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▲Since the rise of new energy vehicles, whether to build cars has become a choice for Huawei and other technology companies. Photo/Xinhua News Agency

"The Wenjie brand has now been sold to Seres at a very low price because national regulations require that the brand owner and the manufacturer must be one. The brand must be owned by the manufacturer, so we transferred all four 'jie' to the car manufacturer."

According to reports, on July 15, in response to why Huawei sold "Wenjie", Yu Chengdong, Huawei's executive director, chairman of the Terminal BG, and chairman of the Intelligent Automotive Solutions BU, gave a "standard answer" in a live broadcast.

Yu Chengdong also said that Huawei has invested heavily in the AITO brand, which is worth at least hundreds of billions of yuan. "Even the name AITO has been transferred. It is very difficult to register a four-letter brand starting with AI globally. It is a very good name."

Huawei's sale of "Wenjie" has not only caused controversy in the industry, but also attracted great attention from all sectors of society. In this regard, Yu Chengdong's words can be regarded as an explanation.

So, what does it mean for Huawei that the "Wenjie" worth tens of billions of yuan is sold to Seres at a low price? What impact will Huawei's "car manufacturing" model have on the development of smart cars in my country and even the world? All aspects of Huawei's move are worth further discussion.

The transfer of "Wenjie" is for compliance needs

During this conversation, Yu Chengdong, as the helmsman of Huawei's smart car business, expressed at least three key messages.

First, Huawei's transfer of "Wenjie" was not a completely optional question, but was for compliance purposes; second, this transfer was a discounted sale, with a brand worth tens of billions of yuan only sold for 2.5 billion yuan; third, Yu Chengdong also promised that Huawei would continue to support Seres in building and selling "Wenjie". From a third-party perspective, at least the first two points are certain.

According to the requirements of the National Development and Reform Commission's Order No. 38, "Regulations on the Management of External Labeling of Automobile Products", the content of the external labeling of automobile products should be consistent with the content marked on documents such as the vehicle product plate and vehicle factory acceptance certificate.

"Wenjie" is a registered trademark of Huawei. The corresponding new energy vehicle brand released by SERES is actually AITO. However, due to early publicity reasons, the brand value is mainly concentrated on "Wenjie". Now SERES finally owns the "Wenjie" brand.

In fact, the "compliance" here is not only about complying with national laws and regulations, but also includes Huawei's internal "regulation" of its car-making strategy, that is, "Huawei does not make cars." This is Huawei's public strategy and commitment, and it has been emphasized many times.

To this end, in an internal document released in 2023, Ren Zhengfei also put forward strict requirements on the exposure of the Huawei logo in car design: the words "HUAWEI/Huawei" must not be used in the promotion and appearance of the entire vehicle, and it was emphasized that the expressions "HUAWEI AITO" and "HUAWEI AITO" should not be used.

Furthermore, the 10 billion yuan value of "Wenjie" is not an arbitrary estimate by Yu Chengdong. According to the evaluation report issued by Zhongjing Minxin Asset Evaluation Company, the 919 "Wenjie" trademarks and 44 appearance patents held by Huawei are worth 10.233 billion yuan.

In addition to "Wenjie", Yu Chengdong also mentioned the concept of "Four Boundaries", including the "Intelligent Boundary" of Huawei's cooperation with Chery, the "Enjoyable Boundary" of Huawei's cooperation with BAIC, and the "Respect Boundary" of Huawei's cooperation with JAC. Ultimately, these "Four Boundaries" will be transferred to car manufacturers according to the "Wenjie" model.

However, given that the market influence of the other three realms is completely incomparable to that of the "Wenjie", the transfer price should also be very different. As for the "Zunjie" jointly developed by Huawei and JAC, even the name was just revealed during the live broadcast, and the car has not yet been launched.

Further consolidate "Huawei does not make cars"

While transferring Wenjie, Huawei stated that it has always insisted on "not making cars", but using leading intelligent connected car technology to continue to help car companies make and sell good cars. This is also Huawei's long-term position after entering the automotive field.

As early as November 2020, Ren Zhengfei even stated in a signed document that "anyone who proposes to build cars and interferes with the company in the future can be transferred from their position and find another job." However, the outside world has always had doubts about "Huawei not building cars", and a big reason is the existence of the "Ask the World" model.

After entering the automotive business, Huawei has two other cooperation models in addition to selling related parts to car manufacturers.

