On April 23rd, Huawei unveiled the new M5 in Beijing. The M5, born at the end of 2021, holds significant importance for Huawei's Smart Selection Vehicle program; it is the pioneering work of this business and its first notable achievement. At the launch event, Yu Chengdong, Huawei's Executive Director, CEO of the Consumer BG, and Chairman of the Huawei Intelligent Automotive Solution BU, even defined the new M5 as the key product to initiate the next three years of Hongmeng Smart Driving (Smart Selection Vehicle).
In the 7 months following its delivery commencement, the M5 delivered a total of 70,000 vehicles. However, starting from August 2022, the M5 entered a downward trend, and even the launch of the Smart Driving version last year failed to reverse the decline. In 2023, the M5's monthly sales volume dropped to less than 3,000 units. Nevertheless, Huawei is not prepared to give up on the M5 and has mobilized resources to relaunch it. The introduction of the new M5 today represents Huawei's response.
Compared to the previous model, the most significant change in the new M5 is the standardization of a high-level smart driving system with lidar across the entire series, along with upgrades in seating, audio, and chassis control. If we only look at the Smart Driving version, the starting price of the new M5 has been reduced by 30,000 yuan to 249,800 yuan. However, if we only consider the starting price, there is no change between the new and old M5, still starting at 249,800 yuan. Reporters learned that the standard version of the old M5 may gradually cease production and sales.
It is worth noting that, like the new M5, the new M7, which is a collaborative effort between Huawei and Seres, was re-launched through product revision. The M7, launched in 2022, followed the trajectory of high initial sales followed by a decline. In the second month after its launch, the M7's monthly sales exceeded 5,000 units, but from the sixth month post-launch, the monthly sales consistently fell below 2,000 units. From April to August 2023, the M7's monthly sales continued to hover below 1,000 units.
To reverse the M7's sales slump, Huawei invested 500 million yuan in redeveloping the product, shifting the focus from a 6-seater SUV to a 5-seater SUV. It leveraged the strengths of the Huawei Hongmeng system and ADS 2.0 intelligent driving capabilities and reduced the product's price by 40,000 to 50,000 yuan, lowering the starting price to under 250,000 yuan. After the new M7 was introduced in September last year, it swept away the sluggishness of the old model, garnering 60,000 orders within 31 days of its launch, becoming the most eye-catching phenomenon in the 2023 automotive market.
In contrast, although the Smart Driving version of the new M5 has reduced its price by 30,000 yuan, the overall starting price of the M5 series as a product line has not changed. Moreover, the new M7 is in a relatively less competitive market, with only one core competitor, the Li Auto L7, and the new M7's starting price is about 60,000 yuan lower than the Li Auto L7. The market for the new M5, however, includes products like the Li Auto L6, Lynk & Co 08, BYD Tang, and Tesla Model Y, with more intense competition.
Considering Huawei's strong "sales driving" capability, the initial orders for the new M5 are still expected to be considerable. Reporters learned from the stores that many users have already secured orders after this afternoon's press conference. However, the stable delivery capability will only become clearer after 3 to 6 months.
Looking back at the four models that Huawei's Smart Selection Vehicle has introduced so far, all three models other than the M9 have faced challenges after their initial launch. This shows that even with Huawei's strong technological innovation, learning, and execution capabilities, as well as brand and traffic capabilities that other companies can hardly match, the automotive industry has its inherent barriers and differences. Know-how, including product definition and product spectrum planning, requires a longer period of accumulation.
As of this year, Huawei's Smart Selection Vehicle sales have exceeded 100,000 units, ranking first among China's new forces, which is already a remarkable achievement. However, for Huawei to achieve greater success in the automotive industry, it may need more time.