On August 6, Yu Chengdong, Executive Director of Huawei, Chairman of Terminal BG, and Chairman of Intelligent Automobile Solution BU, announced at Huawei's new product launch event that the first model jointly developed with BAIC, Hongmeng Intelligent Drive Enjoy S9, was officially released.

At the event, flagship models from luxury brands such as Mercedes-Benz S450L, BMW 730Li, and Maybach S480 were mentioned by Yu Chengdong as benchmarks. However, Huawei set the starting price of Enjoy S9 below 400,000 yuan, lower than the previously announced presale price range of 450,000 to 550,000 yuan.

With the launch of Enjoy S9, the market inevitably compares it with its sibling model, Wenjie M9. Previously, Yu Chengdong stated, "Wenjie M9 is already the top choice for vehicles priced above 500,000 yuan. With Enjoy S9 joining as an SUV counterpart to Wenjie M9, we should have no problem ranking first in the high-end market with both an SUV and a sedan."

For BAIC BJEV, Enjoy S9 is crucial to its turnaround efforts. In recent years, BAIC BJEV has struggled in a competitive market, posting losses for four consecutive years. Specifically, from 2020 to 2023, it incurred losses of 6.48 billion yuan, 5.24 billion yuan, 5.47 billion yuan, and 5.4 billion yuan, respectively. Furthermore, its 2024 half-year performance forecast released on July 9 predicts a net loss attributable to shareholders of listed companies of 2.4 to 2.7 billion yuan for the first half of the year.

Therefore, BAIC has high hopes for Enjoy S9. BAIC Chairman Zhang Jianyong expressed at the Enjoy S9 launch event that BAIC and Huawei are genuine friends, despite Yu Chengdong having many friends. Collaborating with Huawei is a core and top priority strategy for BAIC, leveraging all its strengths across R&D, production, components, and service trade to focus on Enjoy S9.

So, can Enjoy S9 replicate the success of Wenjie M9? Before answering that, let's examine the challenges Enjoy S9 needs to overcome.

01

Challenge 1

New energy sedans have inherent limitations in terms of model type, making them less competitive than new energy SUVs

Firstly, Wenjie M9 is an SUV, while Enjoy S9 is an executive sedan.

In recent years, Chinese brands have made significant breakthroughs in the luxury market with new energy vehicles. Besides Wenjie M9 leading sales above 500,000 yuan, BYD Yangwang U8 reached 5,000 sales within 132 days of its launch, setting a record for the fastest-selling Chinese million-yuan SUV. Additionally, NIO sold over 370,000 new vehicles in 2023, approaching half of BBA's sales, marking the first time a Chinese brand achieved such high sales in the high-end market.

However, all these models, including Wenjie M9, Yangwang U8, and all NIO models, share a common feature: they are new energy SUVs.

Looking at domestic sales data for medium and large sedans, we find that the Mercedes-Benz E-Class, BMW 5 Series, and Audi A6L consistently rank top, each selling over 100,000 units in the past year.

Among domestic medium and large sedans, only BYD Han can compete with these three German luxury models in sales. BYD Han's success mainly stems from its DM plug-in hybrid models, with a relatively lower share of EV sales. Moreover, BYD Han's price range is below 200,000 yuan, indicating that high-end sedans above 300,000 yuan are still dominated by BBA.

This is because SUVs offer stronger utility and practicality, appealing to users who desire larger spaces, better configurations, and more practical applications. Thus, new energy features make SUVs the first category to breakthrough in the luxury market.

In contrast, sedans offer limited interior design flexibility. For example, due to battery thickness, sedans tend to have higher seating positions with no optimal solution yet, limiting advanced configurations like rear executive seats.

In this context, sedans have smaller interiors and trunks, and their lower chassis limits their usage scenarios compared to SUVs. Therefore, sedan users naturally have lower configuration requirements than SUV users. However, sedan users place significantly higher demands on vehicle brands than SUV users, which explains the enduring popularity of Mercedes-Benz E-Class, BMW 5 Series, and Audi A6L.

02

Challenge 2

Executive sedans are the core segment for BBA, and domestic brands lack established consumer recognition

Despite new entrants, BBA's flagship models continue to dominate this segment. In June 2023, both Audi A6L and Mercedes-Benz E-Class sold over 14,000 units in China. A recent research report by Founder Securities shows that BBA's best-selling models—Audi A6L, Mercedes-Benz E-Class, and BMW 5 Series—share similar prices, dimensions, and deep brand histories, entering the Chinese market early and dominating the C-segment luxury car market. Currently, each model sells 10,000 to 20,000 units monthly, accounting for 73% of the luxury sedan market and ranking top in China.

These models excel in brand recognition and market awareness, while their product quality and comprehensive after-sales service pose significant challenges to new entrants.

For Enjoy S9, despite Huawei's technological support and BAIC's manufacturing capabilities, building brand influence and market trust takes time. When choosing high-end executive sedans, consumers prioritize brand history and reputation, which Huawei and BAIC's joint venture still lack.

The reason lies in the premium sedan segment, where brand recognition and consumer loyalty outweigh product capabilities. Domestic brands still lag slightly behind traditional luxury brands like BBA, according to McKinsey's "2024 China Automotive Consumer Insights Report," which cites brand reputation as the primary reason for choosing foreign traditional premium brands, followed by styling and design, with distrust in new brands ranking third.

03

Challenge 3

Huawei's ability to empower sedans has yet to be proven, and multiple 'Jie' brands may reduce exclusivity

Apart from the above, Huawei's empowerment of sedans remains unproven. For example, the market performance of Hongmeng Intelligent Drive's first sedan, Zhijie S7, has been unimpressive. Public data shows that Zhijie S7 delivered 3,197, 5,012, 5,021, and 2,995 units from March to June 2023, respectively.

Following Wenjie, Huawei partnered with Chery, BAIC, and JAC to launch three more 'Jie' series. Asked if there would be more, Yu Chengdong responded directly at a forum in June 2023, "Many major automakers have approached Hongmeng Intelligent Drive for smart vehicle cooperation, but Huawei lacks resources and can only work with four automakers at present."

It's important to note that more 'X Jie' brands would emerge if resources permitted, reducing the exclusivity of Huawei partnerships to some extent.

Huawei vigorously supports Wenjie because it needs a benchmark case to demonstrate the advantages of partnering with it: not only providing advanced in-vehicle systems and intelligent driving technologies but also significantly boosting sales. Through Wenjie's success, Huawei aims to replicate its Android strategy in the automotive industry, attracting more automakers to join its ecosystem and jointly build a new intelligent vehicle landscape.

Therefore, it remains questionable whether Huawei will invest as much effort in Enjoy S9.

04

Conclusion: Sales will speak

Ultimately, sales will determine whether Enjoy can replicate Wenjie's success. According to Hongmeng Intelligent Drive, Enjoy S9 received over 2,500 bookings within 24 hours of its launch. This is not bad for an executive sedan with an average price of around 400,000 yuan.

In summary, Enjoy S9 faces significant challenges entering the luxury executive sedan market but also presents vast opportunities for domestic substitution. The key lies in leveraging Huawei's technological strengths and BAIC's manufacturing capabilities to create a premium pure electric sedan that truly resonates with consumers. Let's wish domestic new energy sedans success in replicating the achievements of domestic new energy SUVs.

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