It wasn't Yu Chengdong who signed the agreement, but rather it may involve investment in Yiwang and the formation of a new joint venture, focusing on the 200,000-250,000 yuan price range. This is the true trajectory of the cooperation between GAC Group and Huawei.

After three years of twists and turns, GAC Group and Huawei have once again made substantial progress in their relationship, signing a deepened cooperation agreement to jointly create a new high-end intelligent automobile brand.

Just as the outside world speculated that Huawei's smart selection brand would add another 'sector,' GAC insiders responded that this cooperation is not a continuation of the Hongmeng SmartRide model but rather a new mode of cooperation. In fact, clues can be seen from the official on-site signing photos. The Huawei representatives present were Xu Zhijun, rotating chairman of Huawei, and Jin Yuzhi, CEO of Huawei's Intelligent Automobile Solutions BU, who are in charge of Huawei's HI mode.

Shortly before GAC Group and Huawei made their official announcement, LUKA Auto exclusively reported that SAIC had already restarted cooperation with Huawei and might open up a new model beyond Huawei's current three modes of cooperation with automakers (supplier, HI, smart selection car)... This new model is being pioneered by GAC Group, and the trend of local automakers embracing Huawei is becoming increasingly apparent.

The fourth cooperation model, replicating AITO?

GAC Group was one of the first automakers in China to cooperate with Huawei. As early as 2021, GAC Group announced that the AION brand would jointly develop a new car, AH8, with Huawei, which was later known in the industry as the HI (Huawei Inside) model.

That year, Chen Hong, then chairman of SAIC Group, put forward the famous "soul theory" at the shareholders' meeting, describing the HI model as one that Chen found "difficult to accept losing the soul." This extinguished the outside world's imagination of deep cooperation between SAIC and Huawei. However, in 2023, when the AH8 project was scheduled for mass production, GAC Group suddenly announced that it had decided to change the AH8 project from joint development to independent development, with Huawei continuing to participate in the project as a supplier.

An insider close to GAC Group told LUKA Auto that GAC Group and Huawei are likely to create this new brand through the formation of a joint venture. In this regard, there is already a domestic automotive market example for reference - AITO.

As a brand deeply tied to Huawei from its inception, AITO has been publicly supported by Yu Chengdong, CEO of Huawei's Terminal BG, who has spoken on its behalf on multiple occasions. In April 2023, he stated at the Electric Vehicle Hundred Person Forum that "Currently, Huawei's HI mode only has one partner, AITO of Changan Automobile. GAC Group has given up, and there are issues with the product definition and competitiveness of BAIC's ARCFOX."

During the period when "GAC Group gave up," Huawei's circle of friends quickly expanded. Currently, in addition to brands under Hongmeng SmartRide, vehicles equipped with Huawei's intelligent driving solutions include AITO, DEEPAL, FANGCHENGBAO BAO8, and the all-new Voyah Dreamer, among other brands and new cars. The "Huawei Solution" has become a bonus in automaker marketing. Taking the all-new Voyah Dreamer, the "first MPV equipped with Huawei's intelligent driving," as an example, its sales exceeded 7,000 units in October alone, while Voyah Dreamer's total sales for 2023 were 20,000 units... Apart from Huawei's support in intelligent technology, the voice and attention it brings to the brand are also valued by automakers.

If we refer to AITO's cooperation model with Huawei, GAC Group also has the potential to invest in Yiwang. In August this year, Changan announced that AITO would invest in Huawei's subsidiary "Yiwang," and the two parties would establish a joint venture to jointly develop intelligent driving and other technologies. Yu Chengdong has publicly stated that companies investing in Yiwang can quickly access Huawei's core technology applications in intelligent driving and intelligent cockpits, and can even obtain the underlying code and jointly promote research and development, as well as have priority access and usage rights to Huawei's pre-research new technologies.

Returning to the cooperation between GAC Group and Huawei, this new cooperation model mentioned by GAC Group can actually be glimpsed in previous cooperation between Trumpchi and Huawei. In September this year, the first concept car, 1 Concept, jointly developed by GAC Trumpchi and Huawei was officially unveiled. GAC Group stated that this cooperation is different from the traditional three models.

Public information shows that in an interview, Huawei's Intelligent Automobile Solutions BU executives described 1 Concept as "the most advanced full-stack cooperation model currently available in the BU." Huawei's Intelligent Automobile Solutions BU currently has two main cooperation models: full-stack and component-based. Undoubtedly, the smart selection car model (Hongmeng SmartRide) is also a full-stack solution.

