On August 25, Seres Group Co., Ltd. (Seres, 601127) announced that its subsidiary Seres Automobile Co., Ltd. (hereinafter referred to as "Seres Automobile") will purchase a 10% stake in Shenzhen Inwang Intelligent Technology Co., Ltd. (hereinafter referred to as "Inwang") held by Huawei Technologies Co., Ltd. (hereinafter referred to as "Huawei") by paying cash, with a transaction value of RMB 11.5 billion.

Thus, the second OEM to join Inwang has been finalized, and it is Seres, which has been rumored for a long time. What surprised the outside world slightly is that the stake it obtained is the same as that of AITO Automobile, which is controlled by Changan Automobile, at 10%. Under such circumstances, AITO Automobile and Seres Automobile are likely to become the joint second largest shareholders of Inwang.

Changan and Seres, with the former being one of the only two initiators of Inwang and the latter joining in response, should have different statuses within Inwang, but now they are running neck and neck. Obviously, in this round of strategic maneuvers, Seres exceeded expectations, while Changan did the opposite.

1

Seres benefits the most

Zhang Xinghai can wake up laughing in his dreams

Flashback to March 2021, when Xiaokang Stock (later renamed Seres) announced a partnership with Huawei, signing a memorandum of cooperation in the field of new energy vehicles. Since then, the gears of Xiaokang Stock's destiny began to turn again.

No one expected that Xiaokang Stock, which partnered with Huawei, could turn from an underdog into a leading player, transforming from manufacturing minivans to luxury high-end vehicles under the AITO brand. Its share price also soared from a low of 12.93 yuan/share (in 2021) to a high of over 100 yuan/share, making it a genuine billion-yuan valuation OEM.

The biggest credit for Seres' turnaround goes to its leader Zhang Xinghai, who fully demonstrates the adage "choice is more important than effort." Without Zhang's decision to partner with Huawei and his unwavering commitment to this cooperation, the success of the AITO brand would not have been possible today.

Of course, Seres and Huawei have achieved mutual success, but it is through this partnership that Seres has turned around its finances and, to some extent, resurrected itself. As such, Zhang Xinghai has genuinely thanked Huawei publicly and praised it as a great company.

In this investment in Inwang, Seres is the first OEM, apart from the two initiators Changan and Huawei, to explicitly express its intention to participate. This shows that Seres is eager to consolidate its partnership with Huawei, and obtaining the same stake as AITO Automobile represents two significant benefits.

The first benefit is that Seres' position in the industry can now be firmly established. Among the OEMs that have joined or are rumored to join Inwang are mainstream automakers such as AITO Automobile (under Changan), FAW, Dongfeng, Chery, Beijing Automotive Group, and JAC Motor. Although Seres has humble origins compared to these other shareholders, its status as the joint second-largest shareholder is sufficient to establish its place in the industry and erase its past as a minivan manufacturer.

The second benefit is that Seres' technological support for future development is now assured. While Seres currently has the deepest partnership with Huawei among automakers, the AITO brand was previously transferred from Huawei to Seres for a fee, raising concerns that Seres' cooperation with Huawei might weaken over time. However, with Seres' investment in a 10% stake in Inwang, the relationship between Seres and Huawei has escalated from a business partnership to a closer and more secure collaboration.

2

Changan only obtained a 10% stake

Zhu Huarong miscalculated

If Seres exceeded expectations by taking a stake in Inwang, Changan fell short in this regard.

On November 26, 2023, Chongqing Changan Automobile Co., Ltd. (hereinafter referred to as "Changan Automobile") announced the signing of an "Investment Cooperation Memorandum" with Huawei, intending to establish a joint venture company, which is now Inwang. The announcement at the time stated that Changan Automobile and its affiliates intended to acquire a stake in the target company not exceeding 40%, with specific equity ratios, investment amounts, and deadlines to be negotiated separately by both parties.

Literally, the phrase "not exceeding 40%" implies a stake close to or equal to 40%, given Changan's role as one of the initiators.

However, subsequent developments revealed disagreements between Changan and Huawei on key issues such as equity ratios and participants. At the 2024 Global Partner Conference of Changan Automobile held on January 16, 2024, Chairman Zhu Huarong publicly stated, "In China, everyone knows that one monk has water to drink, two monks share a bucket of water, but three monks might go thirsty. There are many failed cases of three monks."

He continued, "Changan and Huawei will first get this 'car' up and running at high speed, turning it into a public platform before opening it up to other OEMs and various sectors of society."

Clearly, as the first OEM to announce its intention to invest in Huawei's new company, Changan Automobile did not want to join forces with other OEMs but rather establish the platform with Huawei before inviting other partners.

However, based on the current development situation, Zhu Huarong clearly miscalculated. Inwang will become a joint venture between Huawei and multiple automakers, with Changan being just one of them and not enjoying a special status as one of the two initiators.

In the battle for equity in Inwang, Seres emerged victorious over Changan, and the next stage will be a competition in products. Will AITO Automobile and SL03, both under Changan, be able to challenge the market position of Seres' AITO brand with their Huawei-powered intelligent driving technology solutions?