After the controversies during the previous year, it seems that the Smart World S7 may be making a comeback.
According to the latest report from "Caixin," Huawei plans to re-release the Smart World S7 in the near future, with the new model offering more features without an increase in price.
Insiders reveal that Smart World is also planning to launch its second model, possibly an SUV, and is considering introducing an extended-range version as well.
This aligns with Huawei's product strategy for HarmonyOS-based smart vehicles. For instance, the popular model in their WENJIE series is the M7, a mid-to-large-sized SUV with extended-range capabilities. Given the large market demand for such vehicles, it is only natural for Smart World to participate.
Towards the end of last year, the Huawei-Chery collaboration on the Smart World S7 faced difficulties in deliveries. A large number of customers reported experiencing delays and confusion in the order fulfillment process, with the waiting time for delivery extended from an initial 4 to 6 weeks.
Subsequently, there were reports of the Huawei-Chery collaboration facing obstacles, and it was rumored that the Smart World division would gain more independence and authority.
In an ever-changing automotive market, with price wars and constant industry adjustments, can the Smart World S7 maintain its position?
Will it make another impact, with added features but without an increase in price?
Both Chery and Huawei have invested significant efforts and costs to build the Smart World brand. The Smart World project was established internally at Chery even before 2022, emphasizing its importance within the company.
In 2023, Chery officially established the Smart World division, responsible for integrated management of product design, development, quality, procurement, manufacturing, and service for the Smart World brand. The division is led by Chery's CTO, Gao Xinhua, and involves the participation of thousands of engineers. Billions of dollars have been invested in the project overall.
Huawei has deployed over 800 experts and talents in various fields such as product development, intelligent vehicle solutions, and quality control management to collaborate with Chery on this project. They have also assembled a dedicated team in Huawei to handle sales, delivery, and service for the project.
However, despite the joint efforts, the product they created did not achieve the expected success. When the Wisdom S7 was launched in November last year, it was expected to gain popularity like the Wanjie series. The official announcement stated that pre-orders had already exceeded 20,000 units, and on the day of the launch, they received over 5,000 confirmed orders.
However, there have been delays in delivering vehicles to owners by Zhijie, the company in charge of the orders, and there are various reasons given for the delay.
According to Caixin's report, there are several reasons for the difficulties in delivering the Zhijie S7, such as Huawei's faster product progress requirements and the untimely supply of some components, including Huawei's own components. After reviewing the situation, both parties concluded that the main reason for the delivery issues was the lack of proper coordination within the new partnership system.
For instance, the sales of Zhijie's sub-brand models under the Hongmeng Intelligent Travel were entrusted to China Communications Equipment Group Co., Ltd.
This company can be seen as a sales company for Hongmeng Intelligent Travel. According to individuals familiar with Huawei's sales channels, China Post has its own acceptance standards, and the standards between Chery, Huawei, and China Post are also not completely unified.
In addition to this, the issue of delivery delays also points to limited factory capacity. It is reported that the Zhijie S7 is produced by Chery's newly built Intelligent Internet-connected Super Factory, with a planned annual capacity of 500,000 vehicles. It takes 3-4 months for the production capacity to ramp up. However, the new factory cannot achieve mass production in a short period of time, which is also the reason stated by Zhijie for the delayed delivery.
This is consistent with Caixin's report, which states that Huawei and others couldn't wait for the completion of the new factory and requested that the Zhijie S7 be produced at Chery's factory first. However, Chery's factory is also producing multiple models, including the Xingtu Xingjiyuan model that shares the same platform as the Zhijie S7. The simultaneous production of multiple products poses challenges for on-site communication and coordination.
As the production of the Star Journey Star Era ES is involved, the delivery difficulties of the ZhiJie S7 are intensifying.
Amidst the escalating news of the obstacles faced in the cooperation between Chery and Huawei, the message of a "Chery executive possibly resigning due to this matter" further adds to the confusion.
Prior to this, Huawei also proposed a compensation plan for the delayed delivery: for users who have paid the "final payment" of the ZhiJie S7 between November 28, 2023, and January 15, 2024, if the vehicle delivery exceeds the expected timeframe, owners will receive compensation of 200 CNY per day, up to a maximum of 10,000 CNY.
