Relying on product launches to generate traffic, no one can replicate Huawei's approach, but relying solely on product launches to attract customers is not a sustainable strategy.
In the automotive industry, no brand can match the frequency of Huawei's "HarmonyOS Smart Driving" product launches.
Within a month, Huawei's "HarmonyOS Smart Driving" held three product launches, on August 26 in Chengdu, September 10 in Shenzhen, and September 24 in Shanghai. The first sports utility vehicle (SUV) co-developed by Huawei and Chery, the SmartRide R7, was unveiled in Chengdu, and after pre-orders began in Shenzhen, it was officially launched in Shanghai on September 24, with a suggested retail price starting at 259,800 yuan.
With an average of one product launch every 14 days, what is Huawei striving for with such a high frequency of events?
"After each product launch, the number of visitors to our store noticeably increases," a Huawei HarmonyOS Smart Driving channel partner told us, "The pre-orders for the R7 model have been quite good, but the Shanghai product launch did not bring many short-term additional orders this time. There has been a lot of hype for a long time, and the outside world is somewhat tired."
Several channel partners indicated that the R7 currently holds the top priority in HarmonyOS Smart Driving sales.
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For Huawei, the R7 is a battle that cannot be lost. In November 2023, Huawei was still riding the wave of traffic generated by the September launch of the Mate 60 smartphone, but the first vehicle co-developed with Chery, the SmartRide S7, failed to capitalize on the momentum. Even after a second launch in April of this year, the S7 still received a lukewarm response, with only 425 units sold in August 2024.
As the second vehicle launched after the initial failure of the SmartRide brand, the R7 not only bears the responsibility of reversing the sales trend for SmartRide but, more importantly, Huawei's "HarmonyOS Smart Driving" has four brands, with only the AITO brand currently active. Moreover, the sales gap between AITO and Li Auto has been widening recently. Huawei urgently needs the success of SmartRide to prove its ability to manage multiple brands.Huawei's eagerness is understandable, but such an intense barrage of product launches has also brought side effects.
The odds for the ZhiJie R7
The ZhiJie R7 is a mid-to-large-sized SUV, with dimensions benchmarking the Tesla Model X, but priced in line with the Model Y. This approach is similar to the ZhiJie S7, which benchmarks the Model S, with pricing converging towards the Model 3.
The new car comes in four configurations, including one Pro version, two Max versions, and one Ultra version, with a price range of 259,800 to 339,800 yuan. Both the Max and Ultra versions are equipped with Huawei's latest Qian Kun Smart Driving ADS 3.0 solution.
In terms of various parameters, the ZhiJie R7 continues Huawei's consistent style: while other configurations reach the mainstream market level, it differentiates itself with large space and technological content.
Positioned as a mid-to-large-sized SUV, the overall dimensions of the car are 4956mm in length, 1981mm in width, and 1634mm in height, with a wheelbase of 2950mm, larger than the Model Y and recently launched competitive models such as the Le Dao L60 and the Ji Ke 7X.
Yu Chengdong mentioned on site that the longitudinal space of the first and second rows of the new car is close to one meter, and the depth of the trunk is also 1.2 meters. He even demonstrated on site how many suitcases the trunk could hold.
In terms of power, the new car uses Huawei's 800V high-voltage silicon carbide power platform across the board. The rear-wheel-drive version has a maximum motor power of 215kW; the Ultra four-wheel-drive version has a maximum motor power of 150kW and 215kW at the front and rear respectively, with a 0-100km/h acceleration of 3.9 seconds.
In terms of smart driving, the ZhiJie R7 is equipped with the latest ADS 3.0 high-level intelligent driving system, applying a brand-new end-to-end architecture, and claims to be able to achieve urban smart driving that can be used nationwide upon delivery.
However, the R7 does not have a price advantage.At the press conference, Yu Chengdong stated that Huawei loses 30,000 yuan for each Zhi Jie R7 sold. However, among the domestic cars benchmarking against the Model Y, the Zhi Jie R7 is still the most expensive. The base model, Zhi Jie R7 Pro, is 10,000 yuan more expensive than the Tesla Model Y rear-wheel drive version, and this version only comes with basic ADS intelligent driving features, excluding lidar and advanced driving capabilities. High-end configurations such as zero-gravity seats, ventilation, heating, and massage functions for both front and rear seats, as well as thermoelectric boxes and pillow speakers, are only available on the high-end models. If these options are selected, the price approaches 300,000 yuan.
In comparison, two competitors targeting the Model Y, the Ji Qi 7X is priced at 229,900 to 269,900 yuan, and the Le Dao L60 has an official starting price of 206,900 yuan. For vehicles using the battery rental scheme (BAAS, Battery as A Service), the price can be as low as 149,900 yuan.
Yu Chengdong revealed that within less than two weeks of pre-sale, the order volume for the R7 exceeded 30,000. This is a good number, but it's not surprising. In contrast, the Le Dao L60 received no fewer than 30,000 orders within 72 hours of its launch, and the Ji Qi 7X received 58,000 orders during a 20-day reservation period. This week also sees two more competitors chasing the Model Y, the AITO 07 and the Zhi Ji LS6 facelift, on their way.
