Bloomberg’s latest report highlights Huawei Technologies‘ remarkable success in China’s electric vehicle (EV) market, propelling its manufacturing partner to become the largest stock in Asia over the past month. This development serves as a wake-up call to international EV manufacturers, including Tesla.
Analysts laud the initial triumph of electric SUVs as more than 500,000 orders flooded in within the first 25 days of the Aito M7’s relaunch in September. This success is attributed, in part, to Huawei’s significant consumer appeal in China, leveraging its extensive network of retail stores.
During the same period, Seres Group Co, Huawei’s automaker partner, has experienced a remarkable surge of over 50 percent in its shares, establishing itself as the top performer on the MSCI Asia Pacific Index. This stands in contrast to the declines observed in Tesla and other Chinese EV manufacturers like BYD.
In a note, Morgan Stanley analysts, including Cindy Huang, emphasized the importance for investors to pay growing attention to the potential challenges posed by upcoming Huawei EV launches later this year.
Largest market share
China, boasting the title of the world’s largest EV market, commanded 38 percent of new car sales in August alone. Furthermore, domestic automakers in the country have made substantial progress on the global stage, with BYD on the verge of surpassing Tesla in terms of sales.
In recent months, Chinese EV stocks have experienced a decline, marking a contrast to their earlier rise this year. Concerns surrounding valuations and competitive pressures have deterred investors, and the success of non-listed Huawei further adds to the potential delay in the sector’s recovery.
Direct threat
According to Morgan Stanley, the Aito M7 poses a direct threat to Li Auto’s L7/L8, Tesla’s Y, and G6/G9 models. The “BYD Tang” is also mentioned in this regard. Notably, the Aito M7 starts at a price of 249,800 yuan ($34,235).
According to Huang, investors should closely track the upcoming launches of the “Aito M9” and another vehicle supported by Huawei, namely the “Luxeed S7,” before the year concludes. Huang suggests that the reaction of shares will serve as an early indicator prior to the release of critical sales data.
Favorable reputation
Huawei has cultivated a favorable reputation among the Chinese public and is widely regarded as a symbol of the nation’s technological self-reliance. Leveraging its extensive presence in mobile phone stores, Huawei’s well-established footprint is perceived as an advantageous asset in the EV market after years of expertise development in this domain.
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Factors driving success
Joanna Chen, an analyst at Bloomberg Intelligence, highlighted that the new M7 is gaining momentum thanks to Huawei’s developed ADAS and communication technologies, competitive pricing, and the increased foot traffic in showrooms generated by the launch of Huawei’s new Mate 60 smartphone. The company’s strong research and development capabilities in Shenzhen, along with its brand reputation and expanded sales network, have all contributed to its successful takeoff.
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