In layman's terms, the new model of 1 Concept has a deeper level of cooperation than the HI mode but less than Hongmeng SmartRide. Automakers still retain their dominance in branding and channels. Huawei's Intelligent Automobile Solutions BU stated that this model requires the R&D teams of both cooperating parties to closely cooperate from the beginning of product definition.

GAC Group + Huawei, creating another Zeekr

It is worth noting that although GAC AION gave up the joint development of the high-end model AH8 project with Huawei, it did not abandon its high-end layout. AION's high-end brand, Hyper Haobo , was officially launched in September 2022, with its first model being a pure electric supercar priced at 1.286 million yuan. GAC Group clearly stated in the official announcement that the new brand jointly created with Huawei will be on par with GAC Group's two sub-brands, AION and Trumpchi, which means there will be a clear distinction in brand positioning.

GAC Group responded that Trumpchi brand models focus on being atmospheric, mainstream, and high-quality; AION brand models focus on being advanced, trendy, and high-quality; and Hyper Haobo focuses on technology, luxury, and high taste. From their respective market positions, Trumpchi mainly covers the 100,000-150,000 yuan price range; AION mainly covers the 150,000-200,000 yuan range; and Hyper Haobo , in addition to the supercar starting at one million yuan, has two models, Hyper Haobo HT and Hyper Haobo GT, positioned in the mainstream 200,000-300,000 yuan price range. These three brands have almost covered the mainstream new energy automobile market.

From this perspective, does the new brand created by GAC Group and Huawei have a conflicting positioning with Hyper Haobo ? First of all, based on the new brand's "high-end" positioning, the possibility of overlap with the Trumpchi market is basically ruled out, shifting the pressure to AION and Hyper Haobo .

Earlier this year, Gu Huinan, president of GAC AION, publicly announced a sales target of 700,000 units for the entire year. By October of this year, GAC AION had accumulated sales of 264,900 units, almost halving compared to the 482,000 units sold in the same period last year.

In the past few years, relying on the B-end market, AION could only support sales with the AION S and AION Y. This single sales growth model exposed bottlenecks when the B-end market growth faltered. The path to high-end products was even more difficult, with the higher-priced AION V and AION LX selling poorly. Xiao Yong, deputy general manager of GAC AION, admitted in an interview that in the three years since the launch of the AION Y in April 2021, there have been no new products in the AION series.

In early November, AION officially launched its new car, AION RT, with a starting price of 119,800 yuan. By selling cheaper and cheaper cars, the AION brand has almost given up struggling on the path to high-end products.

Since its inception in 2022, the Hyper Haobo brand has consistently hovered around four-digit monthly sales. The volume models, Hyper Haobo HT and Hyper Haobo GT, have seen average market responses. GAC Group suddenly realized that on the path to high-end products, it still needs to retrain. Especially when AITO under Changan, IM Motors under SAIC, and Zeekr under Geely have begun to occupy a place in the new energy automobile market.

From the market positioning of the AION brand, it is not difficult to see that GAC Group's current layout in the new energy automobile market above 200,000 yuan is almost blank. Taking October sales this year as an example, the main new energy models in the 200,000-300,000 yuan price range are mainly from brands such as Tesla, Xiaomi, Zeekr, and BYD. Among them, the ZHIJIE R7, jointly developed by Chery and Huawei, ranked in the top ten with a monthly sales volume of over 4,700 units.

Obviously, GAC Group also needs its own Zeekr, AITO, or IM Motors.

He Xiaopeng once asserted that cars without strong autonomous driving capabilities are becoming harder to sell. This is true, as the success of Xiaopeng's MONA has already proven how powerful the combination of "low price + AI" is in the consumer market. New cars purchased this year can already achieve L2++++ autonomous driving functionality in their high configurations. By 2025, consumers will enjoy higher configurations at the same price. Alternatively, the same configurations will be available on lower-priced models.

Therefore, the new car from GAC Group + Huawei is expected to bring Huawei's high-level intelligent driving to the 150,000 yuan price range. One reason is based on GAC Group's cost control capabilities learned from Japanese companies, and the other is that the AITO 07, equipped with Huawei's Kunlun Intelligent Driving ADS 3.0, has a starting price of around 210,000 yuan. For consumers, smart cars have entered an era of annual major refreshes. The "wait-and-see" crowd never loses out.