Huawei Intelligent Driving Solutions Overview — A $16 Billion Valued Automotive Tier 1
This is the 2nd of a series to introduce new generation Tier 1s for intelligent driving solutions in China. Read the 1st one here. My recent posts focused on end-to-end autonomous driving and automotive LiDAR, in all of which Huawei had to be mentioned. The company has obviously become a heavyweight of the growing EV/AV industry that requires a dedicated post.
In retrospect, Huawei has achieved a milestone on the mission “to do everything short of building a vehicle”, quoting my original words in a post from 2019. While some of the tech companies in the field struggled to survive, Huawei’s automotive business unit (BU) recorded a net profit of CNY2.231 billion in H1 of 2024 from a net loss of CNY5.597 billion in 2023. Now the automotive BU has been spun off into an independent subsidiary company, Shenzhen Yinwang Intelligent Technology Ltd., with a CNY115 billion (USD16 billion) valuation.
Huawei’s Yinwang currently has five business lines that are: Qiankun intelligent driving, Harmony cockpit, Qiankun auto lighting, Qiankun vehicle control, and Qiankun cloud service. We dive into Qiankun intelligent driving on its solutions and iterations as well as the different collaboration models with auto OEMs.
ADS solutions
To straighten out some terms, Navigation Cruise Assist (NCA) is Huawei’s term for the commonly used Navigation on Autopilot (NOA). Similar to Tesla FSD, it is an advanced intelligent driving function allowing a car to navigate itself on the road with actions like stopping, steering, changing lanes, etc. It has been implemented for highways and city expressways on a scale and is rolling out to complex city roads. So, city NCA is a level up from highway NCA implicitly including the latter.
Huawei’s intelligent driving solution was first adopted by BAIC Arcfox Alpha-S Hi version in 2021, followed by Avatr 11 in 2022. Now referred as ADS 1.0, the system hosted a prestigious set of sensors on two of Ascend 610 chips with 400 TOPS compute power in total. With transformer-based BEV architecture and the input from HD map, it allowed vehicles to navigate in city traffic scenarios. However, city NCA could only be activated in a few cities of China due to the limited availability of HD map. The system cost was estimated to be about CNY100,000 while the vehicle models were priced around CNY400,000 at the time.
The 2nd generation was initially launched with AITO M5 in 2023, followed by a few other models. It implemented GOD (General Obstacle Detection) and RCR (Road Cognition & Reasoning) on the software level to replace the functions of HD map and also downsized the hardware suite by removing 2 cameras, 3 mmWave radars, 2 LiDARs and 1 Ascend 610 chip. By the end of 2023, it was announced that ADS 2.0 has realized city NCA all over China. Meanwhile, the system cost was optimized to about CNY30,000.
The ADS 3.0 was launched earlier this year on Stelato S9 and then made available to precedent models for upgrade. It incorporated neutral networks in the perception and planning modules for smooth human-like driving experience. As a step up from the previous version, city NCA can be activated from parking space and lead all the way to the next parking space. The system configuration remained the same with ADS 2.0 except the LiDAR and mmWave radars were updated to the newest model.
For end consumers to access the software pack for city NCA and AVP, they have the options to do an upfront payment of CNY36,000, monthly subscription of CNY720 or yearly subscription of CNY7,200, discount applicable during certain periods. Highway NCA and APA are standard features without additional cost.
To meet the growing demand of intelligent driving on affordable vehicles, Huawei recently introduced a basic-level solution called ADS SE. It skipped the LiDAR sensor and a rear view camera from the ADS 3.0 configuration, supporting highway NCA and APA by default. To access advanced features like city LCC Plus and AVP, it requires an upfront payment of CNY5,000 or subscriptions of CNY100 per month or CNY1,000 per year. It has been adopted by two models from Changan Deepal as well as the Pro edition of Aito M7, Luxeed S7 and R7, which didn’t come with ADS 3.0.