It is normal for the Enovate to sell well, but it is a capability for the Zhi Jie to sell well.
For Huawei's HarmonyOS Automotive, the Zhi Jie R7 is currently the most promising card.
The previous failure of the Zhi Jie S7 cast a shadow over the Zhi Jie brand. The failure of the S7, in addition to the intense competition in the segment market, was more importantly due to the lack of initial cooperation between Huawei and Chery, leading to delivery delays that caused consumers to lose patience.
For the launch of the R7, Chery's chairman Yin Tongyao, who was on a business trip abroad, sent a video message emphasizing the importance of Zhi Jie. His first sentence was to highlight the importance of Zhi Jie, "Cooperating with Huawei, Zhi Jie is Chery's top strategic project, and we have already invested billions of funds and a development team of more than 1,000 people."
Huawei's "HarmonyOS Automotive" has four brands: Enovate, Zhi Jie, Xiang Jie, and Zun Jie. Currently, Enovate has three models for sale, Zhi Jie has two, and Xiang Jie has one. Although HarmonyOS Automotive delivered a total of 272,136 vehicles from January to August, nearly 80% were contributed by the two models, Enovate M7 and M9.
The August delivery volume shows that HarmonyOS Automotive delivered a total of 33,699 vehicles, a month-on-month decrease of 23.6%. Among them, Enovate M9 delivered 15,386 vehicles, and M7 delivered 10,261 vehicles, accounting for 76% of the total sales volume. In the 44,090 vehicles delivered in July, Enovate M9 delivered 18,047 vehicles, and Enovate M7 delivered 16,562 vehicles, accounting for 78% of the total sales volume.
This has led to Huawei's high dependence on cooperation with Seres. According to the data on Huawei's automotive business disclosed in the announcement of Seres' investment in Huawei's Look Forward, in 2022, 2023, and the first half of 2024, the revenue from the top customer Seres accounted for 56.68%, 50.97%, and 63.38% of Huawei's Look Forward revenue, respectively. When a single major customer accounts for more than half of the revenue, it is difficult for other customers to establish confidence in the supplier.For Huawei, if the ZhiJie R7 can successfully penetrate the market and promote the success of "Hongmeng Zhixing" on more brands, it will help Huawei win more automotive customers, which is crucial for forming a positive cycle in Huawei's automotive business.
A Huawei store salesperson told us that Huawei has already started to put pressure on stores, saying, "It's normal for the Enquiry series to sell well, but it's a capability for the ZhiJie series to sell well."
Better to attack than to defend
In a live broadcast in July 2024, Yu Chengdong admitted that the sales volume of the ZhiJie S7 was not ideal. He believes that although the S7 is very good in terms of intelligent driving, smart cockpit, large space, and ultra-long endurance, Huawei still has a lot of room for improvement in marketing capabilities, and the ZhiJie brand has not yet been established.
Huawei hopes to quickly establish brand user awareness, and establishing user brand recognition is inseparable from intensive marketing.
A former management person from Huawei's automotive business unit told us that Huawei's frequent press conferences are a continuation of its mobile phone marketing strategy. "Generally speaking, mobile phone press conferences are held once in spring and autumn, and the popularity of mobile phones is usually higher within half a year after they go on sale. Manufacturers use press conferences to increase product popularity, which then gradually fades. Now Huawei's automotive marketing also follows this idea."
However, he believes that cars are not mobile phones after all. The development cost of a car is huge, and the sales cycle is longer than that of mobile phones. Too frequent press conferences actually compress the product life cycle.
In addition, the sales experience of Huawei stores in the past focused on the consumer electronics field and were not familiar with the long sales cycle of cars. A leading Huawei channel merchant told us, "Without frequent press conferences, the ability of Huawei store sales to develop new car customers and maintain customer relationships is not as good as that of real car brand sales. Holding press conferences is currently the most effective way to increase the number of people entering the store."
The channel merchant introduced that Huawei stores mainly sell three types of products: consumer electronics, whole-house intelligence, and cars. Among these three, whole-house intelligence has high investment, long return cycle, and difficult profitability; the consumer electronics market is mature, and making money is not easy. Compared to these, cars are currently the largest source of sales profit for Huawei channel merchants.
As far as he knows, many channel merchants were in a loss state in the first half of this year. Huawei hopes to make channel merchants profitable through new car products to support whole-house intelligence and consumer electronics. "Now the market competition is fierce, it's better to be more aggressive in marketing than to defend, maybe we can get more opportunities in the elimination competition."However, this approach also has side effects.
The channel merchant stated that he has already felt the fatigue from the frequent releases. The story of success and failure due to traffic is being played out in the marketing circle almost every moment. Huawei's car marketing wants to solve the problem, and fundamentally, it still needs to understand the differences between car sales models and consumer electronics, and understand the particularity of cars as large durable consumer goods. Relying on frequently holding press conferences to forcibly include car sales in the sales model of consumer electronics is not a long-term solution.