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The initial investment is expected to be Changan's ambition to become digital

2024-08-22

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Changan has been manufacturing cars for forty years. It is learning from the past, looking to the future, and creating a new situation by joining hands with old friends.

On August 20, a deal that could affect the entire Chinese auto market and even the global auto industry came to fruition. Changan Automobile officially announced that Avita Technology signed an Equity Transfer Agreement with Huawei in Chongqing, stipulating that Avita Technology would purchase 10% of the equity of Shenzhen Yinwang Intelligent Technology Co., Ltd. (hereinafter referred to as "Yinwang") held by Huawei, with a transaction amount of RMB 11.5 billion.

Changan and Huawei have entered a period of comprehensive strategic cooperation. It is not surprising that the cooperation is deepened. Avita's initial investment is meaningful. However, if you know Avita's position in the Changan system, it is not difficult to understand the strategic intention behind it.

As Changan's most important brand strategy carrier for new developments, Avita represents the company's high-end development direction. Its first entry into the market can enable it to obtain more empowerment from Huawei first, and use this transaction as an opportunity to comprehensively strengthen its strategic cooperation with Huawei. After all, Avita is not the "only" one in the Changan system, and the family's deep empowerment from the new company is the true meaning of cooperation.

This is a market-oriented result and is also based on considerations of industry trends.

One aims to become the "national team leader" in the new energy era, and the other has the potential to become the "Chinese Bosch" in the intelligent era. The two companies will once again join hands to take their cooperation into a new area.

From cooperation genes, cooperation models to ecological integration and aggregation, in the promising grass-gray snake line that Changan has entered the market, we also see an enterprise with a brand-new methodology for automobile evolution.

The natural starting position

It is no surprise that Avita became the first company to cooperate with Yangwang. After all, the smooth establishment of Yangwang Company is inseparable from the support of Changan.

Changan is the first important supporter of Huawei's plan to build a new company for the car BU. In August 2023, Changan and Huawei discussed the independence of the car BU. At that time, Huawei's rotating chairman Xu Zhijun extended an olive branch to Changan Automobile Chairman Zhu Huarong, asking whether Changan was interested in working with Huawei to build an open platform based on the entire industry and contributing to the world.

Zhu Huarong responded that "this is a good thing" because it is a great help to the rise of China's automotive intelligent industry. Therefore, based on the common values ​​and similar cultures, as well as the common judgment on the future development direction of the automotive industry, the two sides signed a memorandum of cooperation after three months of discussion.

The reason why they were able to make ready commitments and advance efficiently was also because both sides had full revolutionary feelings.

Huawei's Automotive BU originated from the Intelligent Connected Vehicle Center established by Huawei in 2014. After continuous development, it was renamed the current Huawei Intelligent Automotive Solutions BU. It was also in 2014 when Huawei began to enter the automotive field that Changan began its cooperation with Huawei.

From another perspective, every cooperation between Changan and Huawei is a substantial advancement of Changan's intelligent strategy "Beidou Tianshu" plan. Under the guidance of this top-level strategy, it is natural for Avita to invest in Yinwang as the first company.

"First launch" means setting the tone, taking the lead, and means that both parties will jointly develop new business forms, new models, new services, and new technologies.

Occupying the "first launch position" means not only a deep binding at the capital level for Changan Automobile, but also a dual blessing of technology and market. The special status of Avita Technology means that it is destined to become an important role in the cooperation between Changan and Huawei.

As early as the beginning of its establishment, Avita Technology adopted the "CHN" model that is different from the industry. Among them, C refers to Changan, and H refers to Huawei. Huawei mainly provides the Avita brand with autonomous driving software and hardware, and full-stack solutions for smart cars. It is the first to enter the market and lead the way. It also allows Avita to more directly obtain Huawei's core technical resources in the fields of smart driving and smart cockpits under the market-oriented and high-end development path.

Following the trend, Avita will serve as a clarion call to explore and innovate in multiple dimensions, including R&D, production, sales, and even product planning, marketing promotion, and joint training of R&D talents. It will then feed back resources and technology to the Changan system, leading the Changan system to upgrade its products and move its brand towards the high-end.

Looking further ahead, after the Yinwang model is implemented, Avita may gradually open up to other vehicle manufacturers. Zhu Huarong also said: Changan supports Avita to become the first company to invest in Yinwang, in order to build it into the most vivid example of "an open platform for the joint participation of the automotive industry."

With one thing linked to another, Changan Automobile's closed ecological loop has been created, and the breakthrough of a new cooperation model has also taken shape.

New boundaries and new imaginations of cooperation

Intelligence has rewritten the rules of the game in the automotive industry.

From mass production to subsequent software OTA upgrades, a smart car model requires joint research and creation between automakers and suppliers, and rapid iteration. This also means that automakers must be proactive in strategy and tactics - maintaining their core and complementing each other's strengths - in order to unleash the greatest momentum.

Unlike most car companies, Changan has shown stronger dominance in its cooperation with Huawei. Changan has chosen Huawei's HI model. Huawei has made use of its software and hardware technology advantages in the ICT field for more than 30 years, and Changan has made use of its vehicle manufacturing advantages accumulated over 40 years. Through the strong combination, they bring better value and service experience to users.

It is also under this model that the cooperation between Changan and Huawei efficiently crosses the "triple gates", from technology, products to manufacturing, and quickly exports intelligent results.

