It has recently been announced that Huawei is targeting high-end Electric Vehicle (EV) customers with its new product approach. In spite of the fact that the company has no plans to manufacture its own electric vehicles, it has partnered with established domestic automakers in order to gain entry into the market for electric vehicles.
When asked about the company’s EV plans, the CEO of Huawei Consumer Business Group, Richard Yu, said the company planned to sell more than a million EVs powered by Huawei’s Ecosystem by the year 2025. The base variant of EVs using the Huawei software would cost no less than $29020 (RMB 200,000). Essentially Huawei plans to partner with automakers who compete with market leaders like BYD and Tesla which sell EVs at an average price of $33000.
Huawei’s EV Partnership
Huawei, which entered the EV market in 2021, partnered with companies like Seres, Changan, and BAIC to sell EVs in the Chinese market. A partnership with JAC Motors is also being worked on, as well as one with Chery Automobile CO. Ltd, a state-owned automaker which has partnered with Jaguar Land Rover for a number of years.
Over the past few years, Huawei, one of the top technology companies in the world, has been crushed under the heavy sanctions imposed by the US on the country. The company was boycotted by all US firms as soon as it was listed on the infamous US Entity Trade list, which resulted in the company losing a lot of business as a result.
There was a 28.6% decline in Huawei’s revenue in 2021, from 636.8 billion yuan ($93.7 billion) to 636.8 billion yuan ($93.7 billion), as the company was unable to avoid the US-led sanctions and trade bans that have been in place since 2015. There is no doubt that the loss of revenue from this source is one of the main reasons why the company decided to enter the lucrative EV market in the first place. In addition, Huawei wants a slice of the pie in China, as China is one of the biggest EV markets in the world. Thus, it partnered with local automakers to dive into the EV market through partnerships with them.
Huawei’s EV Journey
In September 2022, Huawei unveiled the first electric SUV powered by Huawei technology, the Aito M5, which had been announced by the company for a launch in 2021. A Chinese automaker, Seres, partnered with the telecommunication giant to supply the technology for the sports utility vehicle, which was an instant hit in the Chinese market upon release. During the first four months after its launch, the Aito M5 outsold big EV brands like Nio and Volkswagen as well as any other popular EV on the market, like the Model Y from Tesla.
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The unexpected sales in the initial period were, in fact, sparked more by patriotism than by consumer demand, as the unexpected sales were actually fueled by patriotism. As a result of the increased sanctions against ZTE and Huawei, the Chinese people became more and more patriotic as they were already angry with Washington’s take on their country. At the time of the launch of the Aito M5, Chinese President Xi Jinping called on his citizens to refocus on the nation’s economy by buying locally made products. The nationalist frenzy that resulted from this led to a frenzy of sales for Huawei’s Aito M5, which uses Huawei technology.
It should be noted that when the nationalist sentiments cooled, Aito M5 sales suffered from factors such as the global economic downturn, COVID-19 policies, the weak domestic market, and cutthroat competition, which affected all the EV makers in China once the nationalist sentiments subsided. Aito’s sales in 2022 were below the company’s targets as only 76,180 cars were delivered in that year, which is below its targets.
As a result of China’s Zero-Covid policy, the automobile industry in general has suffered as a result of reduced demand, supply shortages, and a standstill in production as a result of this policy. Now, the Chinese manufacturers of EVs are trying to regain their sales by lowering their prices and enhancing the features of their cars. There have already been price cuts of almost 13% for both the Model 3 and the Model Y by Tesla, the industry leader. It is also worth mentioning that Seres recently lowered the price of the Aito M5 to retain its market share. Amidst this tough competition, Huawei plans to enter the EV market by targeting high-end consumers who can pay the price for its technology.