Text/Lu Qianying

Editor/Ma Jun

Recently, Thalys has ushered in its high-profile moment.

This once obscure small auto company has finally managed to climb to the forefront of the industry, thanks to the growth in sales of its Wenjie series of cars and a series of strategic moves.

In September this year, Thalys' new energy vehicle sales increased by a staggering 265.09% year-on-year, attracting industry attention. The long-standing cloud of losses that has plagued Thalys has been dispelled, with the company's operating revenue growing by 489.58% in the first half of this year, turning a profit and shaking off its previous downturn.

Relying on its in-depth cooperation with Huawei, Thalys has launched the popular Wenjie series of models, becoming the driving force behind its sales explosion.

However, Huawei is weakening its control over the brand while expanding its network of auto companies.

A key move is that Huawei has gradually transferred brand trademarks to auto companies, while also establishing a new company, Yingwang Intelligent Technology Co., Ltd.

In July this year, Thalys invested 2.5 billion yuan to acquire the Wenjie series trademarks, followed by an 11.5 billion yuan investment in Huawei's Yingwang in August.

These moves indicate that Thalys will continue to cooperate with Huawei but will also grasp more autonomy in technology and branding, enhancing its own strength, which is Thalys' key proposition.

While continuing to follow closely with Huawei, Thalys has also acquired a super factory in Chongqing Liangjiang New Area, strengthening its independent production capacity. This strategy of "internal and external cultivation" will be crucial to Thalys' development in the coming period.

Among them, enhancing its independence in technology and market is a must for Thalys. In the fiercely competitive new energy vehicle market, technological strength and brand operation capabilities are fundamental.

1. Sales and revenue surge, Thalys takes off

Thalys is still taking off.

In September, Thalys sold 37,407 new energy vehicles, a year-on-year increase of 265.09%. Meanwhile, in the first half of this year, the company achieved operating revenue of 65.044 billion yuan, a year-on-year increase of 489.58%; net profit attributable to shareholders was 1.625 billion yuan, successfully turning a profit.

Image source: Thalys official website

This achievement marks a turning point for Thalys after several years of losses.

Looking back at Thalys' performance over the past few years, from 2020 to 2023, Thalys suffered consecutive losses for four years. The company's revenue grew from 5.724 billion yuan in 2019 to 35.842 billion yuan in 2023, but due to high R&D costs and marketing expenses, Thalys could not shake off its losses.

However, in the first half of 2024, Thalys finally achieved profitability, thanks to rapid sales growth and the shift towards higher-end product offerings.

Especially in the second quarter of 2024, Thalys' quarterly operating revenue reached 38.484 billion yuan, up 547.69% year-on-year and 44.89% quarter-on-quarter; net profit attributable to shareholders was 1.405 billion yuan, up 295.36% year-on-year and 539.94% quarter-on-quarter.

These figures indicate that Thalys' sales continue to climb, and its gross margin has also improved significantly.

According to the half-year report, Thalys' overall gross margin in the first half of 2024 reached 25.04%, an increase of 18.7 percentage points year-on-year. This figure has surpassed industry leader BYD and climbed to 27.47% in the second quarter.

Just a few days ago, Thalys also released its earnings forecast for the first three quarters, predicting revenue of 103 billion to 110 billion yuan, a year-on-year increase of 518% to 559%; net profit is expected to range from 3.5 billion to 4.1 billion yuan, with gross margin increasing year-on-year and profitability improving.

This financial turnaround is primarily attributed to the success of Thalys' cross-border cooperation with Huawei. Since Thalys and Huawei launched the Wenjie series of models in 2021, their cooperation has brought strong market growth to both Thalys and Huawei.

Image source: Thalys official Weibo

From January to September 2024, Thalys sold over 310,000 new energy vehicles, with the Wenjie series accounting for the majority. Data shows that the Wenjie M9 and new M7 series delivered 15,496 and 16,805 vehicles, respectively, in September.

The popularity of these models has significantly increased the profit margin per vehicle. The Wenjie M9 series has a price range of 469,800 to 569,800 yuan, while the Wenjie new M7 ranges from 249,800 to 289,800 yuan.

The strong sales of high-priced models have driven up the overall selling price per vehicle and further boosted Thalys' profit margin.

Recent financial data shows that Thalys has entered a period of rapid development and has explored a profitable model.

2. By deepening cooperation with Huawei, what has Thalys gained?

Thalys' rise could not have been achieved without Huawei's in-depth support.

As a company that started with auto parts and microcars, Thalys was once unknown and focused on low-end models. After going public in 2016, the company began actively transforming into the new energy vehicle market.

In 2021, Thalys seized the opportunity to cooperate with Huawei, and the gears of fate began to turn.

