Author | Nie Yiyao

There is no field more concerned with “making money” than the new car industry. Nowadays, watching new car brands release new cars always makes people excited and eager to rush to buy them with several hundred thousand or even million yuan to make a profit.

At the end of last year, when AITO’s Wanjie M5 was released, Huawei’s Yu Chengdong said that this car was built according to the standard of a million-dollar luxury car in terms of appearance, interior, performance, experience, and quality.

In other words, the Wanjie M5 priced at 259,800 to 331,800 yuan is worth a million dollars and you will make a profit if you buy it.

Two months ago, at the Guangdong-Hong Kong-Macao Greater Bay Area Auto Show, Yu Chengdong said that AITO will launch its second car model, the Wanjie M7, which will have a more comfortable experience than million-dollar luxury cars such as Toyota Alphard and Lexus LM.

Ten days ago, Li Xiang said that the Ideal L9 is the best SUV under 5 million yuan. Even if Rolls-Royce or Maybach come, the Ideal L9 is still the best under 5 million yuan. By the way, the Ideal L9 is priced at 459,800 yuan.

On July 4th, the AITO Wanjie M7 was launched at the Huawei new product launch event. The new car is priced at 319,800 to 379,800 yuan, which means that consumers buying the Wanjie M7 are not buying at a loss or being deceived, but are buying something worth more than a million dollars.

Real profit or not is not the main point

There are two points in consumer psychology. One is that customers don’t want cheap things, they want to feel like they got a bargain. Two, don’t argue with customers about prices, discuss value with them.

New car brands have clearly mastered this aspect of consumer psychology. They always start by talking about value before discussing prices. After a massage of values worth several hundred thousand or even several million dollars, consumers suddenly feel that prices in the range of three to four hundred thousand yuan are not only not expensive but also provide extreme comfort.

It is said that within 72 hours of the launch of the Ideal L9, more than 30,000 orders were placed. The Wanjie M7 of AITO is even more impressive, with over 20,000 orders placed within 4 hours of its release.

The sales situation is so impressive that Mr. Yu must be very happy, as the current car-making business is related to Huawei’s future development, and the Wanjie M7 is a landmark sample for Huawei to fully enter the new energy vehicle industry and become a core supplier in the intelligent manufacturing supply chain.

Is the AITO Wanjie M7 really that important to Huawei? Yes, it is.Due to being heavily affected by US restrictions on chips in the mobile phone industry, Huawei’s mobile phone business suffered greatly in 2020. Huawei’s global shipments of smartphones in 2020 were 189 million units, a year-on-year decline of 21.5%. In 2021, the predicament in the mobile phone business still has not improved, causing Huawei’s revenue in 2021 to plummet to 636.8 billion yuan, a sharp decrease of 254.6 billion yuan compared to 891.4 billion yuan in 2020, a drop of 28.6%.

At the Huawei 2021 Annual Report Release Conference held on March 28th of this year, the focus of Huawei’s rotating chairman Guo Ping’s speech was “We survived in 2021, and in 2022 we will continue to seek survival and development.”

How to seek survival and development? To delve into the new energy vehicle field and rapidly develop the car manufacturing business is one important path to seek development.

Therefore, why doesn’t Huawei manufacture cars under the “HUAWEI” brand, and instead join hands with Jinkang Siles to create the AITO brand, and vigorously promote and sell the AITO M5 and M7?

The reason still comes from the lesson learned from the phone business being hindered. During the mobile phone business, Huawei was the OEM brand, and all components needed to be self-procured, which made it easily vulnerable and caused the lesson of chips.

One cannot make the same mistake twice, and instead of creating another “HUAWEI” brand car, the investment would be high, and they would have to worry about which supply link would lead to accidents and compete with other automotive brands directly. It would be better to cooperate with global automakers, like Bosch. Huawei can become their core component supplier, borrowing from their successful experiences to make a name for themselves.

Jinkang Siles is the first vehicle manufacturer to have the deepest cooperation with Huawei. Huawei provides three cooperation modes for the partner plans for the car manufacturers.

The first is a common component supply mode. Huawei sells standardized components, such as Huawei’s motor, battery management system, T-BOX responsible for network connections, etc, to car manufacturers. For example, GAC Aiways, NETA Automobile. It is only a simple buying and selling relationship, and Huawei does not have much involvement.

The second is the HI mode. Also known as the “Huawei Inside” full-stack intelligent driving solution cooperation mode. Huawei bundles intelligent components including intelligent cockpit, intelligent driving, and LIDAR to sell them to the car manufacturers. For example, BAIC Arcfox αS HI Edition, YOUTU AVITA 11. The cooperation model requires full participation from Huawei in research and development, as well as the hardware and software of the car.

The third is the Smart Selection Mode. This can be viewed as Huawei’s strong entry into the vehicle manufacturer, where Huawei is deeply involved in all aspects from the design of the car, to the brand building, to sales. For example, the AITO car incubated by Huawei and Jinkang Siles.

And judging from Huawei’s dominance, everything is under Huawei’s command. After all, Huawei not only has software prowess, but also brand appeal, as well as over 5,000 high-end experience stores scattered throughout the country. The OEMs that cooperate with them may not necessarily possess these attributes.

For AITO’s AITO M5 and M7, Huawei must help them achieve success in sales, to prove that in the fierce competition among over 70 car companies nationwide, OEMs who want to quickly break through and continue to compete have the best choice with Huawei Xun.

With Huawei Xun’s support, and Mr. Yu’s relentless sales and promotion, AITO M5’s sales performance has been good, with over 10,000 vehicles delivered in three months and over 7,000 in June, exceeding the initial performance of WmAuto, XPeng, and Li.

