What exactly is Jianghuai New Energy?

Text

Recently, An Jin, the former chairman of Jianghuai Automobile, fell from grace due to suspected serious violations of discipline and law.

At one time, the news caused a sensation in the automotive industry.

In 2012, An Jin, as the "second-generation factory leader," succeeded Zuo Yan'an, ushering in the An Jin era at Jianghuai Automobile that lasted for nine years.

At that time, Jianghuai had already established a solid foothold in the commercial vehicle sector.

After taking over the foundation laid by his predecessors, An Jin led Jianghuai to shift its strategy towards the broader passenger vehicle market.

From a bird's-eye view, this was undoubtedly the right path to take.

However, unfortunately, on this path, Jianghuai has not achieved overly satisfactory results, especially as the automotive industry enters the era of new energy, Jianghuai's laggardness is undeniably apparent.

Fortunately, its deep-rooted foundation still leaves it with a trump card to turn things around in its transition to new energy.

Today, we will attempt to narrate the story of Jianghuai's transition to new energy in one article.

The 'Embrace Both Sides' Strategy of the An Jin Era

Let's go back to the 2010s.

When An Jin took over, Jianghuai was already a renowned local state-owned enterprise with tens of billions of assets nationwide.

During this period, while Jianghuai had established a foothold in the commercial vehicle market, it was still slightly lacking in the passenger vehicle sector catering to the mass market.

Naturally, when An Jin took over Jianghuai, the strategic focus shifted to the passenger vehicle sector, which included new energy passenger vehicles.

In fact, Jianghuai's exploration of new energy vehicles was not late, and even somewhat ahead of the curve.

As early as 2002, Jianghuai had embarked on research and development of new energy vehicles and developed an electric minibus.

In 2009, it also proposed to focus on pure electric vehicles in the future, aiming to become one of the top three in the country.

Shortly thereafter, in the following year, Jianghuai launched its first pure electric vehicle, the Jianghuai iEV series. The initial sales were not substantial, with just over 500 units, but it nonetheless paved the way.

However, despite the buzz, frankly speaking, Jianghuai's transition to new energy was not ideal.

The market never generated much excitement. Instead, as other domestic automakers gradually deployed their strategies, Jianghuai lost its early advantage in the new energy sector.

After several setbacks in independent research and development, Jianghuai ultimately chose a cooperative strategy of 'embracing both sides,' attempting to collaborate with high-quality enterprises to gain time and funding for its new energy development.

First, in 2016, Jianghuai signed a strategic cooperation framework agreement with NIO to manufacture vehicles on its behalf, hoping to make a transition and layout in the new energy sector through this collaboration.

Later, people saw that this cooperation eventually ended with NIO buying out its contract with Jianghuai.

At the end of 2023, after obtaining independent vehicle manufacturing qualifications, NIO bought out the two factories it had jointly operated with Jianghuai for 4 billion yuan, announcing the end of their collaboration.

Apart from NIO, in 2017, Jianghuai also jointly established "Jianghuai Volkswagen" with Volkswagen, each holding a 50% stake, hoping to introduce Volkswagen's technology and management experience to promote Jianghuai's technological upgrading and market expansion in the new energy sector.

However, reality was not so rosy.

SOL E20X, the brand under Jianghuai Volkswagen, has launched nine models, none of which has made much of a splash in the market.

Yes, none of them have.

Perhaps due to developmental difficulties, this partnership ultimately did not last.

Later, Volkswagen China took over most of Jianghuai Volkswagen's shares through capital increases, renaming it Volkswagen Anhui.

From the perspective of a latercomer, although these two collaborations once alleviated Jianghuai's "new energy anxiety," apart from financial gains, Jianghuai's substantive achievements in the new energy sector remained limited.

At least, this can be evidenced by the market performance of its new energy products.

Last year, Jianghuai launched a new pure electric brand called Yiwei, followed by its first pure electric compact car, the Yiwei 3, priced at around 100,000 yuan. Despite its affordable price, as of August this year, sales were only around 10,000 units.

In the overall new energy market, this sales volume has negligible market influence.

