JAC's major customer Nio's shipments in the second half of 2023 are expected to grow by about 100 percent from the first half, which will be a key growth driver for JAC in the second half of the year, Kuo said.
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In addition to the two SUVs currently on sale -- the M5 and M7 -- Aito, an electric vehicle (EV) brand built by Huawei and Seres Group, is said to be building an ultra-luxury MPV.
Huawei is working with Nio's (NYSE: NIO) automotive manufacturing partner Jianghuai Automobile Group Corp (JAC) to develop an MPV model priced at nearly RMB 1 million ($ 140,000), said Ming-Chi, an analyst at TF International Securities who is well known for tracking Apple's supply chain.
The model is expected to be mass-produced in the second quarter of 2024, with a shipment target of about 50,000 units one year after launch, Kuo said in a post on Medium earlier today.
The Aito MPV will play an important role in Huawei's long-term automotive strategy, Kuo said, adding that the model's positioning in the automotive market is similar to the ultra-premium positioning of Huawei's P/Mate series in the Android smartphone market, with the aim of satisfying the needs of high-end users, enhancing brand value and promoting technological innovation.
Revenue from the sale of the Aito MPV will be recognized by JAC, so the model will contribute significantly to JAC's revenue, Kuo said.
Even if a pessimistic assumption is made that Aito MPV sales in 2024 will only reach 20-30 percent of Huawei's sales target, JAC's revenue in 2024 will still significantly exceed the market consensus by at least 20-30 percent, the analyst said.
As the Aito MPV was jointly developed by Huawei and JAC, net profit margins are also higher than the latter's average, Kuo said, adding that JAC's existing product line is expected to grow in the third quarter and second half of the year.
JAC's major customer Nio's shipments in the second half of 2023 are expected to grow by about 100 percent from the first half, which will be a key growth driver for JAC in the second half, Kuo said.
Anhui, where JAC is located, is covered by a four-hour traffic circle in the Yangtze River Delta and is one of China's most efficient production centers, Kuo noted.
Anhui's low transportation costs for EV parts are a key competitive advantage for JAC in the long run, he added.
Kuo has previously tracked the Apple industry chain for a long time and is one of the most influential analysts in the space. He has covered the EV sector several times in the past few years, the last time on April 17, 2022, revealing the details of the resumption of production at Tesla's Shanghai factory from a Covid lockdown.
Regarding Huawei's partnership with JAC, in April this year, local media outlet 36kr reported that Huawei and JAC will jointly build models targeting the ultra-high-end luxury pure EV market, with a price range of around RMB 800,000 - RMB 1 million.
In the EV era, JAC's more familiar identity is that of Nio's manufacturing partner. However, in its cooperation with Nio, JAC only provided the factory and car-making qualifications, and did not participate in the vehicle development or manufacturing process, 36kr's report noted.
In its partnership with Huawei, JAC is interested in learning from the tech giant's engineering and development system, thus opening up to it a more flexible cooperation space, according to 36kr.
Huawei will be involved in the development of vehicles, electronic and electrical architecture, and core systems for the project, and the JAC has a positive attitude in that partnership, the report said, citing a person familiar with the matter.
The project site is located in the JAC Xingang industrial park in Hefei's Feixi county, with a total investment of about RMB 2.6 billion, and is expected to be completed by early next year, a previous tender document showed.
After the project is completed, it will be able to produce B to D+ class models, including sedan, SUV, MPV, crossover and sporty cars, with an annual capacity of 300,000 vehicles, according to the document.
($1 = RMB 7.1428)
Huawei, JAC partner to target ultra-luxury pure electric vehicle market, report says
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