The automotive industry is currently witnessing some significant transformations, driven by a surge in electric vehicle (EV) popularity and the strategic partnerships that are evolving between traditional car manufacturers and tech companiesOne of the most intriguing collaborations is between Chinese electric vehicle maker Cyrus and tech giant HuaweiThis partnership has not only elevated the recognition of their Aiways brand, but is also reflective of a broader trend in automotive innovation.

On November 9th, Huawei's Smart Selection Car business revealed the commencement of pre-sales for its inaugural sedan—the Zhijie S7. This launch was accompanied by the introduction of the Harmony Smart Travel Club, representing a coalition of brands under the HarmonyOS ecosystemThe Zhijie S7 is specifically designed to cater to the growing market for mid-to-high-end electric sedans, with an anticipated price range between 200,000 and 300,000 RMB, positioning it as a competitor to the popular Tesla Model 3 in the Chinese market.

During this year's autumn innovation showcase in September, Huawei's Executive Director and Chairman of the Smart Automotive Solutions Business Unit, Yu Chengdong, expressed his confidence, proclaiming that the Zhijie S7 would surpass even the Tesla Model S in terms of performance featuresOn social media, he reiterated the excitement surrounding the upcoming vehicle, promising breakthroughs in intelligence, safety, comfort, and performance, urging the public to stay tuned for its debut.

The vehicle is a result of a strategic partnership with the traditional automaker CheryFor Chery, venturing into the high-end segment with the Zhijie S7 represents a crucial pivot away from their previous reliance on lower-end electric models, which have hindered their growth amid the competitive backdrop of the EV market.

In October, during the 2023 Chery Technology Day, an emblematic moment unfolded as Chery Automobile’s CEO, Yin Tongyue, voiced the company's struggles with the rising prominence of newenergy vehicles. “Chery woke up early to the potential of new energy,” he lamented, “yet we ended up missing the bus for timely deployment

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However, from now on, we will catch up with our competitors.”

This sentiment underscores Chery's awkward position in the current EV landscapeDespite establishing its first clean energy project back in 1999 and founding its new energy vehicle division in 2010—years ahead of many contemporary automakers—the company has found itself eclipsed by rivals like BYD and Geely.

Chery's early beginnings in the new energy sector were marked by initiatives that positioned them among pioneers in the spaceIn 1999, while BYD was merely a battery manufacturer, Chery had already redefined its trajectory by launching significant projects well ahead of Elon Musk's establishment of TeslaHowever, their competitive edge has waned in the face of new entrants and established players alike.

Currently, the domestic EV landscape is dominated by four integral players: BYD, Great Wall, Changan, and CheryWith BYD leading the charge in electric vehicle sales across the market, and others such as Geely and Changan carving out significant territories with successful new energy models—a direct comparison shows Chery’s diminished presence, as they struggle to be recognized within the rapidly evolving market.

In 2022, sales figures for Chery reached 1.23 million units, with a noticeable uptick in their new energy vehicle sales reaching 233,000, marking a 113% increase year-on-yearModels like the QQ Ice Cream and Chery Little Ant highlighted their success with over 90,000 units sold apiece, bolstering their reputation in the electric vehicle segment.

As the head of Chery's New Energy Division, Baosi Yu has articulated a vision focused on “developing premium small cars.” In prior statements, he affirmed that, “In 2023, we will construct a product marketing system directly responding to user needs, solidifying our position as the world leader in premium pure electric compact cars, making them the first choice for the national economy.”

For 2023, Chery set a demanding target: 450,000 new energy vehicle sales

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However, this year has seen them impacted by a protracted slump in the micro-EV market, with first-quarter sales tumbling significantly, marking them as the company with the largest year-on-year decline in new energy vehicle figures.

As the competition in China's new energy vehicle market intensifies, particularly in the mid-to-high-end sector, leading domestic brands have introduced new lines such as Geely's Zeekr and Changan's Deep Blue, while Chery's slower response has drawn criticism as both its Chery and Exeed brands currently lack pure electric models.

In April, Chery announced a strategic pivot incorporating new technologies, brands, and products in the new energy realmMoreover, they reorganized their brands into four divisions: Chery, Exeed, Jetour, and iCAR, where iCAR stands as their inaugural independent electric brand.