Therefore, it can be said that even after "embracing both sides," Jianghuai's current new energy transition challenges remain unresolved.

With challenges persisting, how will Jianghuai solve them?

It is against this backdrop that Jianghuai once again chose a cooperative strategy.

Yes, it is still attempting to solve the new energy puzzle through a "strong alliance."

This time, the chosen partner is even more formidable: Huawei.

By partnering with Huawei, can Jianghuai find relief?

In December last year, Jianghuai officially announced its collaboration with Huawei.

For a time, this attracted considerable attention.

According to public information at the time, Huawei and Jianghuai would jointly create an ultra-high-end model targeting Mercedes-Benz Maybach.

Impressive. A Jianghuai comparable to Maybach; the significance of such a brand leap for Jianghuai is self-evident.

Even so, there remains a lingering doubt among the public about this collaboration.

Considering the previous outcomes of Jianghuai's "embracing both sides" strategy, people are eager to know if this union with Huawei can truly provide solutions to Jianghuai's new energy challenges.

Regarding this question, we may find some clues from existing information.

According to public information, the cooperation between Jianghuai and Huawei falls under Huawei's "Intelligent Selection" model.

Simply put, Huawei takes care of everything, while Jianghuai is responsible for manufacturing and branding.

A representative of this cooperation model is Seres, which has reaped considerable benefits from it.

Before its deep collaboration with Huawei in 2019, Seres was heavily indebted, with a market value of just over 10 billion yuan, and its brand was virtually non-existent in terms of brand equity.

However, after partnering with Huawei and launching the Wenjie M5, M7, and M9 models, Seres has made a complete turnaround. Even now, the Wenjie series consistently sells over 40,000 units per month.

Seres has thus profited immensely. The latest financial report shows that in the first half of 2024, Seres generated revenue of 65 billion yuan, marking its most impressive financial performance in history. Its profitability for this half-year even surpassed that of the entire year of 2019, and its market value has increased tenfold to over 100 billion yuan.

Impressive, isn't it? These are the benefits of collaborating with Huawei.

Given Seres's precedent, it seems Jianghuai's collaboration is on solid ground.

However, there's one thing we must pay particular attention to.

While such collaborations can bring financial gains, they often turn automakers into contract manufacturers. In other words, while money is made, the automaker's own product strength sees limited improvement. After all, the solutions are provided by Huawei.

So, is Jianghuai truly content with becoming a contract manufacturer?

If not, how Jianghuai will develop new energy vehicles remains a question it must answer.

Jianghuai needs to answer: On what basis?

The first challenge facing Jianghuai is to define its "niche" in the new energy market as an independent brand.

In the new energy industry, virtually every brand's rise is attributed to occupying a unique "niche," such as Tesla's electric control, XPeng's intelligence, Lixiang's extended-range technology, NIO's service, or even Leaping Auto's affordability for selling cheap cars.

So, what about Jianghuai? So far, Jianghuai has no answer.

Jianghuai needs to explain why customers should buy from them.

However, based on Jianghuai's current foundation, we still believe it has the groundwork to answer this question.

After all, as a traditional automaker, Jianghuai has accumulated rich experience in vehicle manufacturing over the years and ventured into new energy relatively early. Furthermore, through collaborations with high-quality automakers like NIO and Volkswagen, it has gained extensive experience in new energy vehicle manufacturing management.

Coupled with proprietary technologies like honeycomb battery and autonomous driving, Jianghuai's foundation is solid.

With such a foundation and technological reserves, if Jianghuai perseveres and develops its independent brand, it may well succeed.

In fact, there's another point worth mentioning. Compared to other automakers, Jianghuai still holds a considerable market share in the commercial vehicle sector. Therefore, Jianghuai's foundation is solid.

In conclusion, answering the question of new energy is difficult for Jianghuai, especially in today's highly competitive market landscape.

Regardless, the collaboration with Huawei can buy Jianghuai time.

However, to truly excel in new energy, relying solely on the collaboration with Huawei is insufficient. Ultimately, Jianghuai must forge its own path.

Best wishes to Jianghuai. We look forward to its breakthroughs.

We will also continue to closely follow Jianghuai's problem-solving artistry.