The biggest news over the weekend was the agreement between Huawei and Chongqing Changan Automobile, a well-established Chinese state-owned automobile enterprise. Huawei will establish an automobile company to provide comprehensive services for automobile intelligent systems. Interestingly, other automobile companies can invest in this newly established Huawei subsidiary.
There are several implications behind this.
1) Next year, Huawei will make a full effort to enter the new energy automobile market, as a related company in automotive intelligence, and may capture the market. These types of companies are mainly listed on the A-share market.
Changan Automobile just cooperated with NIO's battery swapping service last week, and now they are partnering with Huawei for intelligent solutions, showing their determination to invest in electric vehicles. With the upcoming entry of Xiaomi, the competition in the new energy automobile market next year will become even more intense. $NIO-SW (09866.HK)$ No new energy automobile manufacturer has a significant product advantage, so in the end, it may come down to a price war. The industry's profitability for the next year or two does not look optimistic. Investors will have opportunities once the industry consolidates and eliminates weaker companies.
3) None of the new energy car manufacturers have significant product advantages, so it is likely that there will be a price war in the end. The industry's profitability in the next one to two years is not optimistic. Investment opportunities will only arise after industry consolidation and the elimination of weaker companies.
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