The first is the HI mode (Huawei Inside), in which Huawei provides full-stack smart car solutions to car companies, similar to Apple's Carplay; the second is the Smart Car mode, which is the cooperative car-making model between SERES and Huawei, in which Huawei is fully responsible for the design, research and development, and sales of Smart Cars.

Strictly speaking, both HI and Smart Car models belong to "Huawei does not manufacture cars", but since Smart Car is almost completely dominated by Huawei, the role of the car manufacturer is similar to that of OEM, and it is inevitable that some friendly companies will have doubts.

Many media outlets also jokingly referred to Wenjie as Huawei's "own son" in their reports, fearing that if Huawei's strategy changes one day, such as acquiring a controlling stake in SERES, its position would change from being its "own son" making cars to being "making cars itself."

In fact, there is no dispute about whether Huawei should build cars. It is just a choice of different paths, and each path has its pros and cons.

For example, Xiaomi, also a technology company, is now actively manufacturing cars. Huawei's launch of the smart car selection model is also based on practical reasons.

Huawei has great ambitions for its automotive business and needs to efficiently launch a smart car that fully implements Huawei's thinking. However, it is difficult to achieve this if it only relies on the HI model dominated by car manufacturers.

Therefore, Huawei chose SERES as its main partner and worked hard to create a prototype car to let the market quickly understand and accept Huawei's vision for future smart cars. The result is obvious to everyone. After its release, the "Wenjie" sold well and became the best-selling new car for many consecutive months. It can be said to be a great success.

As a result, SERES became famous, its stock price soared, and it became a company with a market value of hundreds of billions.

But as far as Huawei is concerned, since it has decided not to build cars, and "Ask the World" has allowed the market to see Huawei's automotive intelligence, its main strategic goal has been achieved. At this point, whether it still has the "Four Worlds" has become unimportant.

Huawei cars can be everywhere

In fact, since the rise of new energy vehicles, whether to build cars has become a multiple-choice question facing technology companies.

BYD used to be an IT company, starting out by making laptop batteries; Musk made his first fortune by making Tesla, also relying on the Internet; the current three major new energy vehicle companies, NIO, Xiaopeng and Li Auto, also originated from the technology industry; later came Xiaomi, and before Apple announced that it would give up its car business, it had also been struggling with whether or not to make cars.

Huawei has also been troubled by such disputes for a long time. However, judging from Huawei's low-price bid this time, Huawei's plan to stop making cars is completely clear. In the automotive field, Huawei wants to be an enabler, focusing on building an ecosystem and using its smart connected car technology to help car companies make and sell good cars.

There are pros and cons to personally making cars and participating in car manufacturing and providing services by building an ecosystem. It will take time to verify which path is better. But from the current time point, it is more beneficial for Huawei not to make cars.

First of all, the current car manufacturing market is too competitive. If Huawei personally gets involved in car manufacturing, it will face greater market uncertainty and need to devote more resources to fight in the red ocean. Secondly, not making cars is more in line with Huawei's overall strategy.

The automobile market is certainly a huge outlet, but Huawei also has to face other tasks at a higher level, such as artificial intelligence, the pure-blooded Hongmeng ecosystem, and chip breakthroughs, all of which are more urgent than making cars.

Moreover, not making cars can help Huawei unite more friends, while making cars will attract more firepower for Huawei. In the process of promoting "Ask the World", Huawei should have a deep understanding of the latter.

More importantly, the future of China's new energy vehicle market lies in the world, but Huawei is a technology company that is deeply feared by superpowers. Huawei also needs to consider geopolitical and international trade risk factors when making cars.

It is difficult to do something, but it is also difficult not to do something. Looking back at the history of global corporate development, there have been a large number of strong companies that have gone from prosperity to decline because they missed the opportunity, such as Motorola, Nokia, Kodak, Yahoo, etc.

This undoubtedly makes it difficult for companies to avoid heavy pressure when making decisions, fearing that they will become historical sinners. This conflict also exists within Huawei when it is trying to "not build cars".

If the "Huawei does not make cars" strategy is successful, although there will be no "Huawei cars" in the market in the future concept, "Huawei cars" will be everywhere, and hundreds of millions of consumers will live in the Huawei car ecosystem.

Of course, this also requires Huawei to truly be "far ahead" in "helping car companies build and sell good cars" and give car companies and the market enough reasons to apply it. We have reason to have greater expectations for this.

Written by Xin Haiguang (columnist)

Editor/ He Rui

Proofreading/ Li Lijun