Huawei's Handover of AITO: A Well-Laid Plan for "Weaning" or the End of Its Car-Making Dreams?
Hello everyone, I'm your financial observer. Recently, there was a big announcement in the automotive industry: Huawei plans to remove its "favored child," AITO, from its own exclusive dealership network, starting from 2027, allowing Seres to take full control of its own operations.
Many netizens' first reaction was, "Is Huawei failing?" or "Is AITO going to decline?"
Let me give you the conclusion right away: This is neither a sign of Huawei's decline nor the end of AITO; rather, it's a long-planned "graduation ceremony."
Think of it this way: Huawei, like a top student, has been mentoring Seres, a student with a solid foundation but great potential. For the first seven years, Huawei did everything—from writing research papers to conducting experiments and even helping with defenses. Now that Seres has grown up, Huawei realizes it needs to focus on other students. It can no longer devote all its resources to Seres, as relying too much on one student will prevent them from developing independently. So Huawei has decided to provide reference materials and guidance, but let Seres take on the exams and complete their own assignments.
Below, I'll break down this decision into five aspects to help you understand the business logic and the harsh realities behind it.
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1. The "Sweet Trap" in the Financial Books: Why Does Seres Need to Be Independent?
Many think Huawei's assistance in selling AITO is a form of charity, but it's actually a very clever business deal, albeit with a high cost.
1. Huawei Makes "Hard-Earned Money" and "Toll Fees"
According to Seres's prospectus, for each AITO sold, Seres has to pay Huawei two significant amounts:
- Hardware procurement fees + 2% technology licensing fees (to Yiwang Company)
- 8% channel service fees (to Huawei's retail partners)
In total, Seres has to give 10% of its revenue to Huawei for each car sold. For example, for an AITO priced at 400,000 yuan, Seres would have to pay 40,000 yuan just for these fees, not to mention the cost of hardware components like chips and screens provided by Huawei.
2. Is Seres "Working for Huawei"?
Although Huawei doesn't directly share profits, the more Seres sells, the more money goes to Huawei.
- A highlight in 2024: Seres had revenue of 145.1 billion yuan and a profit of 5.9 billion yuan. It looked promising.
- The Reality in 2026: Revenue declined in the first half of the year, resulting in a loss of 1.717 billion yuan. Last year at this time, it was still making a profit of 2.9 billion yuan!
Why? The industry's price competition was too fierce. Huawei receives a fixed percentage of the fees regardless of market conditions, while Seres bears all the risks (rising原材料 costs, price cuts, and inventory buildup).
In simple terms, Huawei is the "landlord," and Seres is the one building the house and paying the mortgage. If the house price (car price) falls, the landlord (Huawei) still collects the rent, but the builder (Seres) might suffer losses.
3. Why the Change Now?
Seres is struggling to sustain this model. If it continues, it will eventually fail. Although Huawei doesn't manufacture cars itself, it doesn't want to see its partners go bankrupt, as that would mean losing its best platform for showcasing its technology. By giving Seres more control and responsibility for its own profits and losses, Huawei is actually freeing it to adapt more flexibly to the market.
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2. The Misalignment Between "Soul" and "Body": Huawei Can Teach Car-Making, but Not the Skills
What makes Huawei strong? Its software—intelligence, cockpit systems, chips, and algorithms—these are the "soul" of a car. What does Seres do well? Manufacturing—stamping, welding, painting, and assembly—these are the "body."
1. The Limits of Huawei's "Fast Track"
By transferring its IPD (Integrated Product Development) system, Huawei helped Seres transform from a small car manufacturer into a high-end car company. However, car-making is a skill that takes decades to develop.
- Chassis Tuning: How to make a car handle turns smoothly and avoid bumps? This requires countless tests and engineers' experience.
- Quality Control: Rusty exhaust pipes, noisy doors, peeling interiors—these issues can't be solved by coding; they depend on skilled workers and strict quality management systems in the factory.
2. What Do Rising Complaints Indicate?
Since 2026, the number of complaints about AITO has increased significantly. Owners are complaining about motor failures, malfunctioning intelligent driving systems, and rusting cars.
This shows that Huawei's advanced technology outpaces Seres' manufacturing capabilities. It's like giving a novice driver an F1 car; the car is excellent, but the driver (Seres' manufacturing system) isn't ready yet.
3. Huawei's Limited Capacity
Huawei currently has multiple car brands: AITO (Seres), Zhijie (Chery), Xiangjie (Beiqi), Zunjie (Jianghuai), and Shangjie (SAIC). Even Yu Chengdong admits, "It's already challenging to support two or three brands; five is extremely difficult." Huawei's resources for stores, sales, and after-sales service are limited. If it continues to be deeply involved in each brand's operations, its resources will be stretched thin.