At the end of 2021, the Wenjie brand, jointly created by Thalys and Huawei, debuted for the first time, with the Wenjie M5 entering the public eye as a "smart travel" option, stirring up the market. In March 2022, the Wenjie M5 was officially delivered, and sales figures soared rapidly, setting a record for the fastest new brand to sell over 10,000 units in 87 days in May that year.

In their cooperation, Huawei not only provided Thalys with cutting-edge intelligent driving technology and an ecosystem but also opened up markets for Thalys through its extensive sales channels. In the third quarter of 2022, the launch of the Wenjie M7 again brought stunning sales growth to Thalys.

Image source: Thalys official Weibo

The success of the Wenjie M7 and Wenjie M5 shows that Thalys' cross-border cooperation with Huawei is gradually gaining a foothold in the market.

In October 2023, with the strong sales of the new Wenjie M7, Thalys faced enormous delivery pressure.

To ensure smooth delivery, production lines worked overtime non-stop in the factory, with production shifts increased to 22 hours per day. At the same time, Thalys and Huawei invested an additional 1 billion yuan in the entire supply chain and hired 20,000 new workers to ensure high-quality production.

This level of investment also reveals the confidence that Thalys and Huawei have in the future of Wenjie. The importance of the Wenjie series in Huawei's ecosystem is further highlighted, and Thalys has achieved its peak order targets, further consolidating its market reputation.

In the three years of cooperation, Thalys has gained not only technical support from Huawei but also a comprehensive upgrade in brand awareness and market channels.

In 2023, Wenjie became the fastest new energy vehicle brand to reach 100,000 offline sales, further consolidating Thalys' position among emerging forces.

Beyond sales, Thalys has also taken an important step in brand building. In July 2024, Thalys announced that it had acquired 919 registered or pending Wenjie-related trademarks and 44 related design patents held by Huawei for 2.5 billion yuan. Through this transaction, Thalys gained further control over the intellectual property rights of the Wenjie brand.

In the future, as more new products are launched, the focus of the entire industry will be on whether Thalys can continue its rapid progress.

3. Thalys spends heavily to prove itself

In 2024, Thalys' ambitions in the new energy vehicle sector are evident. Frequent investments and strategic moves demonstrate its determination to accelerate development.

In August this year, Huawei's actions once again attracted industry attention. As Huawei's core platform for smart vehicle technology, its subsidiary Yingwang attracted multiple auto companies to compete for stakes.

First, on August 19, Changan Automobile announced that its subsidiary AVTR Motor had acquired a 10% stake in Yingwang for 11.5 billion yuan. Subsequently, on August 25, Thalys also announced that it had invested the same amount in Yingwang, becoming its second-largest investor.

It is worth noting that Thalys' investment of up to 11.5 billion yuan has exceeded its net assets of 11.4 billion yuan in 2023, constituting a significant asset restructuring.

With the investments from the two major auto companies, Yingwang has become a hot property in the new energy vehicle sector.

While Thalys has deepened its cooperation with Huawei through this transaction, it is also aware that it needs to gradually enhance its own technological strength and market influence.

Therefore, Thalys has also invested heavily in brand building, channel expansion, and production capacity.

In addition to acquiring the Wenjie trademarks for 2.5 billion yuan, Thalys has also increased its stake in its subsidiary Thalys Automobile for 1.329 billion yuan, further enhancing its control over core businesses.

At the same time, Thalys has spared no effort in investment at the production end.

In 2024, Thalys invested 8.164 billion yuan to acquire all shares of Longsheng New Energy Technology Co., Ltd. in Chongqing Liangjiang New Area, gaining ownership of its "super factory." This smart factory boasts over 3,000 robots working in coordination, achieving 100% automation in key processes. This significant investment ensures Thalys' autonomy at the production end and enhances its manufacturing capabilities.

In addition to domestic layout , Thalys is also seeking opportunities in overseas markets.

This year, Thalys also plans to expand its channel layout and sales outlets in the European market and continue to invest in local R&D and production facilities.

Overall, Thalys' spending spree is unlikely to stop anytime soon, although it will put some pressure on the company's profitability, it is necessary.

Meanwhile, the profits of Yingwang are gradually reflected in Thalys' financial statements. According to Founder Securities' analysis, Yingwang's profits will be included in Thalys' financial statements in the form of investment income, becoming its second growth curve in the future.

A lingering question in the outside world is whether Thalys can maintain its current position without Huawei. It can be seen that under Huawei's guidance, Thalys has emerged from its novice stage. Regardless of future changes in cooperation with Huawei, Thalys must have the ability to operate Wenjie well. Only in this way can Thalys truly prove itself.

(The cover image of this article is sourced from Thalys' official website.)