AITO "Regains Control of the Steering Wheel": A Capital Game About Profit, Power, and the Future
Hello everyone, I'm your financial observer. Today, we're talking about a significant event that happened in the automotive and capital markets on September 15th: AITO (Autonomous Intelligent Technology Organization) has taken back the initiative in car manufacturing.
In simple terms, Seres (AITO's parent company) is no longer completely under Huawei's command. Previously, Huawei would decide what cars to produce, how to sell them, and how to market them, while Seres was responsible for the actual manufacturing process. Now, Seres wants to reclaim these core powers, with Huawei only providing technology (such as intelligent driving systems and chips) and support.
As soon as the news broke, both AITO's A-share and H-share prices plummeted. Many investors were confused: Didn't AITO's sales perform well? Why did the stock price drop just because it became independent?
Don't worry; this is actually a well-planned move to "wean" AITO off Huawei's support. It's also a necessary step for both companies to reassess their partnership as sales growth has slowed down. Let me break down this situation into five key points to help you understand the logic behind it.
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1. Why the sudden "breakup"? Because making money is becoming harder
Many people think AITO and Seres were in a "honeymoon period," but in fact, they had already started a trial partnership several months ago.
Background: In 2023, Seres was a company losing 2.45 billion yuan and urgently needed Huawei's help to sell its cars. Huawei not only provided technology but also deeply involved itself in product development, marketing, and even distribution channels. This strategy was very successful; in 2024, Seres' revenue tripled, and it turned a profit of 5.946 billion yuan.
The turning point came in 2025: Although AITO sold 426,000 cars and its revenue increased to 165 billion yuan, its profit barely increased (by only 10 million yuan). Why?
- Higher sales costs: Selling expenses rose from 19.1 billion yuan to 24.1 billion yuan (an increase of 26%).
- Higher R&D costs: R&D expenses increased from 5.5 billion yuan to 7.9 billion yuan (an increase of 42%).
It's like running a restaurant: before, there were many customers, and it was worth investing in a top chef (Huawei) to boost sales. Now, with fewer customers, the costs for hiring the chef, renovating the restaurant, and marketing remain high, and the owner realizes that "the more they sell, the less profit they make."
Therefore, Seres needed to learn to manage its own operations. In the first half of 2026, Seres even experienced losses and negative cash flow. Continuing to rely on Huawei's full range of services became too costly. By taking back control, Seres aims to control costs and maintain its profit margin.
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2. Seres has been secretly preparing for independence for a while
This announcement wasn't impulsive; Seres had been preparing for at least three months, if not longer.
Clues:
- Name change and new logo: At the end of May this year, Seres' subsidiary, Landian Technology, was renamed Saidu Technology. A new brand independent of Huawei's HarmonyOS Auto Alliance was also unveiled. Seres formed its own team and collaborated with ByteDance's "DouBao" large language model to develop its own intelligent cockpit system.
- Implication: Huawei doesn't manufacture cars, nor does ByteDance, but Seres wants to test whether it can develop smart cars on its own without Huawei's full support.
Clues:
- Asset acquisition: In 2024, Seres spent 2.5 billion yuan to buy AITO's trademarks and patents and another 11.5 billion yuan to acquire a 10% stake in Huawei's Yiwang Company.
- Implication: Seres wants to keep its trademarks and technology assets under its control. It doesn't want to be easily replaced by Huawei.
Conclusion: Seres' strategy is to continue using Huawei's technology but make its own decisions about product development, sales, and branding. This isn't a complete separation; it's more of a shift from a "managed marriage" to a "partnership with equal responsibilities."
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3. Huawei's "five-carrier" dilemma: Running out of resources
If you only look at Seres, you might think it's being greedy. But looking at Huawei's HarmonyOS Auto Alliance, you'll see that Huawei is also stretched thin and running out of resources.
What is the "five-carrier" situation?
HarmonyOS Auto Alliance currently has five car partners:
1. AITO (Seres)
2. Zhijie (Chery)
3. Xiangjie (BAIC)
4. Zunjie (Jianghuai)
5. Shangjie (SAIC)
The problem: Previously, with only AITO, Huawei could focus all its efforts. Now, with five partners sharing resources, Huawei's capabilities are limited:
- Limited product teams, chip supply, store space, and marketing channels.
- AITO accounts for most of the sales: In the first eight months, HarmonyOS Auto Alliance sold 236,600 cars, with AITO contributing 162,700 (almost 70%).
As a result, other partners (Chery, BAIC, etc.) feel that Huawei is focusing too much on AITO, hindering their own sales efforts.
- For Huawei: If AITO steps back and takes over more responsibilities, Huawei can focus on supporting other brands.
- For AITO: Although it loses Huawei's extensive support, it gains more autonomy and lower costs.
This adjustment is essentially a reallocation of resources within HarmonyOS Auto Alliance. AITO is "graduating" to make room for newer, less established brands.
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4. Why can't AITO leave completely? Because it's a valuable brand
You might ask: If AITO wants independence, why not just leave the alliance?
The reason: AITO is a symbol of Huawei's credibility in the automotive industry.
- AITO's value: By January 2026, AITO had produced its 1 millionth car in 46 months, proving Huawei's technology and the success of the partnership model.
- Consequences of leaving:
- For Huawei: It would damage its reputation if AITO fails, suggesting the model is ineffective.
- For other partners: If AITO leaves, it could set off a chain reaction, raising concerns about the stability of the alliance.
- For AITO: Without Huawei's brand support, its competitiveness in the premium market would be weakened.
The ideal scenario is for AITO to remain within the alliance while maintaining operational autonomy.
- For AITO: It saves costs and gains independence.
- For Huawei: It conserves resources and maintains its image.
- For the other partners: It reduces competition and provides a successful example for others.
This is a delicate balance of semi-independence.
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5. Investor concerns: Can AITO handle the challenge?
Let's return to the stock price drop. Why are investors so worried?
The main concern is AITO's ability to succeed on its own. In the past, AITO's success was attributed to Huawei. Huawei helped with product development, marketing, and store distribution. Now, with less support, investors question AITO's capabilities:
- Product development: Without Huawei's expertise, can AITO create another hit product?
- Marketing: Without Huawei's support, can AITO maintain its popularity?
- Distribution: Can AITO's sales network handle the increased demand without Huawei's stores?
Investors are re-evaluating AITO's stock value, as it no longer relies on Huawei's brand endorsement. If AITO can prove it can succeed without Huawei, its stock price will be supported.
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In summary
AITO's reclamation of control is not a simple breakup but a mature transition.
- For AITO: It's a transition from a dependent company to a self-sufficient one.
- For Huawei: It's a shift from a full supporter to a technology provider.
- For the industry: It marks a shift towards more refined operations in China's new energy vehicle market. The era of relying on market momentum and brand hype is over; the focus is on cost control and brand strength.
In short, AITO hasn't left Huawei; it just doesn't want Huawei to do everything for it anymore. AITO must prove that it can thrive on its own. This journey is just beginning.