Chinese tech behemoths are expanding their territories to the automotive sector, stirring the market. Taiwan-based suppliers play a critical part in these companies' car ventures. They have more confidence in Huawei's long-term success compared to Xiaomi.
Huawei's partner Seres said that, from the supply chain perspective, more time is required to observe Huawei's and Xiaomi's vehicle orders and performance. However, Huawei has been forceful with its suppliers, the company's major drawback.
Sources said Huawei has brought its consumer electronics industry mindset to its EV business. Although the company is a new entrant in the car industry, it has been demanding from its suppliers.
Huawei plans to spin off its car business and form a joint venture with Changan Automobile. It has also developed EVs with Chery Automobile and Seres. The company represents decent market opportunities, benefiting its suppliers and partners.
For example, Seres manufactures the AITO EV it developed with Huawei, narrowing its loss from CNY3.8 billion (US$532 million) in 2022 to between CNY2.1 billion and CNY2.7 billion in 2023.
Seres has said rising costs for labor and core EV technology development and the sluggish sales volume in the first three quarters of 2023 explain why the company stayed in the red last year. As the Aito M7 and M9 models arrive in the market, Seres will likely improve its profitability.
Some Taiwanese suppliers have become part of Xiaomi's supply chain. However, sources said the company's instability made many Taiwan-based businesses cautious about the potential collaboration when Xiaomi approached them as it started designing its EV.
The primary reason for suppliers' hesitance was the unknown market size that Xiaomi's SU7 can support. The vehicle's performance also needs to be clarified. In addition, whether Xiaomi EV can continue to gain traction in the market after the company's loyal fans calm down. Suppliers need more time to explore the above issues.
According to sources, Xiaomi asked Taiwan-based suppliers to customize molds for many car components when approaching them. Since the customization would cost significantly, suppliers were less likely to take risks.
Sources emphasized that it is too early to conclude Xiaomi's car business or sales. Suppliers will pay more attention to Huawei, which will likely generate more opportunities. The competition and reshuffle among emerging Chinese EV makers are also worth the attention.
