259,800 yuan, Hongmeng Zhixing’s first coupe SUV was officially listed.
From the press conference, Yu Chengdong always used "far beyond" to show Huawei’s ability to give the Smart R7, it can be seen how much Huawei attaches importance to this car. As a benchmark model, the starting price of the Smart R7 is 10,000 yuan more expensive than the main selling version of the Model Y, but in Yu Chengdong’s mouth, this is the experience of "buying at the price of Model Y".
Whether it is the standard full blood Tuling chassis (continuous variable damping shock absorber + air suspension), the new upgraded silk cloud seat, or the intelligent driving ability of the whole series of 800V and Huawei ADS3.0, Huawei uses such an intuitive stacking material to achieve the "million-level standard", which is not only an attitude given by Huawei in the increasingly crowded smart electric vehicle market, that is, it does not choose to reduce the distribution to participate in the invalid price war, but also a signal conveyed by Hongmeng Zhixing to the outside world, that is, the intelligent brand can no longer lose.
The two launches of the Smart World S7
Zhijie is the second brand to debut under Hongmeng Zhixing, and the cooperation between Huawei and Chery has attracted great attention from the beginning. First, after the great success of the Wenjie brand, the market and users are full of curiosity and expectation for every move of Hongmeng Zhixing. Second, compared with the first partner, Cyrus, Chery has more profound and mature experience in vehicle manufacturing and capabilities, as well as supply chain and channels.
Therefore, the first car S7 of Zhijie received 5,000 large orders on the day it was listed on November 28 last year, and it broke through 20,000 within 3 days. When everything was developing in the direction expected by Huawei, and it was thought that it would continue the brilliant record of Wenjie’s new M7, a series of rights protection incidents such as the owner’s "difficulty in picking up the car" and "eight deadly sins" continuously exposed on social platforms made this high-profile blockbuster model a target of public criticism. Subsequently, it was reported that the daily output of Zhijie S7 was only a few dozen units by Chery, confirming the delivery difficulties caused by the serious shortage of production capacity of Zhijie S7.
This wave of splashing heaven’s wealth did not catch, and it was also destined to be unfavorable for the intelligent brand.
According to third-party statistics, the delivery volume of S7 in December after the listing of 784 vehicles, and 113 vehicles in January 2024, which is too large a gap with the large order volume of the previous 20,000.
Although Yu Chengdong bluntly stated on the delivery difficulties of the Smart S7 at the Electric Vehicle 100 Forum in early 2024 that "the listing was delayed due to factory relocation and chip supply shortage", and Hongmeng Zhixing official also gave a compensation plan, for the Smart S7 users between November 28 and January 15, if the delivery is overdue, the owner will receive compensation of 200 yuan per day, up to 10,000 yuan, but such measures still failed to resolve the complaints and anger of the early users of the smart car.
For new car brands, the release of the hype PPT is just the first step. To compete for true skills, it depends on the delivery ability. To enable users to drive their favorite cars in the shortest possible time, they can form a word-of-mouth effect and promote the rapid development of new brands. If even the car cannot be delivered, what else can be said to become bigger and stronger?
Faced with the unfavorable public opinion that fell sharply from the peak of the listing, after four months to solve the production capacity problem, Huawei and Chery decided to re-list the smart world S7. This very rare practice in the car circle also caused a lot of onlookers. Has the second release of the car changed?
The starting price has not changed, but the price of the medium and high-end models has been reduced by 20,000, and the battery and battery life of the medium and high-end models have been improved. Yin Tongyue, chairperson of Chery, said at the second release that Chery’s current production capacity can guarantee "one car per minute", so that everyone can rest assured of the delivery ability of the Smart S7.
At first, the second listing still had some effect. The order volume in the first two months exceeded 5,000, but after that, it did not increase but decreased, from around 2,000 in June and July to 425 in August. Such results can only be said that the defeat of the Intelligent World S7 has been determined.
When it first went public last year, there was the huge traffic and popularity brought by the strong return of Huawei Mate 60, and the hard-to-copy user favorability and brand effect brought by the big sale of the new M7 to Hongmeng Zhixing. It can be said that "the right time, the right place and the right person" are all there, but it can only be blamed on the intellectual world for not seizing this rare opportunity.
By the first half of this year, the brand’s reputation will be gone, and the blessing of public opinion effect will be gone. Moreover, there is still such a traffic giant in the market, and the smart world S7, which is also positioned for the C-class car, has little market space.
Is Chery responsible?
The unfavorable start of Zhijie S7 did not continue the success of Huawei’s brand to Wenjie, and the appearance of delivery problems caused rumors that "Huawei and Chery" were at odds for a while.
During the period, Han Biwen, who was then the deputy general manager of Chery and the general manager of the manufacturing division, left. A screenshot of a chat circulated on the Internet showed that "Zhijie S7 is all Huawei’s, and no software version was handed over to Chery. Even the leader’s test drive was hand-brushed by Huawei engineers." The slow progress led to a delay in delivery, which led to the resignation of the leader in charge of the project.
