Four years ago, a bold statement from the then-chairman of SAIC Motor Group filled the air with tension: “If we hand over the intelligent cockpit and smart driving to Huawei, SAIC will be left with no soul, only a body.” This sentiment effectively shut down any potential collaboration between the two giantsFast forward four years, we find a dramatically different landscapeYu Chengdong, the now prominent face of Huawei’s automotive division, has voiced concerns over limited resources and indicated that his company could only support four partnershipsYet, SAIC has chosen to integrate its promising independent brand into the already saturated Harmony OS-driven intelligent driving ecosystem, making room for Huawei at their table.

This long-awaited thaw in relations can be understood through a lens of strategic necessityThe common adversary on both sides is none other than BYD, which has emerged as a formidable competitorAs Wang Chuanfu accelerates forward with his ambitions, leveraging scale and innovation to redefine the second half of the smart mobility landscape, SAIC finds itself in a state of anxiety, having seen its total sales eclipsed last yearMeanwhile, Huawei, stepping ambitiously to capitalize on its positioning as "China's Bosch," recognizes a pressing need to broaden its ecological reach and strategic map to strengthen its position in the market.

The cooperative venture is undoubtedly a case of two powerhouse entities leveraging their strengths to create synergyWhen Huawei’s smart tech penetrates the dynamic 150,000 RMB market segment, combined with SAIC's supply chain advantages and overseas market expertise, we may very well witness a transformative shift in the structure of the Chinese automotive market.

Savvy investors have already begun to sense the potential tremors caused by this high-profile unionSince late October last year, the stock price of SAIC Motor surged from a low of 13 RMB per share up to a peak of 21.3 RMB, settling into a stable average around 17 RMB per share

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This swift rise pushed the company's market capitalization close to 200 billion RMB.

As the automotive sector braces itself for a major shake-up, a new phase of competition is gearing up, signaling a turbulent yet potentially rewarding era ahead.

On February 21, a pivotal moment unfolded as SAIC and Huawei signed a deep cooperation agreement in ShanghaiThe signing ceremony was graced by the highest-ranking officials from both companies, including SAIC's Chairman Wang Xiaoqiu and President Jia Jianxu, alongside Huawei’s Automotive BU Chairman Yu Chengdong and President Wang YanminThe enthusiasm surrounding SAIC’s new brand, "Shangjie," suggests a definitive entry into Huawei’s Harmony-driven ecosystem, potentially marking SAIC as Huawei's "fifth realm."

However, specifics about the collaboration remained light, with no concrete framework laid out in the official announcementWhat’s crucial to note is that SAIC stands as the most influential and significant automaker to engage with Huawei thus far, implying that the model of cooperation might not adhere to previous norms, but rather evolve into something innovative that maximizes the strengths of both partiesThe joint proclamation asserted that they will work together to explore new paths in smart automotive technology and business model innovations, aiming to develop globally competitive smart vehicles.

Despite prior silence surrounding conjectured partnership talks, the market was already catching wind of these developmentsEarlier this year, SAIC had feverishly pursued trademark registrations for names like "Shangjie" and "SAIC Shangjie." While the trademarks await substantive scrutiny, the naming logic is evidently aligned with the Harmony ecosystem, solidifying their commitment to this partnership.

According to insiders, the partnership will see a realignment in areas including product definition, function development, brand positioning, and marketing strategies, tailored per vehicle model

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The initial vehicle resulting from this collaboration will find its roots in the internal codename "ES39" from the Roewe brand, leveraging the SAIC Nebula platformHuawei will infuse its expertise into refining the product, integrating its smart cockpit and driving technologies with an anticipated launch in the fourth quarter of this year.

The forthcoming offerings are poised to target a price range of 150,000-250,000 RMB, potentially positioning them as the most accessible in Huawei's lineup, marking a critical moment for both firms in a sector where affordability meets intelligence.

Fundamentally, since last July, SAIC has undergone a comprehensive reform, unprecedented in its scaleThis was also the catalyst for initiating its collaboration with Huawei, which gained traction as news emerged of SAIC’s President leading discussions with HuaweiThe resounding success of XPeng’s revitalized "Mona" prototype serves as an inspiring benchmark for both entities to expedite their strategies using 'half-finished' products in the market.

Industry analysts regard this partnership as a significant moment—one that could redefine competitive dynamics in the smart automotive realmAs Harmonized Intelligence solidifies its positions in markets above 250,000 RMB, the demand for a robust partner in the fiercely competitive sub-200,000 RMB segment is more relevant than ever.

For the past four decades, SAIC has stood as a titan among Chinese automakers, crowned the nation’s sales leader for eighteen consecutive yearsYet, the encroaching competitive environment has amplified pressures: BYD surged ahead with an annual sales figure of 4.27 million vehicles in the past year, overtaking SAIC's long-held record.

The ensuing year saw SAIC's total sales tumble by 20%, despite its independent brands maintaining a commanding presence with models like Zhiji, Roewe, and MG accounting for 2.41 million units—60% of the group’s total sales

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Nonetheless, this was heavily supported by budget-friendly Wuling (1.34 million) and the overseas-focused MG brand (700,000). The harsh realities of price wars compounded by the decline in joint venture fuel vehicle sales led to a staggering 90% drop in group net profit.

With increasing pressure mounting, the necessity for SAIC to pivot is urgent, particularly as the market begins to experience a cleansing phase, drawing immediate focus to possible avenues for reinventionUpon taking office, Jia Jianxu has instituted aggressive reforms aimed at revamping SAIC’s passenger vehicle segment, with an overarching goal of recovering lost market share.

At the end of October, the merger of Roewe and Zhiji signaled the first moves toward resource consolidationSubsequently, SAIC unveiled a “large passenger vehicle strategy” that fully integrated the development, supply chain, and overseas operations of Roewe, MG, Zhiji, and FEI Fan, establishing the industry's first “integrated research, production, and sales” super platform.

This move has cemented SAIC’s commitment to creating impactful, scale-driven models through a streamlined, low-cost production approachHowever, consolidating, enhancing, and rallying efforts represent only the initial steps in a competitive landscape overflowing with diverse offeringsJia Jianxu’s mission going forward will be to amplify SAIC's market presence and imprint its identity with a distinctive flair.

Huawei’s strengths lie in its ability to amplify brands and create compelling productsThe resurgent Aito M7 and the buzz surrounding the M9 exemplify Huawei's transformational influence—demonstrating a capacity to turn losses into profits while propelling Seres into the limelightFurthermore, Huawei's recent successes with other brands reinforce the notion that it can replicate its “golden touch” across partners, suggesting that the era of anmerken in product design and technology carry weight in maintaining consumer relevance in a shifting marketplace.

However, the landscape is evolving

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