Seres Turns Loss into Profit

Huawei Transfers Wenjie Trademarks

Seres, which has a "deep tie" with Huawei, has recently made a new move.

A few days ago, Seres announced that its holding subsidiary Seres Automobile Co., Ltd. plans to acquire 919 registered or pending Wenjie series word and graphic trademarks, as well as 44 related design patents, held by Huawei Technologies Co., Ltd. and its affiliates. The total acquisition price is 2.5 billion yuan.

Wenjie is Seres's flagship automotive brand and Huawei HarmonyOS's first cooperation brand. With Huawei's technology, brand, and channel support, Wenjie's sales have soared, far exceeding other new force brands, thereby driving Seres's market value to soar.

On June 18, Seres reached its peak for the first time, with a market value of 151.507 billion yuan at the close, surpassing NIO's 151 billion Hong Kong dollars (approximately 137.5 billion yuan). Subsequently, it "far surpassed" for multiple working days, continuously widening the gap with the second-ranked market value. However, due to stock price fluctuations, Seres's share price began to decline on June 25, and NIO regained its position as the "first stock of new car-making forces." As of the close on July 12, Seres's market value was 123.8 billion yuan, while NIO's market value was 166.2 billion Hong Kong dollars (approximately 150.7 billion yuan).

Seres's 2024 semi-annual performance pre-profit announcement released on July 9 showed that it is expected to achieve operating revenue of 63.9 billion to 66 billion yuan in the first half of 2024, an increase of 479% to 498% year-on-year; net profit attributable to shareholders is expected to be 1.39 billion to 1.7 billion yuan, turning a loss into a profit compared with the same period last year; and deducted net profit is expected to be 1.19 billion to 1.5 billion yuan.

Various signs indicate that Wenjie has entered the harvest period. Why did Huawei choose to transfer the Wenjie trademark at this time? Was it a change in cooperation or another calculation? According to the assessment report issued by Zhongjing Minxin Asset Appraisal Company, the 919 Wenjie trademarks and 44 design patents held by Huawei are valued at 10.233 billion yuan. The transfer at a price of 2.5 billion yuan is almost a "steep discount." However, Huawei's move to "unbind" also inevitably raises questions about Wenjie's status as Huawei's "beloved son" in the automotive circle.

"This transfer does not affect the cooperation between the two parties," Seres responded, adding that both sides will further deepen their cooperation. Huawei also stated that transferring the Wenjie series trademarks to Seres while continuing to support Seres in manufacturing and selling Wenjie.

Image source: Seres

On the same day Seres announced the acquisition, it also announced the signing of an agreement with Huawei to further deepen their joint business cooperation.

According to the agreement, under the premise that the original cooperation framework remains unchanged, Seres and Huawei will give full play to their respective resources and endowments, focusing on the AITO Wenjie brand under Seres Automobile. Both parties will jointly design and market, providing users with high-end smart electric vehicle products and intelligent travel solutions, turning AITO Wenjie into a world-class leading brand of new luxury automobiles, and jointly achieving business success.

This is also the second time Seres and Huawei have signed a related agreement since they signed a deepened joint business agreement in February last year, further confirming that their cooperation relationship remains solid.

Seres's cooperation with Huawei began in 2018, when both sides signed a strategic cooperation agreement aimed at in-depth cooperation in the field of intelligent connected vehicles, successfully achieving mass production of products in 2021. Over four years, Wenjie M5, M7, M9, and other models have gained widespread recognition from the market and users. The latest data shows that in June, Seres sold 41,457 vehicles, a year-on-year increase of 631.42%; from January to June, Seres sold a total of 182,602 vehicles, a year-on-year increase of 608.83%. Among them, Wenjie M9 delivered 17,241 vehicles in June; the new M7 delivered 18,493 vehicles in June, with cumulative sales exceeding 110,000 in the first half of the year.

As of June 26, Wenjie M9 had been on the market for six months, with cumulative bookings exceeding 100,000, setting a new sales record for luxury brand models in the Chinese market. The strong sales of high-end models have not only pushed Seres's sales to a new level but also turned the company's losses into profits.

Image source: Seres

According to the announcement, Seres expects significant growth in operating revenue, net profit attributable to shareholders, and deducted net profit in the first half of 2024. Before starting to make a profit this year, Seres had suffered continuous losses for four years, with a cumulative loss of nearly 10 billion yuan.

