(Yicai) Sept. 16 -- As Huawei Technologies’ auto business model changes, the Chinese technology giant is giving up control over the Aito electric vehicle brand to its carmaking partner Seres Group.

Aito remains a core member of Huawei’s Harmony Intelligent Mobility Alliance ecosystem, Huawei and Seres announced in a joint statement yesterday. From now on, Seres will lead product definition and design, marketing, retail sales channels, and service functions, while Huawei will continue to provide technology solutions.

Under the new framework, Aito cars will be displayed and sold in dedicated, exclusive stores rather than alongside other HIMA collaboration brands, a Seres insider told Yicai.

Seres’ shares [SHA: 601127; HKG: 9927] were trading down 1 percent at CNY45.01 (USD6.70) in Shanghai and 1.8 percent at HKD34.06 (USD4.34) in Hong Kong as of 11.10 a.m. today, after falling 5.1 percent and 6.1 percent, respectively, yesterday.

Aito has been a staple of Huawei’s expansion into the automotive industry. It was launched in December 2021, with the one millionth Aito car rolling off the production line in January this year.

In July 2024, Seres announced it planned to buy 919 Aito trademarks and 44 exterior design patents from Huawei and its affiliates for CNY2.5 billion (USD372.5 million). The following month, the carmaker signed a deal to invest in Huawei’s Yinwang Intelligent Technology, acquiring a 10 percent stake in the intelligent auto solutions provider for CNY11.5 billion (USD1.7 billion). The transaction was completed in September 2025.

Over the past few years, Aito’s price premium has largely stemmed from Huawei’s name, partly from its technology and partly from its retail channels and brand endorsement, analysts said. With this new arrangement, Huawei gains a lighter asset structure and broader partnerships, while Seres assumes heavier operational responsibilities, the analysts noted, adding that this poses challenges for both.

Seres is already facing significant financial and operational pressure. Its revenue dropped 7.9 percent to CNY57.5 billion in the first half of the year from a year earlier, and it turned a net profit of CNY2.9 billion into a net loss of CNY1.7 billion in the period.

The market attributed the loss mainly to the so-called ‘Huawei tax,’ which refers to the technical licensing, component procurement, and channel sales fees the automaker pays to Huawei for their HIMA in-depth cooperation.

Seres’ payments to Huawei fall into three categories: procurement costs for hardware, such as smart driving systems, intelligent cockpits, and powertrain components, a technology licensing fee equal to 2 percent of the vehicle retail price, and channel marketing service fees equal to 8 percent of the vehicle retail price.

Seres’ payments to Huawei rose from CNY5.8 billion in 2022 to CNY7.2 billion in 2023, CNY42 billion in 2024, and CNY56.1 billion in 2025, with the share of its total procurement more than doubling to 34 percent from 15 percent, and that to its revenue climbing to 34 percent from 17 percent in the period.

In the first half, Seres’ expenses neared CNY13.9 billion, exceeding its gross profit of CNY13.4 billion. Of that, selling expenses were CNY8.5 billion, or over 63 percent of the gross profit in the period. Procurement of goods and services from Yinwang increased 75 percent to CNY9.8 billion from a year earlier.

Aito’s monthly deliveries have been declining since May. Last month, the brand delivered 20,652 EVs, down 50 percent from the same period last year, with the total figure for the first eight months of the year down 14 percent to 201,902 units.

Moreover, HIMA now includes four other brands -- Luxeed with Chery Automobile, Stelato with BAIC Group, Maextro with JAC Group, and Shangjie with SAIC Motor -- so Aito’s share in HIMA’s total sales volume has dropped to around 60 percent in June from 87 percent in 2024.

Editor: Futura Costaglione