Finally, Chery's spokesperson, Jin Yibo, stepped forward to put an end to the speculations, stating that the cooperation between the two parties is going smoothly, with both sides investing more resources to deepen their collaboration and actively promoting the production and delivery of the ZhiJie S7.
As of early this month, Chery has upgraded the EH ZhiJie division to an independent business unit, with separate accounting and autonomous management. The independence of ZhiJie within Chery is likely the latest outcome of their deepened cooperation.
Furthermore, the plan to relaunch the ZhiJie S7 in spring 2024 demonstrates a clear objective, which is to once again emphasize the advantages of the ZhiJie S7 and regain the attention of more consumers.
The key now lies in how to stage a comeback. The success of the WenJie serves as the best template for the ZhiJie S7. However, the initial market response to the ZhiJie S7, which gained fame with its "far ahead" positioning, seems to resemble the "disastrous start" that the old M7 encountered upon its launch.
According to official information, within two days of its release, the ZhiJie S7 received over 10,000 orders, which is definitely an impressive achievement for a new brand and model with a relatively high positioning.
Based on this pre-sale data, ZhiJie was expected to become a phenomenal brand in the domestic market, but unfortunately, it quickly lost momentum.
After the delivery began, the performance of the S7 did not meet expectations. According to third-party data (Dongche Di), the sales of ZhiJie S7 were 115 units in November of last year, only 784 units in December, and 604 units in January 2024.
If we calculate it this way, the S7's sales in the past three months haven't even reached 1,500 units, which is indeed quite embarrassing compared to WenJie.
After all, at the launch event of the Zhijie S7 in November last year, Huawei's CEO, Richard Yu, boldly stated that all four versions of the S7 were currently being sold at a loss, with the hope of making up for the losses once sales increase in the future.
However, it seems that the rosy expectations of Huawei and Chery have fallen short.
The reason for the poor sales is not because the product itself is inadequate, but rather the "toothpaste squeezing" production method has led many prospective buyers to give up on being "far ahead".
In addition to this, there have been issues with the disorderly delivery of orders and vehicle quality problems, but fundamentally, the production capacity of the Zhijie S7 is the main issue.
For Huawei, unlike the collaboration with Seres, Chery is a completely different magnitude. In the collaboration with Seres, Seres was in a relatively weaker position, entrusting the entire process from production to sales to Huawei, giving Huawei a high level of control.
However, Chery, as a strong independent brand giant, has its own technology and sales. Its projected sales for the whole year of 2023 are as high as 1.88 million vehicles. With these two strong players collaborating, it is inevitable that there will be some areas of discord.
Furthermore, for Chery, not only does it have to be responsible for the production of the Zhijie S7, but it also needs to focus on its own "dear son," the Chery Exeed Star Jet. The Star Jet itself is in direct competition with the Zhijie S7 in terms of market positioning, and one can imagine Chery's internal attitude towards the Zhijie S7.
From numerous complaints by car owners, it appears that the delivery period for the ZhiJie S7 can be as long as 3 months, while the Xing Ji Yuan ES only takes around half a month, or even shorter.
The issues related to delivery and other aspects have already had an impact on the reputation of the ZhiJie brand. Both Chery and Huawei need to take measures to regain market confidence, and one possible solution is a second listing.
Furthermore, in order to boost market confidence, especially in the context of price wars today, ZhiJie S7 is considering a strategy of lowering prices across the entire lineup to demonstrate sincerity to consumers. Another way to achieve a price reduction is by "increasing quantity without increasing price".
At the same time, the unfortunate powertrain options make it difficult for the Zhijie S7 to replicate the success of the Wenjie. Currently, the Zhijie S7 only offers a pure electric drive, and within the price range of 250,000 RMB, the market is already saturated.
In addition to the Zhijie S7, users can choose from the Tesla Model 3, Jike 007, Xiaopeng P7, and the highly anticipated Xiaomi SU7. Compared to these models, the Zhijie S7 is a new entrant in the market and has a longer delivery period, which adds to the pressure.
In the Chinese market, SUVs have gained more popularity than sedans, and all three models from Wenjie are SUVs that offer both pure electric and extended range powertrain options. This provides users with a wider range of choices.
It remains to be seen how Zhijie will play its cards effectively in the coming days.
