The Defining Handshake Reshaping China’s Auto Industry
On August 7, 2025, Huawei Executive Director Richard Yu (余承东) and Chery Chairman Yin Tongyue (尹同跃) clasped hands before flashing screens announcing “Zhijie 2.0 Strategic Signing” in Shenzhen. This ceremonial moment formalized China’s most radical automotive experiment: Huawei assuming full operational control of the Zhijie EV brand while Chery committed $1.4 billion and 5,000 engineers to the venture. Yin’s admission that “listening to Huawei brings success, ignoring them brings setbacks” reveals the brutal new reality facing automakers.
The power transfer follows Zhijie’s near-collapse despite early promise—its 2023 S7 sedan garnered 20,000 orders at launch but crashed when chip shortages and factory relocations caused 3-month delivery delays. Internal conflicts worsened as Chery allegedly prioritized its proprietary Exeed brand. Meanwhile, Huawei’s other partnerships flourished: Aito sales surged under Huawei’s management, Jianghuai’s JiJie saw explosive orders, and Beijing Auto’s XiangJie gained traction. Zhijie became the glaring underperformer in Huawei’s “Five Realms” strategy, forcing Chery’s surrender.
The Control Struggle That Brought Zhijie to Its Knees
– Production Chaos: Chery’s Wuhu factory repeatedly diverted capacity from Zhijie to Exeed models, leaving S7 buyers waiting indefinitely
– Technical Disconnects: Harmony OS integration faltered without Huawei’s direct manufacturing oversight
– Brand Dilution: Marketing inconsistencies confused consumers about Zhijie’s positioning
Huawei’s Takeover Blueprint: Absolute Command
The newly formed Zhijie New Energy Company—100% owned by Chery but operationally controlled by Huawei—implements a radical integration model:
Manufacturing Domination
At the retooled Wuhu Super Factory:
– 100% automated stamping/welding lines producing one vehicle per minute
– Huawei’s AI quality system monitoring 2,000+ parameters (imported from Aito success)
– Real-time cloud synchronization between Shenzhen R&D and production floors
Product Strategy Reset
Chery suspended its Exeed MPV project, redirecting engineers to Zhijie’s R9 SUV development. Huawei now controls:
– Vehicle design and specification
– Supply chain decisions
– Sales channel strategy
– Service network standards
The $1.4 Billion Tech Onslaught
Huawei weaponized its R&D advantage in the August 8 Zhijie relaunch, slashing premium tech into mid-tier pricing:
Brutal Hardware Democratization
– 192-line LiDAR + rear solid-state radar + 4D millimeter wave radar (99.6% obstacle detection)
– External voice control for doors/AC within 3 meters
– Snowy Owl powertrain silencing tech (58dB at 120km/h)
– Dual zero-gravity seats with 123-degree recline
These features—previously exclusive to the $56,000 Aito M8—now appear in the $25,000 Zhijie S7. Huawei’s three-year, $1.4 billion R&D investment enabled this “technology violence.”
Software Supremacy
– Harmony OS 4.0 cockpit with cross-device ecosystem integration
– ADS 4.0 autonomous driving standard across all models
– Over-the-air upgrade infrastructure guaranteeing 5-year feature enhancements
The Five Realms Resource Crisis
“Managing five brands is extremely difficult. My resources are stretched thin,” Richard Yu confessed at May’s Future Auto Pioneers Summit. Huawei’s gambit risks overextension while rivals accelerate:
Competitive Pressures
– Xiaomi’s SU7 secured 120,000 orders in 36 hours
– Tesla’s Model Y refresh slashed prices by 15%
– BYD’s Seal 06 DM-i dominates the $20,000 segment
Yet Huawei gains critical advantages through Zhijie’s surrender:
– Unified decision-making ends internal friction
– Supply chain leverage increases 40% through consolidated orders
– Engineering resources concentrate on Harmony OS optimization
Third-Generation Domination Strategy
Huawei’s consumer electronics playbook—”first generation experiments, second adjusts, third dominates”—now drives Zhijie:
Evolutionary Roadmap
– Gen1 (S7): Delivery disaster became learning lab
– Gen2 (R7): Sold at $8,000 loss per vehicle to gain market foothold
– Gen3 (New S7/R7): Profit-focused assault on Tesla/Xiaomi
Huawei’s “Pure Harmony” ecosystem integration gives Zhijie unique leverage—seamless connectivity across phones, home devices, and vehicles creates switching costs competitors can’t match.
Automakers’ Existential Choice
China’s auto executives now face an irreversible power shift. As Yin Tongyue acknowledged, “When we disagree, we follow Huawei.” This capitulation establishes the new industry paradigm:
The Tech-Ally Imperative
– SAIC (once protective of its “soul”) now partners with Huawei
– BAIC and JAC embraced Huawei control for faster development
– Geely bets on independent Flyme Auto ecosystem
Traditional manufacturers lacking either:
– Vertical integration like BYD
– Tech partnerships like Huawei/Xiaomi
face extinction within 24 months. The brutal math: Huawei spends more monthly on automotive AI ($23 million) than Chery’s quarterly R&D budget.
The High-Stakes Experiment
Zhijie becomes the ultimate test case for tech-driven automotive disruption. Success would validate Huawei’s “control without ownership” model globally. Failure might expose the limits of cross-industry empire building.
For consumers, Huawei’s takeover means accelerated innovation: Zhijie’s new S7/R7 deliver unprecedented tech value at mid-market prices. For investors, watch Harmony OS adoption rates—when Zhijie exceeds 50,000 monthly sales, Huawei’s ecosystem leverage becomes unstoppable.
China’s auto industry has reached its tech-or-die moment. Automakers must now choose their ecosystem alliance—Huawei or Xiaomi—before the window closes. The victors won’t just dominate roads, but the entire mobility experience. Track Zhijie’s sales data through Q4 2025 to gauge whether Huawei’s gamble will reshape global automotive hierarchies.