The result is: AITO gets all the attention, while the other four brands suffer. In the first half of 2026, AITO accounted for nearly 70% of HarmonyOS smart car sales, while the other brands combined didn't even come close. This internal competition is also detrimental to Huawei's overall brand image.
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3. Yu Chengdong's "Retirement": The End of the Internal Debate Within Huawei
What's most interesting about this adjustment is Yu Chengdong's silence.
1. Yu Chengdong vs. Ren Zhengfei: Two Philosophies of Car-Making
- Yu Chengdong (the Car-Making Faction): I want to make quality cars and lead the automotive industry, even putting the "HUAWEI" brand on them. He focuses on brand influence and product excellence.
- Ren Zhengfei (the Supplier Faction): Huawei doesn't make cars; we make components, just like Bosch. We want to profit from our technology without the burden of car manufacturing. He emphasizes strategic focus and risk isolation.
2. The Signal of Power Transfer
- 2023: Yu Chengdong stepped down as the CEO of the car business unit.
- 2025: He no longer serves as the chairman of the car business unit.
- September 2026: The AITO model was adjusted, and Yu Chengdong didn't comment on it.
This indicates that Ren Zhengfei's strategy won. Huawei has decided to focus on being a supplier of smart car components rather than a car manufacturer.
Yu Chengdong's retirement signifies that Huawei's impulse to take direct control has been suppressed. It wants to return to its core businesses: chips, communications, and AI computing power. The car business is just an extension of these technologies.
3. The "Trust Crisis" with Car Manufacturers
Traditional car manufacturers (like Chen Hong from SAIC) have always worried that Huawei's dominance would turn them into mere shells. Now that Huawei is stepping back and handing over product definition, brand marketing, and retail channels, it's a signal that it trusts its partners.
"I'm not taking your soul; I'm just providing the best technology." This also sends a message to other car manufacturers: Huawei is a reliable partner, not a potential competitor.
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4. Why "2027"? A Precise Timing
Note the timeline in the news: January 1, 2027.
- A Buffer Period for Seres: The change doesn't happen today but next year, giving Seres a year to:
- Establish its own sales channels.
- Train its sales and service teams.
- Adjust its internal structure to adapt to independent operations.
If the change happened tomorrow, Seres would be in chaos.
- Avoiding the Pain of 2026: Seres is already facing declining sales and losses. Cutting off Huawei's support at this time would be even worse.
By 2027, the industry landscape might be clearer, and Seres will have time to adjust its strategy.
3. Huawei's "Retirement after Achieving Its Goal"
When Huawei entered the car industry in 2019, Chinese smart car technology was dominated by foreign companies. In seven years, Huawei made intelligent driving a standard feature, driving the industry forward. Now, its technology has taken root in the industry.
- Qiankun Intelligent Driving is already used in 25 brands and over 60 car models.
- Yiwang Company (Huawei's intelligent driving division) has become independent with an open equity structure.
Huawei has fulfilled its historical mission of promoting the intelligent transformation of Chinese cars. Now, it's time for car manufacturers to take the lead.
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5. Looking to the Future: A "Dead End" or a "New Path"?
The headline suggests that Huawei's car-making efforts are heading towards a dead end, but I think that's too extreme. A more accurate description is: The end of Huawei's "deep involvement" in car manufacturing and the beginning of a new model where it focuses on providing technology.
1. For Huawei: It can focus on its core strengths—research and development of advanced intelligent driving algorithms, improving chip performance, and expanding into global markets (with Yiwang's independence).
This shifts the car business from a profit center to a platform for showcasing technology and an entry point for its ecosystem.
2. For Seres: It's a painful but necessary transition. In the short term, Seres will face challenges:
- Losing the traffic from Huawei's stores.
- Building its own brand recognition.
- Possibly facing reduced profits due to increased marketing costs.
In the long run, this is the beginning of its true growth. Seres must prove it can:
- Produce successful products on its own.
- Establish a high-end brand image.
- Find competitive advantages beyond Huawei's technology.
If Seres can overcome these challenges, it will no longer be just a factory for Huawei; it will become a truly independent high-end car company.
3. For the Industry: It creates a healthier ecosystem:
- Car manufacturers (like Chery, Beiqi, Jianghuai) will have more control over their brands.
- Competition will become more intense as other companies can use Huawei's technology to develop their own products.
- Technology will become more widespread as Huawei will be more willing to share it with more manufacturers.
In summary:
Huawei's handover of AITO is not a sign of weakness but of its strength. It has grown so much that it needs to return to its core businesses and allow its partners to grow independently. This is a "graduation" process, painful but essential for both parties to mature. Huawei will focus on its core competencies, while car manufacturers will have the freedom to develop their own brands. This is the healthier path for China's smart car industry.
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This analysis provides a comprehensive view of the situation, highlighting the strategic and practical reasons behind Huawei's decision to hand over AITO to Seres.