SERES & Huawei: A Collaboration Story

In the fast-evolving electric vehicle (EV) market, SERES has emerged as a significant player due to its strategic partnership with Huawei, one of the world's leading technology giantsThis partnership is not merely a collaboration of convenience but represents a deeper alignment of interests, technological SERES, and a cautious yet ambitious approach to navigating the complexities of the modern automotive landscape.

Set against the backdrop of the global push toward electrification, 2021 marked a pivotal moment when Synergy officially partnered with HuaweiTheir collaboration spans various domains, including industrial Internet, artificial intelligence, and smart mobilityThis strategic alliance has allowed Synergy to leverage Huawei’s expertise and resources to accelerate its innovation in the smart vehicle sector.

The journey has not been a smooth ride for SERES, which has experienced both soaring stock prices and tumultuous market fluctuations

Initially, after teaming up with Huawei, their stock prices began to rise dramatically, driven largely by investor enthusiasm and the potential of this collaborationThe completion of Huawei's "Intelligent Selection Car" model has captured significant public attention and generated considerable anticipation in the market.

The burgeoning demand for SERES’s new model, the Wanja New M7, turned the company into a darling of the capital market once againReports indicated that the stock price skyrocketed from approximately 31.76 yuan per share to an astounding 88.80 yuanBy October 23, 2023, Synergy's shares were reported at 85.26 yuan, signaling a whopping 160% increase since the partnership was announced.

The partnership was not merely a result of opportunism; there was a clear understanding from both companies about the necessity of synergy to overcome the intricate challenges of the automotive market

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Huawei’s internal discussions reflected their initial reluctance to directly enter the car manufacturing arena, a perspective strongly expressed by Huawei's founder, Ren ZhengfeiHowever, the inexorable trend toward vehicle electrification necessitated a new approach.

A Strategic Victory for SERES

Within Huawei, opinions about whether to venture into automotive manufacturing have been fiercely dividedWhile Ren insisted that Huawei should not produce cars to avoid overt competition with automakers, the reality of automotive intelligence and electrification has led to a re-evaluation of this stance.

Many insiders recognized Huawei’s strengths in hardware, software, and system development as key reasons to reconsider its position

Huawei’s prowess in these areas significantly lowered the barriers to entry into the automotive industry, attracting many senior leaders’ attention, notably Yu Chengdong, who began exploring potential partners for extensive cooperation.

This was precisely where SERES positioned itself—aiming for deep collaboration and delivering immediate benefits to align with Huawei’s ambitionsHowever, a widespread concern among automotive giants was that Huawei might assert too much control, which earned it a cautious reception from traditional manufacturers.

For SERES, the focus shifted explicitly toward its electric vehicle ambitions, having begun its investments in this area back in 2016 with about 10 billion yuan dedicated to research and development

However, early challenges, including declining revenues and sluggish sales, nearly derailed its investment strategies and threatened the company’s very existence.

As the demand for electric vehicles surged, Huawei offered a lifelineBy significantly reducing operational costs and leveraging its advanced technology and infrastructure, SERES was able to position itself as an attractive partnerThe revenue-sharing model emerged as a fair compromise, although it meant that Synergy received a mere 10% of the profits from the sales of cooperative models, as Huawei retained the lion's share.

Even with these significant concessions, Synergy brought to the table considerable capabilities, including advanced battery technologies as well as innovative manufacturing processes, which had already been recognized as vital to creating a competitive EV offering

The collaboration with Huawei allowed Synergy to develop products that met the high standards of the automotive market.

Huawei's Capital Magnetism

The relationship between SERES and Huawei reflects a deeper story of resilience and ambitionFollowing their merger, Synergy experienced significant capital gains in the stock market, showcasing the extent of Huawei's influence in attracting investor interest.

When news of the collaboration broke, Synergy’s shares surged from a mere single-digit valuation to as high as 83.83 yuanIt’s a testament to the market’s belief in the potential of this partnership

Yet, as with any ambitious endeavor, there were significant risks involved.

After launching their first collaborative model, the SERES-Huawei Smart Selection SF5, sales were disappointing, marking a challenging entry into the competitive EV marketFor the entire year of 2021, cumulative sales amounted to only 8,169 units—far below investor expectations.

The disappointing performance led to investor skepticism about the viability of SERES’s business model and its ability to succeed in the highly contested automotive landscape, further exacerbated by declining stock prices, which halved in value.

However, resurgence was on the horizon

By May of 2022, an announcement declared that sales figures exceeded previous years significantly, igniting optimism and reinvigorating Synergy’s market position.

With the release of patents for the Wanja brand to Huawei, the stock prices once again soared to 90.50 yuan per sharethe stock rally was augmented by public excitement over the new model's performance and the strategic branding changes undertaken by SERES.

In July 2022, Synergy rebranded, signaling its commitment to vehicle electrificationPreviously a subsidiary, the rebranding showcased its ambition to become a dedicated EV manufacturer.

Despite a rocky start with the M5 model earlier this year, the release of the new M7 model in August has rekindled investor and consumer confidence.

The Journey of Transformation

Synergy's journey reflects a transforming narrative that encompasses challenges and breakthroughs

From its roots as a supplier of components, it has redefined its identity several times—evidence of its ongoing evolution against the backdrop of industry disruption.

The company’s history includes a name change three significant times, symbolizing each major pivot point in its developmentThis latest transformation represents a strategic focus on smart electric vehicles, aligning with market demands and technological advancements.

The founder Zhang Xinghai's vision has played a key role in directing the company towards promising avenuesWith a background in manufacturing springs, he recognized the opportunity that lay within the automotive supply chain and seized it, eventually establishing partnerships that propelled SERES into the spotlight.

As electric vehicles usher in a new age for the automotive sector, Synergy is positioning itself strategically through targeted partnerships and continuous innovation

Their partnership with Huawei may define their path forward but also requires balancing dynamics of control and influence between the two entities.

However, the true measure of success will depend on SERES's ability to maintain autonomous growth while leveraging Huawei's technological advantagesUndertaking this endeavor amidst a fiercely competitive environment will demand not only agility but vision as well.

Looking ahead, the success of SERES and Huawei's collaboration will rely heavily on its ability to adapt and evolve in response to market demands, consumer preferences, and technological advancementsWhether this partnership will lead to a lasting legacy within the EV sector remains to be seen, yet the groundwork laid suggests potential for a bright future.