Core Viewpoint - Huawei and Chery have announced the independent operation of the Zhijie brand, aiming to enhance their technological advantages with an investment exceeding 10 billion yuan and a dedicated R&D team of 5,000 people [2] Group 1: Zhijie Brand Performance - From January to July 2023, Zhijie brand's cumulative sales reached 49,000 units, marking a year-on-year increase of 164.7%, but accounting for less than 30% of the total sales of Hongmeng Zhixing [3] - The main model, Zhijie R7, contributed approximately 90% of the brand's total sales with 46,050 units sold, while the Zhijie S7 has seen a significant decline in sales, dropping to 730 units in July 2023, a year-on-year decrease of 52.6% [3] Group 2: Operational Challenges - The decline in Zhijie S7 sales is attributed to internal conflicts between Huawei and Chery regarding brand management, leading to operational inefficiencies [3][4] - The S7 model faced delivery issues due to factory relocations and supply chain shortages, resulting in only 794 units delivered from January 2023 to February 2024 [3] Group 3: Strategic Developments - The establishment of Anhui Zhijie New Energy Automobile Co., Ltd. as a wholly-owned subsidiary of Chery indicates a strategic move towards independent operation, with a focus on enhancing production capabilities and resource allocation [6] - The independent operation allows Huawei to take full control of technology development and strategic decision-making, while Chery focuses on manufacturing and resource support [6][7] Group 4: Future Outlook - The independent operation is expected to lead to systematic improvements, including dedicated production capacity and accelerated technological R&D, with a goal of achieving monthly sales of over 10,000 units by the end of 2025 [7] - The introduction of new models, such as the large SUV Zhijie R9 and new MPV, aims to enhance market competitiveness and meet diverse consumer needs [7]

Core Viewpoint - The partnership between Huawei and Chery has evolved into an independent operation for the Zhijie brand, with significant investments and a dedicated R&D team aimed at enhancing technological leadership [1][4]. Group 1: Independent Operation and Investment - Zhijie has officially achieved independent operation with a focus on integrated production, sales, and service, supported by over 10 billion yuan in investment and a 5,000-person R&D team [1]. - The establishment of Anhui Zhijie New Energy Automobile Co., Ltd. as a wholly-owned subsidiary of Chery marks a strategic move towards potential IPO plans for Chery, indicating a possible separation of the Zhijie brand from the main company [4]. Group 2: Sales Performance and Challenges - From January to July this year, Zhijie brand's cumulative sales reached 49,000 units, reflecting a year-on-year growth of 164.7%, but the brand heavily relies on the Zhijie R7, which accounted for approximately 90% of total sales [2]. - The Zhijie S7 has faced significant sales declines, with only 730 units sold in July, a drop of 52.6% year-on-year, highlighting operational challenges and internal conflicts between Huawei and Chery [2]. Group 3: Internal Dynamics and Brand Positioning - Internal conflicts between Huawei and Chery have hindered the Zhijie brand's development, with issues related to brand recognition and competition with the AITO brand [3]. - The management approach has shifted to prioritize Huawei's technological leadership while Chery focuses on manufacturing, aiming to resolve previous operational inefficiencies [4][6]. Group 4: Future Prospects and Strategic Goals - The independent operation is expected to enhance Zhijie's production capacity, with 40% of the Wuhu factory's capacity allocated to Zhijie, aiming to resolve delivery delays [5]. - Future product innovations and market expansion are planned, including the launch of new models like the Zhijie R9 and MPV, as well as the implementation of advanced technologies such as ADS 4.0 [5][6].

Core Viewpoint - Huawei and Chery have entered a new phase of their "technical marriage," with the unveiling of dual design centers and the signing of a strategic cooperation agreement, leading to the independent operation of Zhijie, which will be fully led by Huawei [1][3]. Group 1: Strategic Developments - Zhijie will upgrade to an independent subsidiary named "Anhui Zhijie New Energy Vehicle Co., Ltd." Huawei will not hold controlling shares but will dominate strategic decisions and the entire production and sales service process [3]. - Chery has prioritized Zhijie as its "first strategic project," confirming through official documents that it will fully invest in Zhijie and abandon the Star Era project [3]. - Chery's Chairman Yin Tongyue stated that following Huawei's guidance leads to success, while ignoring it results in setbacks, indicating a strong commitment to Huawei's leadership [3]. Group 2: Investment and Resource Allocation - Huawei plans to invest a budget in the hundreds of billions for research and development, forming a "technical team" of 5,000 people, and establishing dual design centers in Shanghai and Shenzhen [3]. - The Shanghai center will focus on exterior design and trend definition, while the Shenzhen center will handle the implementation of Huawei's full-stack technology [3]. - The R&D base in Wuhu's "Songshan Lake" will also be activated, creating a collaborative research layout across three locations, which is unprecedented in Huawei's partnerships with car manufacturers [3]. Group 3: Product and Market Strategy - Zhijie will integrate into the Hongmeng Intelligent Travel channel network, providing consumers with a unified "Huawei service" experience [4]. - The brand will continue to enhance its product offerings, with the launch of the new Zhijie dual 7 models and plans for a large SUV Zhijie R9 and the first MPV from Hongmeng Intelligent Travel, targeting family and business markets [4]. - Past challenges for Zhijie included delivery issues with the first model S7 and fluctuating sales for R7, prompting a need for systemic evolution [4].

Investment Rating - The industry rating is "Outperform the Market" [10][85]. Core Insights - Geely Holding Group has recently integrated its internal smart driving companies and teams, merging Zeekr's smart driving team, Geely Research Institute, and the smart driving brand "Mochi Zhixing" under Chongqing Qianli Smart Driving, which was established on June 27 this year. This company will focus on smart driving algorithms, automotive-grade hardware adaptation, and scenario-based solutions to support L2-L4 level autonomous driving technology mass production [3][14]. - Chery Automobile and Huawei signed a strategic cooperation agreement for the Zhijie brand, committing over 10 billion yuan in R&D funding and forming a dedicated 5,000-person R&D team to enhance core areas such as smart driving and battery technology. The new Zhijie New Energy Company will operate independently, covering the entire chain from R&D to user services [4][15]. - The automotive sector outperformed the CSI 300 index by 1.5 percentage points, with a weekly increase of 2.7% from August 4 to August 8, 2025, and a year-to-date increase of 12.7% [17][22]. Summary by Sections Weekly Market Performance - The automotive sector increased by 2.7% from August 4 to August 8, 2025, outperforming the CSI 300 index by 1.5 percentage points. Year-to-date, the automotive sector has risen by 12.7% [17][22]. Key Industry Data - In July 2025, retail sales of passenger vehicles reached 1.834 million units, a year-on-year increase of 7%, while wholesale sales were 2.192 million units, up 12% year-on-year. New energy passenger vehicle retail sales were 1.003 million units, a 14% increase year-on-year [6][37][38]. Industry News - Pony.ai launched a Robotaxi service in Shanghai, marking a significant step in autonomous driving services. The service operates in key areas of Pudong and is available to the public through a mobile app [68]. - The China Passenger Car Association slightly raised its annual forecast for 2025, predicting a 6% increase in retail sales of passenger vehicles [68].