Economic Observer reporter Zhou Ju Changan Automobile’s intensive foreign investment and cooperation recently made it a "online celebrity" enterprise in the automobile industry. One of the most interesting events is that Changan Automobile became the first vehicle enterprise to invest in a new company established after Huawei BU (Huawei Smart Car Solutions Division) became independent.
Affected by this cooperation, Changan Automobile’s share price reached a long-lost daily limit for two consecutive trading days on November 27th and 28th, and its share price rushed to 21.48 yuan/share, setting a new high in market value in the past six months.
According to the announcement issued by Changan Automobile on November 26th, it has signed a Memorandum of Investment Cooperation with Huawei. According to this Memorandum, Changan Automobile plans to invest in the company that Huawei will set up to engage in the research, development, design, production, sales and service of automotive intelligent systems and component solutions. Changan Automobile and its related parties intend to contribute to acquire the equity of the target company at a ratio of no more than 40%.
This cooperation means that the rumor that Huawei BU is about to operate independently, which was previously rumored by the industry, has finally come to the fore. On the other hand, it is quite surprising that Changan Automobile became the first car company to support Huawei. Because among many vehicle companies that cooperate with Huawei, Changan Automobile is not the one with the deepest cooperation.
Investing in Huawei’s new company is just one of a series of big moves recently launched by Changan Automobile. In the past half a month, Changan Automobile, as the first automobile company, signed a cooperation agreement on power exchange with Weilai Automobile. It also released a high-profile self-developed battery brand Changan "Golden Bell Cover" and announced that it will invest 10 billion yuan in self-developed power batteries; Furthermore, Changan Automobile has also entered Southeast Asia to accelerate the development of globalization.
As a state-owned automobile enterprise group with a history of more than 160 years, why has Changan Automobile changed its temperament in the near future?
A sudden intensive shot
In the automotive industry, Huawei has proved to have huge traffic in intelligent driving and intelligent cockpit. Under this circumstance, even though some car companies are still worried that their "soul" will be mastered by others, Changan is the first to stand up and become the first car company shareholder of Huawei’s new company.
In fact, the cooperation between Changan Automobile and Huawei has a long history. As early as 2019, Huawei and Changan Automobile comprehensively deepened their strategic cooperation and established a joint innovation center. Subsequently, Changan Automobile teamed up with Huawei and Contemporary Amperex Technology Co., Limited, a battery company, to build Aouita Science and Technology, and Huawei provided Aouita Science and Technology with high-level assisted driving function and HarmonyOS intelligent cockpit. In August this year, Changan Deep Blue signed a cooperation framework agreement with Huawei BU.
Investing in Huawei’s new company will further strengthen the binding relationship between Changan Automobile and Huawei, and indirectly enhance its brand popularity and terminal sales performance. As the first shareholder of Huawei’s new company, Changan Automobile is expected to be the first to carry the technological achievements of the new company. According to Huawei, invitations to join the new company have been sent to partners such as Cyrus, Chery, Jianghuai and BAIC.
In addition to investing in Huawei’s new company, Changan Automobile has made frequent moves in the last half month. On November 21st, Changan Automobile and Weilai Automobile signed a cooperation agreement on battery exchange. According to the agreement, the two sides will cooperate in promoting the establishment of battery exchange standards, the construction and sharing of battery exchange networks, the research and development of battery exchange vehicles, and the establishment of an efficient battery asset management mechanism. Changan Automobile is the first automobile company to reach a power exchange cooperation with Weilai. On November 29th, Geely Holding Group also announced cooperation with Weilai in power exchange.
Changan Automobile entered the power exchange market in 2020. In September of that year, the first station of Changan New Energy Power Exchange Station was officially completed in Chongqing Olympic Sports Center, and it was indicated that the partners of Changan New Energy and Power Exchange Alliance will build 100 power exchange stations in Chongqing in the next five years. However, since then, the development of Changan Automobile in power exchange has not been as expected. The cooperation with Weilai in the field of power exchange will not only save the funds for repeated construction of power exchange stations nationwide, but also accelerate the research and development process of power exchange vehicles. At present, Weilai’s power exchange development is in a leading position in the industry.
In addition, Changan Automobile has also launched self-research actions in key technical fields. At the Guangzhou Auto Show held in the middle and late November, Changan Automobile officially released Changan Automobile’s self-developed battery brand-Changan "Golden Bell Cover".
At present, Changan Automobile and Contemporary Amperex Technology Co., Limited have established a battery joint venture company, Time Changan, and Changan Automobile will also conduct self-research and development of power batteries. In the automobile industry, there are not a few vehicle companies that adopt the battery self-research route, but some car companies have already backed out because of the huge cost. Why did Changan Automobile "go against the trend" and enter the field of battery self-research?
According to Changan Automobile, its self-developed battery is not simply considered from the relationship between supply and demand, but the core lies in breaking through the core technologies of batteries, including new battery technologies such as solid state, semi-solid state and sulfur-lithium battery, from the perspective of establishing the whole ecology of power, energy and energy.
Changan Automobile’s self-developed system has become the foundation of its self-developed battery. It is reported that Changan Automobile has set up a battery research institute with more than 1,200 battery R&D personnel, including 125 senior experts and top academic talents. In the future, Changan Automobile will invest 10 billion yuan in batteries, and by 2024, the battery team will reach 3,000 people.
