Behind Seres' phased adjustment: premium new energy vehicles enter value-based competition, while Aito's long-term fundamentals remain strengthening

The new energy vehicle (NEV) industry is undergoing a profound transformation. $Chongqing Sokon Industry Group Stock (601127.SH)$$SERES (09927.HK)$

Over the past few years, new energy vehicle (NEV) manufacturers have relied on rapid growth to capture market share. However, as industry penetration continues to rise, the competitive dynamics are shifting. The focus is moving from scale expansion to brand strength, technological capabilities, and profitability, marking a new phase of development for China's NEV industry.

On July 13, Seres issued a preliminary earnings announcement for the first half of 2026, forecasting a net loss attributable to shareholders of the listed company in the range of RMB 1.5 billion to RMB 1.8 billion.

For the market, this shift into losses undoubtedly creates short-term pressure. However, a closer look at the announcement reveals that the earnings volatility stems primarily from changes in the competitive stage of the industry and operational adjustments, rather than any significant shift in demand-side conditions.

According to the announcement, the company’s performance was affected by rising prices of key raw materials such as memory chips, industrial metals, and lithium carbonate. Additionally, based on prudent accounting principles, the company adjusted the carrying value of certain existing assets whose applicability has become limited due to technological iteration and model transitions.

Meanwhile, the company maintains ample cash reserves and a solid balance sheet structure, providing sufficient support for ongoing business operations, technology R&D, and strategic investments.

Therefore, while Seres’ short-term profit fluctuations warrant attention, it is even more critical to understand the industry phase it currently occupies: as the NEV sector enters a period of intense competition, long-term corporate value will be determined not merely by quarterly profitability, but by the ability to navigate through full business cycles.

1. The industry has entered an adjustment phase—premium NEVs must also demonstrate resilience through cycles

In fact, profitability pressures in the automotive sector have become an industry-wide challenge.

According to data from China’s National Bureau of Statistics, from January to May 2026, profits of large-scale industrial enterprises nationwide rose by 18.8% year-on-year, whereas profits in the automotive manufacturing sector declined by 19.8%. This indicates that the challenges currently facing the automotive industry are not isolated to a single company but reflect shared pressures stemming from shifts in the industry’s competitive landscape.

On one hand, the NEV market is gradually transitioning from a high-growth phase to a mature, competitive stage, with competition shifting from 'whether products exist' to 'differentiation capabilities.' On the other hand, price wars continue to ripple through the supply chain, forcing companies to contend not only with pricing pressure at the consumer end but also to sustain heavy investments in areas such as autonomous driving, semiconductors, and software ecosystems—temporarily weighing on profitability.

Over the past few years, China's new energy vehicle industry has grown rapidly, with numerous companies trading price cuts for scale. However, as the industry enters a phase of competition within a stagnant market, this model is now facing severe challenges.

Although premium brands cannot entirely avoid industry cycles, companies with brand premium, technological capabilities, and ecosystem advantages may actually gain further opportunities to solidify their lead amid accelerated competitive shakeouts.

From an industry-wide perspective, what truly needs to change is the mode of competition—less focus on price wars, more emphasis on value creation. Only by continuously enhancing product quality, technological capability, and brand value can companies establish sustainable competitive advantages in the next phase.

2. AITO Continues Breaking Into the Premium Market, Building Competitiveness in Luxury Smart Vehicles

Short-term profit fluctuations have not altered AITO’s underlying growth trajectory.

In the first half of this year, AITO deliveries rose by over 10.2% year-over-year. Despite intensifying competition in the new energy vehicle market, AITO has maintained resilient growth.

More importantly, AITO’s growth does not stem from using low prices to capture market share, but rather from continuous breakthroughs with premium products.

The newly launched AITO M9 exceeded 10,000 units in deliveries during its first month on the market, and the AITO M9 Ultimate LWB (long-wheelbase) edition is also set to begin deliveries soon, further strengthening AITO’s competitiveness in the premium smart SUV segment. This continues Seres’ recent trend of shifting its product mix toward higher-value models—a strategy widely acknowledged by institutional analysts.

Huaxi Securities noted in a report that Seres’ first-quarter revenue growth was primarily driven by strong sales of its premium product lineup, with AITO brand deliveries reaching approximately 68,000 units, up about 50% year-over-year. The M7, M8, and M9 models collectively formed a key pillar of this sales growth.

CITIC Securities previously highlighted in a research note that the AITO M9 is positioned as a smart luxury SUV priced around RMB 500,000, and its premium pricing and flagship positioning are expected to deliver stronger earnings elasticity.

For automotive companies, true competitiveness lies not merely in sales volume, but in a comprehensive reflection of vehicle portfolio structure, per-vehicle value, and profitability. Higher-priced models are helping Seres establish a value proposition distinct from mass-market new energy brands. While some new energy brands rely on low pricing to expand sales, Seres is enhancing brand value and long-term growth potential through premium vehicles.

3. From an automaker to an intelligent vehicle ecosystem platform, Seres is unlocking long-term growth potential

Evaluating Seres solely through the lens of a traditional automaker may lead to an underestimation of its future growth potential.

As the automotive industry enters the era of intelligence, vehicles are gradually evolving from mere transportation tools into a key application gateway for artificial intelligence.

In recent years, Seres has continuously increased its R&D investment, steadily building up capabilities in intelligent vehicle technologies, patent reserves, and innovation systems.

Huaxi Securities believes that Seres’s future growth drivers will stem not only from its premium vehicle lineup, but also from sustained R&D investment, new product cycles, and strategic initiatives in emerging areas such as robotics.

Meanwhile, the company is actively exploring new growth trajectories.

Seres’s future development logic may extend beyond being merely a new energy vehicle manufacturer, potentially evolving into a multifaceted value system integrating vehicle manufacturing, AI-driven intelligence capabilities, and high-potential industrial investments. Strategic initiatives such as Yinwang and AIVA, for instance, offer significant room for imagination regarding the company’s future.

Of course, realizing the value of these new businesses will take time, but industry trends are becoming increasingly clear: future competition in the automotive sector will rely ever more heavily on capabilities in artificial intelligence, robotics, and software ecosystems. Companies with solid vehicle manufacturing foundations that can also integrate intelligent technology resources stand to capture higher-dimensional growth opportunities.

Additionally, the company’s continued announcements regarding share buybacks signal management’s confidence in its long-term prospects to the market.

4. Conclusion

The new energy vehicle industry is shifting from scale-based competition to value-driven competition, and short-term profit volatility does not define a company's long-term value.

For Seres, the continued upward trajectory of the Aito brand, breakthroughs with premium models, and its intelligent ecosystem strategy are building long-term competitive advantages distinct from those of traditional automakers.

As industry competition refocuses on intrinsic value, companies with strengths in branding, technology, and ecosystem integration are poised to achieve greater growth potential in the next phase of competition.

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