Although Chery has refuted rumors that the departure of executives is not the reason for the cooperation project, the fermentation of rumors and the criticism of Huawei’s smart car model by car company executives in public have put Chery and Huawei’s smart project under tremendous pressure.
From a filing document issued by the Wuhu Public Resources Transaction Supervision and Administration Bureau, it can be seen that the construction of Jiangbei Intelligent Networked Automobile and Parts Industrial Park in Wuhu Economic Development Zone was completed on January 31, 2024. This factory is Chery’s Intelligent Networked Super Second Factory, which is used to produce Intelligent S7.
That is to say, before the Super Second Factory was officially put into production, that is, after the first release of the S7, the production of the S7 was placed in the Chery Super One Factory, which was mainly used to produce Chery’s own models, such as the Xingtu brand. One was an independent brand, and the other was a cooperative foundry brand, which could explain why after the first listing, the daily production capacity of the S7 was only more than ten units.
Although Yin Tongyue said at the press conference that "cooperation with Huawei is Chery’s first priority strategy", as an old car company with decades of car manufacturing history and experience, Chery’s cooperation with Huawei on intellectual projects cannot be completely as smooth as Cyrus and Huawei. The smart car model (i.e. Hongmeng Zhixing) requires car companies to hand over their "souls" to make Huawei’s technology more synergistic. This requires car companies to be willing to do "OEM" roles in cooperation projects, thus giving up a lot of car manufacturing and parts has the voice over, which will definitely affect the original good business operation model and interest chain within the car company.
Cyrus was willing to cooperate fully because Huawei’s appearance saved them from bankruptcy, while Chery’s market position and annual sales were beyond Cyrus’s reach, so it was naturally unwilling to cooperate in this relationship.
Therefore, from the intellectual world project, it reflects Chery’s internal two-party game of joining Hongmeng Zhixing, as well as Chery’s hesitation and infirmity in the direction of new energy transformation
Yin Tongyue also said that "if China wants to build a good car, it cannot do without Huawei. If China wants to change from an automobile power to a world power, it needs the blessing and empowerment of Huawei Hongmeng System." After the failure of the S7 in the intellectual world, I believe that Chery has also made a summary internally. The top management has set the tone and needs to convey this central idea step by step, and in the face of existing executives or departments. Collaboration interruptions or other impacts that will inevitably occur between existing channels, supply chains, partners, etc., this needs to be solved by Yin Tongyue.
Chery Left Behind
It is not an exaggeration to say that Zhijie is Chery’s only hope to enter the high-end market in the new energy transition stage.
The Chery Starway Interstellar Era ES, which is on the same platform as the Smart Era S7, was released last year following the Smart Era S7. It has sold a total of 3,666 vehicles in the nine months of its listing. This is obviously a failure for Chery, which hopes to open the entrance to the high-end new energy vehicle market in the Star Era.
When traditional car companies such as Geely and Changan launched their own new energy brands and gradually leveraged the market firmly occupied by fuel vehicles in the past with extremely high product power, Chery still did not have a new energy sequence that could bear the heavy sales responsibility except for Xingtu, Jietu and the fuel vehicles of this brand.
According to the data of the Passenger Association, the sales volume of Geely and Changan new energy models in 2023 was 487,000 and 474,000 respectively, while Chery was 128,000. Reflected in the product, Geely’s polar krypton and Lynk & Co are transforming very fast in pure electricity and hybrid respectively, and already have a large-scale sales system and market share. Even the newly hatched Galaxy brand has grown very fast in a year. On the other hand, Changan’s Avita, Qiyuan and Deep Blue brands are also launching new products in different sub-sectors, and sales are also good.
In contrast to Chery, if you ask what the best-selling model is, the answer will only be the same, Arrizo and the two brothers who left the fuel sequence, Chery is blank in the field of new energy. The main reason is that the transformation speed is slow, the product line is confused, and there are many internal disputes.
Chery only established four future brands in the new energy market at the beginning of last year as Chery, Xingtu, Jietu, and iCAR. This kind of response speed and execution are indeed in line with the fact that it is currently lagging behind in the new energy market. After establishing the four major brands for more than a year, only the Heshanhai car series has considerable sales, but it is only relative to Chery itself.
And the main reason for the good sales of these two brands is the low price. When other car companies add fixed labels to their respective new energy brands to strengthen brand recognition and guide users’ inertial thinking, in order to impact the high-end, Chery still does not seem to realize this importance in the transformation stage, resulting in the current impression of new energy brands to users is still vague.
Therefore, choosing to cooperate with Huawei to launch the Intelligent World brand is a big gamble for Chery and a necessary battle, which can not only help Chery quickly catch up with the rhythm of the new energy transformation stage, but also enable Chery to break through in the high-end market.
Before the launch of Zhijie R7, Yin Tongyue and Yu Chengdong jointly promoted the car booth many times, and it can be seen that both have high hopes for this car, which is not only related to Chery’s new energy transformation results, but also the driving force for Hongmeng Zhixing to continue to move forward. After solving key factors such as factory capacity and collaboration issues, R7 is also a key battle for the Zhijie brand. Whether Huawei’s strongest "stacking material" can work or not remains to be seen.