"In this round of transformation, Changan Automobile seems to have a clear strategy: open your mind to the leaders in key areas of smart new energy vehicles and actively embrace them for our use. At the same time, we have invested heavily in research and development in some key areas to create unique labels. " Mei Songlin, a senior analyst in the automotive industry, told the Economic Observer.
Anxiety behind madness
At present, the competition in the automobile market is becoming more and more fierce. Changan Automobile’s intensive investment and cooperation reflect Changan Automobile’s new thinking in the era of new energy vehicles, but at the same time Changan Automobile cannot hide its anxiety and sense of crisis. "It (Changan Automobile) needs to keep up with the pace of the times and ensure that it is still an important member of the poker table." Mei Songlin told the Economic Observer reporter.
In May this year, Zhu Huarong, Chairman of Changan Automobile, once said at the 2022 performance communication meeting of Changan Automobile that in the next 2-3 years, it is conservatively predicted that 60%-70% of brands will be shut down and turned, and only the head enterprises with good products, strong technology, large scale and rapid transformation can survive and develop in the fierce market competition.
In the process of transformation to intelligent electrification, many car companies, including independent brands such as BYD and Geely Automobile, have emerged from the market by introducing new models and improving technology. BYD, in particular, has shown a strong growth momentum after the transformation of new energy vehicles. On the other hand, Changan Automobile faces considerable pressure in the fields of new energy and intelligence.
Changan Automobile launched its new energy quite early. In 2017, it released the "Shangri-La Plan" for the new energy field. It is expected that in 2025, it will completely stop selling traditional fuel vehicles and realize the electrification of full spectrum products. Changan Automobile’s latest strategic plan is that by 2030, the group will sell 5 million vehicles, including 4 million Changan brand vehicles, and the sales of new energy vehicles will account for more than 60%. To achieve the goal, Changan Automobile has laid out three smart electric brands, namely, Changan Qiyuan, Deep Blue Automobile and Aouita, and built three pure electric platforms, namely, large, medium and small.
However, from the perspective of effectiveness, Changan Automobile can be described as "loud thunder and little rain" in terms of new energy. Data show that in the first 10 months of this year, Changan Automobile sold 2,110,600 vehicles, up 10.76% year-on-year; The cumulative sales volume of independent brand new energy in the first 10 months was 364,100 units, an increase of 88.76% year-on-year. Although the year-on-year growth rate is not small, the total sales volume of Changan New Energy accounts for only 14.5%, which is less than the 30% new energy market share of the whole industry.
Before 2017, Changan Automobile ranked first in the sales of its own brands for many years. However, in 2017, Changan Automobile was surpassed by Geely Automobile, and then BYD rose strongly. Changan automobile is no longer the "first brother" of its own brand. In the face of a new round of intelligent electrification transformation in the industry, Changan Automobile tried to ensure that it would not be squeezed off the table through radical investment and cooperative layout.
It is worth noting that in the automobile industry, Changan Automobile has few successful precedents in foreign joint ventures and cooperation. Aouita, a high-end brand owned by Changan, was formerly known as Changan Weilai, and was founded by Changan Automobile and Weilai Automobile in 2018 with a share ratio of 50:50. However, Weilai withdrew its shares from it, and Changan Automobile newly introduced Huawei and Contemporary Amperex Technology Co., Limited to establish Aouita Technology. Furthermore, the joint ventures of Changan Automobile, such as Changan Suzuki and Changan Peugeot Citroen, have already withdrawn from the China market due to poor management. At present, only Changan Ford is still struggling.
Therefore, what will be the future effect of Changan Automobile’s foreign investment cooperation with great fanfare? A remarkable fact is that Changan will not be the only partner, whether it is Huawei’s new company or Weilai’s "friend circle" for exchanging electricity. It will be a big challenge for Changan Automobile to maintain its own differentiation in joint venture and cooperation.
Furthermore, the strategic fluctuation of Changan Automobile in its transformation and development is quite large. It is reported that in order to develop new energy sources, Changan has decided to collectively classify the original Changan UNI sequence and Auchan brand into the new Changan V standard while establishing a new Qiyuan brand, and will no longer make large-scale investment. That is to say, the UNI sequence and other product sequences that have just been established for two or three years have been abandoned in fact.
At present, Changan Automobile still has abundant funds to support its transformation and development. According to the latest financial report data released by Changan Automobile, the total operating income in the first three quarters of this year exceeded 100 billion yuan, up 26.78% year-on-year, the net profit returned to the mother reached 9.882 billion yuan, and the cash reserve reached 72.19 billion yuan. However, Changan Automobile’s non-net profit in the first three quarters was 3.61 billion yuan, down 5.9% year-on-year. This is mainly because its acquisition of Deep Blue Auto generated a profit of 5.021 billion yuan.
At the same time, Changan Automobile plans to explore new points from overseas markets. On November 27th, Changan Automobile Brand held a press conference in Southeast Asia, which indicated that it would invest 20 billion baht to build a new energy vehicle production base in Rayong, Thailand, with a total scale of 200,000 vehicles per year. According to the plan, the overseas sales of Changan Automobile will exceed 1.2 million by 2030.
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