Vertical integrated industry chains
Looking into the supply chain of ADS solutions, Huawei owns some of the core technologies, often referred as a vertical integration of chip-hardware-software-cloud.
The MDC controller platform is built on Ascend AI chipset from HiSilicon, a subsidiary company of Huawei, with tailored operating system, middleware and tool chain.
In terms of sensors, Huawei’s LiDAR product has evolved from D2 of 92-channel launched in 2020 to D3 of 192-channel launched this year. The next generation D5 of 512-channel will be unveiled in 2025. Although not widely discussed, Huawei has jumped to the top supplier chart for front radar (including 4D) and corner radar, rapidly gaining market share this year.
As the industry is shifting towards the end-to-end architecture, data and computing power are crucial for any model-based intelligent driving systems to scale. In October, Huawei recorded a total computing power of 7.5 EFLOPS, allowing a model iteration every five days trained with 35 million km data on a daily basis, all of which are made possible with Huawei Cloud.
Three collaboration models with auto OEMs
Over the years, Huawei has identified three models to work with auto OEMs.
The first model is called Harmony Intelligent Mobility Alliance (HIMA), in which Huawei acts as a Tier 0.5 supplier. It is involved in the entire life cycle of a vehicle model by empowering the auto OEM from product design and development, quality and supply chain management, branding, online & offline sales to after sales service. Huawei has launched four brands with four OEMs under this model that are AITO with Seres, Luxeed with Chery, Stelato with BAIC and Maextro with JAC.
HIMA has achieved significant commercial success with over 500,000 vehicles delivered in 32 months, although this year contributed a big part of the sales volume. The average price of all HIMA models was rounded to CNY 399,000 based on the data from January to August 2024. The brands under HIMA are perceived by consumers as high-end and high-level intelligent associated with the widely recognized Huawei image.
The second model is called Huawei Inside (HI), where Huawei acts as a Tier 1 providing full stack hardware and software integrated solutions. For example, it has launched the Alpha-S vehicle model with BAIC Arcfox, three models with Changan Avatr, two models with Changan Deepal and a model with Dongfeng Voyah. Another model with M-Hero is expected to hit the market in Q1 of 2025.
The third model is for Huawei to supply standard parts or modules as Tier 2. It has over 30 products including all types of sensors, T-box, AR-HUD, powertrain, cloud service, etc. A longer list of vehicle models is under this category all containing auto parts from Huawei.
Meantime, Huawei is probably eyeing a bigger OEM-circle not restricted by the above-mentioned three models. Bao8 from BYD sub-brand Fangchengbao has been released with ADS 3.0 intelligent driving solutions, which is neither under HIMA nor HI strictly speaking. Also, it was reported that Trumpchi, a brand under GAC would launch three new vehicles in 2025 integrated with ADS 3.0 and Harmony cockpit solutions.
Yinwang to disrupt the automotive ecosystem?
Going back to Yinwang’s financials, the net profit of 2024 is expected to reach CNY5 billion with H1 net profit as CNY2.231 billion. The CNY115 billion valuation makes its PE multiple 23, which is on par with other Tier 1s such as Desay SV at 25 and Adayo at 20 (according to China Fortune Securities’ estimation of 2024). However, Yinwang is not merely a traditional Tier 1.
The automotive industry is facing severe challenges with intensive competition among new EV brands, high R&D costs and price wars spreading to upper stream players. Huawei envisions an open platform enrolled by both OEMs and suppliers with a dedication to intelligent system solutions while covering design, development, production, sales and services, eventually beneficial to all parties.
The HIMA practice known as Tier 0.5 has proven to be successful and Yinwang is taking a further step to strengthen the alliance via capital. Before the entity was established, Huawei extended invitations to its existing and potential OEM partners, with Avatr and Seres being the early birds each acquired a 10% stake. More OEMs are expected to get on board. With Yinwang’s new role emerging, would it ultimately disrupt the automotive ecosystem? We have the next few years to find out.