However, for Mr. Yu, who is guided by the principle of “surviving and seeking development,” it is still not enough to quickly bring Huawei into the new energy vehicle field.

After all, Mr. Yu is already accustomed to being Huawei’s top general, expanding Huawei’s business from one field to another, climbing from one height to another.

Therefore, AITO M7 must move quickly, quickly stand out, and make people envious of their sales. If this can be achieved, Huawei’s bargaining chips in negotiating with OEMs will be higher, and Huawei’s progress in the car-making industry will be faster. This is important for Huawei, which is accustomed to strong leadership.

Of course, in the future, Mr. Yu’s value to consumers will be even higher, certainly not just in the millions, but more like the several million that Li Xiang offers.

Is AITO M7 really worth over a million?

Compared to Li Xiang’s statement that the LI L9 is the “best under 5 million yuan,” Mr. Yu’s statement that the AITO M7 “surpasses a million-dollar luxury car” is still somewhat implicit.

If the LiXiang L9 can create a luxurious smart riding experience for users at the best “under 5 million yuan” price with large space, TV refrigerators, and 100 flagship configurations.

Then AITO M7 can also create a “surpasses a million-dollar luxury car” feeling for users with its large space, HarmonyOS intelligent cockpit, and second-row zero-gravity seats.

Like LI L9, AITO M7 also boasts a “true large six-seat space” for the same six-seat layout.”What are the dimensions and wheelbase of the ‘True Six-Seat Space’ mentioned in the Huawei automotive ad? Official data shows that the WEY M7 measures 5020x1945x1775mm with a wheelbase of 2820mm.

Obviously, it doesn’t have the ideal dimensions of the L9, and even falls short of the Ideal ONE. The Ideal ONE measures 5030x1960x1760mm with a wheelbase of 2935mm.

Not only is the WEY M7 15mm taller than the Ideal ONE, but its length and width are also inferior, and its wheelbase is unexpectedly 115mm shorter than that of the Ideal ONE, and even 60mm shorter than the WEY M5.

Surprisingly, how does the WEY M7 achieve its ‘True Six-Seat Space’? Huawei’s answer is to use less common area to achieve a larger space.

How is this achieved? According to Huawei’s official statement, the WEY M7 uses a highly-integrated six-in-one range extender powertrain, which saves space in the engine compartment and shortens the distance between the front wheel center and the front pedal, thereby reducing the car’s common area and achieving a larger cabin space with a relatively short wheelbase.

Huawei has created a new standard for measuring cabin longitudinal seating space. Reportedly, the WEY M7’s overall longitudinal cabin seating space—front, middle, and rear—reaches 2605mm, surpassing competitors like the BMW X7 and Mercedes-Benz GLS and guaranteeing a “first-class cabin” experience for each row.

Of course, whether or not this is true depends on individual consumers’ experiences.

The Hongmeng Intelligent Cabin is the WEY M7’s secret weapon for “exceeding million-dollar luxury cars.”

Using the most representative in-car system as an example, consumers who have experienced the WEY M5 in-car system have marveled at Huawei’s mature in-car system performance and complete software logic, comparable to the smoothness and power of a mobile phone.

The Hongmeng Intelligent Cabin not only brings its smartphone ecosystem to the car system, but also includes a service center and application center. In addition to maps and the Huawei store, it also supports various rich in-car applications, such as Leishi KTV, 14 in-car games, Bilibili, Ximalaya, Youku Video, Tencent Video, NetEase Cloud Music, and more. Moreover, the in-car system supports split-screen display.

On the WEY M7, features such as the Super Desktop have been added. With the Huawei phone running the HarmonyOS, when the user gets in the car and touches the center screen, all of their phone’s applications can be synchronized to the in-car screen. Furthermore, all apps can be adapted to the in-car screen, enabling seamless information flow and interaction between Huawei smartphones and car systems, which CEO Yu has stated, “All Huawei HarmonyOS apps, just one company in the world, are synchronized with car systems.”Except for the car machine, HUAWEI SOUND audio system with 19 speaker units, 7.1 surround sound field, 1000W power amplifier, and 107dB bass effect provides excellent audio-visual experience for singing, video watching, and gaming.

The upgraded XiaoYi intelligent voice system supports 60 seconds of continuous conversation, 4 sound zone control, and wake-up-free function (as long as it is instruction language, no need to wake up XiaoYi). These are the extra points of the WenJie M7 smart cockpit.

WenJie M7’s second-row zero-gravity seat cannot be ignored. Mr. Yu said that this is the “most comfortable and enjoyable executive seat that surpasses the million-dollar luxury cars, the world’s first, and there is no other like it”.

The reason is that this zero-gravity seat located on the right side of the second row can be turned into a flat-bed mode with one button. The seat cushion and backrest tilt back 30 degrees together, while the leg rest extends out to support both legs, which can make the legs and heart on the same horizontal line, achieving a truly lying-flat experience.

However, in order to provide users with a flat-bed resting position, the front driver’s seat needs to slide forward and free up space, and move toward the center aisle.

It can only be said that in the WenJie M7 with a relatively short wheelbase, Huawei squeezes out the large cabin space by reducing the “public space,” and uses this flexible approach to create the world’s most comfortable and enjoyable executive seat, which is truly extraordinary.

Traditional car companies that have half of the effort put into people (consumers) for new car brands will never be as difficult to catch up in the field of new energy and smart cars.

Can the price of more than 300 thousand yuan earn the value of over a million? Most of the time, it depends not on how users think, but on how sellers think.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.