Exeed, Chery’s high-end brand, launched the Xingji product series this year, which covers various body types including sedans, SUVs, and MPVs across pure electric and extended-range formatsFurthermore, Jetour has announced plans for complete electrification by 2024.

Despite these efforts, real progress remains elusive for Chery's new energy endeavors, demonstrating a frustrating gap between intention and market presence.

Recent public data indicates that Chery Group sold approximately 190,000 vehicles in September, with about 13,000 being new energy models—less than 7% of their total offeringsIn contrast, the domestic penetration rate of new energy vehicles from independent brands has soared to 59.4%. Although Chery hurled past the 200,000 sales mark in October, they neglected to disclose the figures for their new energy models, further clouding their performance narrative.

Furthermore, data from Car Owners Home reveals that between January and September 2022, Chery amassed total sales of 1.2532 million vehicles, with new energy sales exceeding 160,000 units

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Among these, the Little Ant and QQ Ice Cream accounted for 158,000 units combined, reiterating that the microcar segment still heavily dominates Chery's electric vehicle structure.

Examining Chery's product offerings on their new energy vehicle website, six models are currently listed, three of which are microcars—including the Little Ant, Wujie Pro, and QQ Ice Cream—all priced below 100,000 RMB, with the QQ Ice Cream priced under 30,000 RMBWhile these micro-EVs fulfill a market niche, the broader perception often relegates them to low-end, inexpensive alternatives, hindering the vision of becoming mainstream representative models in the electric vehicle sector.

Chery boasts a strong reputation in the fuel vehicle domain but finds itself constrained in new energy, primarily due to its low-end market entanglementDuring a particular interview, Yin Tongyue noted, “Not having a high-end brand is quite pitiable and threatens future viability.”

Historically, Chery's ventures into higher-end electrification have often culminated in failuresThis low-end fixation arguably represents a stumbling block on Chery’s path to innovation, igniting a pressing need to reverse this trend and develop a compelling electric vehicle that could catapult them into the upper echelon of the market.

During the 2023 Chery Technology Day held on October 16, Chairman Yin Tongyue pledged that next year, their competitive stance within the new energy vehicle sector would not be as passive as in years pastHe assured stakeholders that they would forge a position amongst the industry leaders without resorting to losses for the sake of salesChery aims to rise in the ranks of new energy vehicles with a commitment to shine as a ‘latecomer’ to the sector.

To this end, Chery disclosed plans to invest 20 billion RMB annually in research and development, forecasting total investments surpassing 100 billion RMB over five years, which includes establishing the Yaoguang Laboratory aimed at recruiting more than 25,000 R&D employees.

In pursuit of this ambitious agenda, Chery has also sought strategic partnerships, collaborating with Contemporary Amperex Technology Co., Ltd. (CATL) to launch supercharging battery technology in the Exeed Xingji model, and with iFlytek to incorporate AI technology, enhancing their offerings with the latest AI capabilities.

A critical pillar of their strategy remains the collaboration with Huawei on the Zhijie S7 electric sedan, which embodies a hybridized approach between traditional automotive expertise and cutting-edge technology.

Positioned as a large mid-size electric sedan, the Zhijie S7 will debut with the new HarmonyOS4 system alongside the high-level intelligent driving system ADS 2.0, integrating CATL's lithium iron phosphate or ternary lithium and lithium manganese phosphate batteries, alongside Huawei's electric motor systems.

The Zhijie brand, a second collaboration between Huawei and automotive manufacturers following the successful launch of the AITO brand, calls for an innovative business model wherein Huawei leads product definition, research, and design, alongside distribution through their established retail channels.

In addition to technological synergies, Yu Chengdong has made it clear that Chery and Huawei’s partnership is set to delve into product development, supply chain management, and market expansion, harnessing mutual strengths to explore new business models and value-added services.

As the Smart Selection car model crystallizes—a test case exemplifying robust collaboration between the technology and automotive sectors—Cyrus is a notable benchmark for what can be achieved when tech companies and traditional automakers unite for innovation.

Prior to partnering with Huawei, Cyrus was primarily a regional player in the automotive landscape; however, the partnership has considerably raised their profile and sales figures, drawing serious attention from both traditional and new automotive players alike.

In October of this year, Cyrus experienced a 12.84% year-on-year increase in new energy vehicle sales, with the delivery of its Aiways M7 crossing over 10,547 units in a single month—setting a new record

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