The digital new factory that Changan Automobile is proud of was jointly built with Huawei. The two parties have created a world-leading smart factory "model room". The whole factory is customized by Changan + Huawei for intelligence. It has the widest connection range in the industry (more than 12,000 devices are wirelessly connected) and the highest connection rate (5G+Wifi6+IP+optical, up to 1 million points/second). More than 20T of manufacturing data is formed into a huge database every year. The factory has the ability to self-learn, optimize energy consumption, and make self-judgment in production decisions. With the empowerment of all parties, the digital factory has achieved an overall manufacturing efficiency increase of 20%, cost reduction of 20%, and carbon reduction of 19%.

In the battle of smart driving to open cities, in cooperation with Huawei HI full-stack intelligent vehicle solutions, many models of Avita have launched the NCA function for map-free urban areas. Without relying on high-precision maps, it can realize intelligent assisted driving on national highways, national roads, provincial roads, rural roads, main roads, secondary roads and branch roads throughout the city, and be the first to realize "driving across the country".

This year is a big year for DeepBlue Auto's products. The first model equipped with Huawei Qiankun intelligent driving, the DeepBlue S07, is also equipped with Huawei Qiankun ADS SE advanced intelligent driving. It will support the NCA intelligent driving navigation assistance system and will also integrate Huawei's self-developed parking control algorithm to enhance the intelligent driving experience in all dimensions.

This signing will enable the cooperation between the two parties to enter a new area and a new stage.

According to the agreement, Changan Automobile and Huawei will comprehensively upgrade their strategic cooperation in the fields of brand and ecology, cloud and AI technology, green energy, and industrial chain cooperation.

This also leaves more room for imagination. For example, in the field of intelligent driving, maps, cloud computing power and AI are the core infrastructure. Creating a cloud-based, car-cloud integrated development model will enable automakers to build stronger infrastructure capabilities, thereby helping them reduce costs and increase efficiency in R&D, production and supply chain.

The two parties will also jointly explore the deepening and application of intelligence beyond automotive products. The new model Avita 07, which will be launched in the third quarter, will also be produced in the digital factory. In the future, the two parties will also integrate the industry's advanced digital transformation methodologies and technologies to further create a "new benchmark" for intelligent manufacturing and showcase cutting-edge research results in intelligence.

Perhaps, Changan Qiyuan may also enter Huawei's Hongmeng ecosystem in the future, which will be a comprehensive upgrade for Changan Automobile's new energy product matrix.

All this means that the boundaries of cooperation between Changan and Huawei will be further expanded in the future. By penetrating deeper into the upstream of the intelligent industrial chain, Changan Automobile will lay the groundwork for expanding and strengthening its "new cars and new ecology".

Intelligent advancement leads to a new cycle of "digital intelligence car"

"This era brings a natural and excellent opportunity for Chinese companies and brands, an opportunity to keep pace with the world's top brands."

In the rapidly changing market, Zhu Huarong is also leading Changan to maintain a keener insight and turn the rudder in time to lead the future. In Changan Automobile's view, with the deep integration of new elements such as the next generation of communication technology, energy, and data, new energy vehicles are just a prelude, and digital new vehicles are the real future. Changan's future victory is to unswervingly create new cars and a new ecosystem.

In order to achieve this goal, Changan has been working on open source and insisting on building a cooperative and open ecological system. It has mentioned in its intelligent strategy "Beidou Tianshu" plan that it will integrate globally available scientific and technological resources to achieve win-win results with partners in the entire automobile-centered ecosystem.

This is the original intention of Yinwang. Zhu Huarong said that Changan and Huawei should first develop this car and run it at high speed, gradually making it a public platform, and then open it to other vehicle companies and all walks of life.

Behind the platform's ambitions, in addition to the deep friendship with Huawei, Changan also has confidence in its reserves of intelligent achievements.

Up to now, Changan Automobile has accumulated profound technology in the field of intelligence. Changan Automobile ranks first in the industry in the number of patent disclosures in the field of intelligence. It has mastered more than 30 key technologies such as the industry's first integrated adaptive cruise control, remote intelligent parking, and remote valet parking, and has mastered more than 200 core technologies in total. The scientific research results are constantly demonstrated, with more than 5,476 invention patents applied for in total, ranking first in the industry in the number of patent disclosures in the field of intelligence. At present, Changan Automobile has mastered more than 200 core technologies in the three major fields of driving, cockpit, and intelligent driving, of which 30 technologies have been launched in China for the first time.

In terms of higher-level intelligent driving technology, Changan Automobile obtained an autonomous driving test license issued by the Ministry of Industry and Information Technology and other four ministries in June. This move is intended to support the road access and mass production of L3-level autonomous driving vehicles. Changan is one of the first nine shortlisted car companies.

As AI big models start a wave of high-quality racing, Changan has also already started the work of tackling the new generation of intelligent driving technology solutions based on "end-to-end" big models and "multi-modal" big models. The Changan Qiyuan E07, which is about to be launched, will be equipped with Changan's self-developed interactive intelligent driving system.

On the second day after signing the cooperation agreement, Avita first released the Kunlun extended-range technology and the new model Avita 07; in the evening, it officially announced the Avita 12 equipped with Huawei Qiankun Intelligent Driving ADS3.0 and CATL Kirin Supercharger Battery.

So, having said that, Changan's leading position in intelligent technology is enough to play a leading role together with Huawei in the development of the industry. Cooperating with such a national team player with both strength and vision is not only an inevitable option for Huawei, but also the common choice of the industry.

After all, the highest level of cooperation is to meet a worthy opponent, and lasting success is the rule for a long-term business.