In the view of industry insiders, Wenjie has entered the harvest period, and both Huawei HarmonyOS and Seres have gained more industry status. At this time, the return of the Wenjie trademark to Seres is a win-win situation for future development. For Seres, after acquiring the Wenjie trademark, it has clarified brand ownership, and Huawei will still provide technical support, allowing for more autonomous development. For Huawei, after the trademark transfer, the boundaries of HarmonyOS Intelligent Selection mode are clearer, which is also conducive to better cooperation with other partners in the future. Balanced development In fact, before Wenjie, Huawei has transferred the "Zhijie" and "Xiangjie" trademarks to Chery Automobile Co., Ltd. and Beijing Automotive Group New Energy Automobile Co., Ltd., respectively, this year. This series of operations are Huawei's "subtraction" in the automotive business to clarify its position of "not making cars." Currently, Huawei's cooperation with automakers is divided into three categories: vertical component supply, HI (Huawei Inside) mode, and HarmonyOS Intelligent Selection mode. Among them, the HI mode provides automakers with full-stack smart car solutions, while the Huawei Intelligent Selection mode involves Huawei's deep involvement in product definition, styling design, marketing, user experience, and other aspects, making it the mode with the highest "Huawei content." Early on, in addition to Wenjie choosing the HarmonyOS Intelligent Selection mode, ARCFOX, GAC Aion, and Chang'an Avita all chose the HI mode. However, with the popularity of Wenjie, the value of Huawei HarmonyOS Intelligent Selection has gradually been recognized by the industry, so more and more automakers have joined the HarmonyOS Intelligent Selection family.

In the existing HarmonyOS Intelligent Selection system, there are four brands: Wenjie (Huawei's cooperation with Seres), Zhijie (Huawei's cooperation with Chery), Xiangjie (Huawei's cooperation with Beijing Automotive Group), and the "fourth Jie" (rumored to be named "Aojie," the name has not been finalized yet, Huawei's cooperation with JAC Motor). Currently, Wenjie has launched three SUV models: M5, M7, and M9; Zhijie has launched its first HarmonyOS Intelligent Selection smart sedan, the S7; Xiangjie has launched its first HarmonyOS Intelligent Selection executive-class luxury flagship sedan, the Xiangjie S9, which has started taking reservations, with a pre-sale price of 450,000 to 550,000 yuan, and is scheduled to be released in August this year. The yet-to-be-launched Aojie (rumored name) will be the most high-end brand in HarmonyOS Intelligent Selection, with the expected price of its first model reaching the million level and possibly making its debut in the fourth quarter of this year.

Image source: Huawei

According to data released by Huawei, the HarmonyOS Intelligent Selection series (Wenjie, Zhijie) delivered a total of 194,200 new vehicles in the first half of 2024, with 46,100 vehicles delivered in June alone, topping the sales ranking of new force brands in China in the first half of the year. However, Huawei is not content with this. In addition to the already established "four Jie," Huawei also hopes to penetrate more brands. According to incomplete statistics, from May 2023 to present, Huawei has applied for up to 54 "× Jie" trademarks.

At present, Huawei's "investment attraction" has begun to bear fruit. It is reported that Huawei has reached an agreement with Changan to jointly establish a new intelligent brand, "Yinwang." Meanwhile, in addition to cooperation with Avita under the HI mode, Huawei has further partnered with Changan's Deep Blue Automobile.

Jin Yuzhi, CEO of Huawei's Intelligent Automotive Solutions BU, recently stated that Huawei has launched the Qiankun Intelligent Driving ADS SE to promote the accessibility of intelligent driving and will provide the pure vision-based Qiankun Intelligent Driving for the first time in vehicles priced below 200,000 yuan. This vehicle is the upcoming Changan Deep Blue S07, which will be released this month.

In addition, on February 22 this year, Dongfeng's MSH-Tech and VOYAH Automobile signed a strategic cooperation agreement with Huawei, sharing industrial resources and establishing a long-term strategic partnership. During the Beijing Auto Show this year, GAC Motor also announced its cooperation with Huawei and launched a joint innovation plan. "Huawei insists on not making cars but using intelligent connected vehicle technology to continuously help automakers make and sell good cars," Huawei has repeatedly emphasized its "non-car-making" philosophy, which seems more pure after unbinding trademarks. However, for automotive brands like Wenjie that are deeply tied to Huawei, the impact of this move is currently unknown.

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