei’s B-end legion has a principle, which is to “serve customers efficiently”.
Wang Jun (COO of Huawei Smart Car Solutions BU, President of Smart Driving Solutions Product Line) also described the cooperation with car companies in this way: “It’s really working day and night.”
Huawei has high efficiency and “good things”, which is also acknowledged by GAC itself. However, the cost-profit issue involving core technologies is actually a matter of right to speak.
In the traditional auto industry, car companies have always had the highest voice. Occasionally, suppliers with strong voice, such as Bosch and Fuyao Glass, etc., but due to the mature cooperation model, the price is still within the acceptable range of car companies.
However, Huawei’s “advanced customization” has touched the profit red line of car companies. Especially for a company like GAC that focuses on profitability and sustainable operation, it is almost unacceptable.
But some people say that Huawei cannot be blamed for this. The high price of Huawei’s HI solution may be related to their cost pressure.
In the first half of this year, Huawei’s R&D investment was more than 130 billion yuan, a large part of which was invested in the field of smart cars.
Yu Chengdong also once said, “The (automotive) business is the only loss-making business of Huawei.”
According to people familiar with the matter, the profit contribution of Huawei’s HI model is not obvious. What really gives Huawei’s profit is the smart selection model.
According to media reports, in the smart selection mode, the share between Huawei and the manufacturer is about 1:9, and in the end, Huawei’s revenue per car is about 5,000 yuan. This level of income is much higher than the bicycle profits of many independent brands such as Geely, Chery and BYD.
Large investment, long cycle, and low rate of return are the problems in the initial stage of Huawei’s HI model. This is also the reason why Yu Chengdong vigorously promotes the smart selection model.
Recently, it has also been reported that since the success of the Huawei brand launched by Huawei and Celis, Chery, Jianghuai and other brands have expressed their intention to adopt a smart selection cooperation model with Huawei.
It can be seen that both Huawei and GAC are in the initial stage of business transformation and are far from a mature cooperation model.
This is a new type of in-depth cooperation model brought about by the electrification and intelligence of vehicles, which no one has ever experienced. In Zhao Fuquan’s words:
“Simple buying and selling between OEMs and supply chain companies will definitely not work. Key suppliers must be deeply bound, jointly developed, and data shared. OEMs and supply chain companies need to bet against each other. Without this spirit, there is no way. Establish strategic mutual trust in the true sense, and without trust, signing any contract is useless.”
But no matter how much you trust, for companies, profits are definitely necessary, and the right to speak is also a matter of contention.
Now that Huawei is strong, when car companies lack the core R&D capabilities of autonomous driving, they can only sell the right to speak and sell profits. However, if GAC wants to regain the “bargaining power” in the future, it can indeed follow its battery development idea-first cooperation and then self-research.
It is not impossible to support a new darling in the field of autonomous driving just like China Innovation Airlines. Now the Great Wall has Momo Zhixing, and Geely has Yikatong.
However, the competitive landscape in the field of autonomous driving is far more complicated than that in the battery field. How to choose depends on your own pattern and vision.
This article is from the WeChat public account: Auto Sankei (ID: autoreport) , author: Liang Qiumeng
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