AITO

In 2020, Seres sold exactly 732 electric cars. The company had spent half a billion dollars building a Silicon Valley R&D center, hiring a Tesla co-founder, and buying a factory in Indiana — then watched it all fail. Three years later, AITO delivered 427,000 vehicles and outsold BMW in China’s luxury segment. The difference was one phone call to Huawei.

The Most Dramatic Turnaround in Chinese Automotive History

The numbers defy conventional business logic. Revenue surged from ¥35.8 billion in 2023 to ¥145.2 billion in 2024 — a 305% increase in a single year. Cumulative losses of ¥9.84 billion over four years reversed into a ¥5.95 billion profit. The AITO M9, priced between ¥469,800 and ¥569,800, outsold every BMW, Mercedes, and Audi in China’s luxury segment for eleven consecutive months. Seres became only the fourth EV company globally — after Tesla, BYD, and Li Auto — to achieve sustained profitability.

None of this was inevitable. The strategy that produced these numbers required Seres to do something most companies find psychologically impossible: surrender its brand identity entirely. AITO vehicles are sold through more than 800 Huawei retail stores, powered by Huawei’s HarmonyOS operating system, and marketed by Huawei’s consumer electronics chief Richard Yu. Chinese consumers physically remove “Seres” badges from factory-fresh cars and replace them with Huawei logos. When asked about the phenomenon, chairman Zhang Zhengping (张正萍) offered no protest: “The market decides if a product is good. No one buys it for the badge alone.” The invisible manufacturer had become China’s most profitable new car company.

From Springs to Silicon Valley

Seres did not begin as a technology company. Zhang Xinghai (张兴海) founded a spring factory in Chongqing (重庆) in 1986 with ¥8,000 in pooled capital, making clutch springs for washing machines. He was twenty-three. By the mid-1990s, the company had pivoted to motorcycle shock absorbers, eventually becoming China’s largest producer in the segment with capacity exceeding 1.5 million units annually. In 2003, Zhang negotiated what was then unprecedented in Chinese industry: a 50-50 joint venture with state-owned Dongfeng Motor — the first private-SOE automobile partnership in Chinese history. Dongfeng Xiaokang (东风小康) produced microvans and light commercial vehicles that sold in more than seventy countries under the DFSK badge, eventually exporting 500,000 units and building assembly capacity in Indonesia. The company mastered high-volume manufacturing, supply chain logistics, and the brutal economics of low-margin vehicles — capabilities that would prove essential when the product shifted from ¥50,000 minivans to ¥500,000 luxury SUVs.

His motivation for the EV pivot was existential rather than opportunistic. “The same car — ours sells for ¥100,000,” he told Fenghuang Auto. “Swap the badge, it could sell for ¥200,000.” After two decades as a permanent third-place manufacturer behind Wuling and Chang’an in the microvan segment, he saw the electric vehicle transition as the only escape from commodity manufacturing — from what he called being “technology-poor” (技术穷), a company with no core technology and no brand premium.

The pivot began in 2016 when the company, listed on the Shanghai Stock Exchange as Xiaokang Co. (601127.SH), committed capital to a Silicon Valley venture. Xinghai sent his son Zhengping to California to establish SF Motors in Santa Clara. The scale of the bet was enormous: $33 million to acquire InEVit, the battery technology startup co-founded by Tesla co-founder Martin Eberhard; $110 million for a 675,500-square-foot former Hummer H2 plant in Mishawaka, Indiana; and hundreds of millions more in R&D and facility retooling. Total American investment exceeded $500 million.

By 2019, every dollar was effectively lost. SF Motors suspended its American launch, laid off hundreds of engineers in California, and Xinghai’s market capitalization dropped 80% to approximately ¥12.2 billion. The company retreated to China with expensive battery technology, more than 300 patents, and no viable product to show for the largest overseas R&D investment by any Chinese automaker. Then, in January 2019, a cooperation agreement with Huawei planted a seed whose importance was invisible at the time. The deal covered industrial IoT and ICT infrastructure — mundane technical collaboration, not the deep automotive partnership it would become.

732 Cars and the Phone Call That Changed Everything

The crisis deepened before it resolved. The SF5, Seres’ first Chinese-market electric vehicle, sold 732 units in all of 2020. Monthly sales in early 2021 dropped to 83, then 13, then 54 — numbers suggesting not underperformance but near-total market rejection. Across Chongqing, Lifan Auto (力帆) — another private automaker facing identical structural pressures — was entering bankruptcy. The cautionary mirror was impossible to ignore. Seres had accumulated ¥1.73 billion in losses for 2020 alone, with the cumulative total climbing toward ¥9.84 billion across four years. Internal skepticism was intense: “Everyone was extremely skeptical of Xinghai’s decision” to pursue EVs, Chinese media reported.

Xinghai made two decisions that October that defined everything that followed. He mortgaged 70% of his personal stockholdings to fund continued operations — an extraordinarily personal financial gamble for a man who had spent thirty-four years building a manufacturing empire. Then he resigned as chairman of the listed company, installing his thirty-one-year-old son Zhengping at the helm. The signal was deliberate: generational renewal at the moment of maximum institutional vulnerability.

Huawei’s Yu Chengdong (余承东) visited Chongqing in early 2021. Yu had been searching for a manufacturing partner willing to build vehicles entirely around Huawei’s technology stack — HarmonyOS cockpit, Advanced Driving System, DriveONE powertrain — and distribute them through Huawei’s consumer electronics stores. Larger automakers including BAIC and Changan had rejected the arrangement, unwilling to cede brand control to a technology company. Seres, with nothing left to lose and everything to prove, accepted.

The SF5 began selling through Huawei stores in April 2021, generating approximately 7,080 units through November — a modest proof of concept. The real break came on December 2, 2021, when Seres and Huawei jointly announced the AITO (问界) brand. AITO was not a Seres product sold through Huawei. In consumer perception and market positioning, it was a Huawei product built by Seres. The distinction between those two framings was worth approximately ¥100 billion in annual revenue. The company renamed itself from Xiaokang to Seres Group (赛力斯集团) in July 2022, erasing the last traces of the minivan business that had sustained it for two decades.

The product that validated the entire strategy was not AITO’s first vehicle but a third-generation refresh. The new M7, launched September 12, 2023, generated more than 130,000 orders within four months — more than the SF5 had sold in its entire existence. Product-market fit, elusive for three years, arrived in a single quarter. The vehicle’s combination of Huawei’s intelligent cockpit, competitive pricing, and the credibility of Huawei’s retail channel produced demand that overwhelmed Seres’ production lines.

The M9 and the Economics of Strategic Surrender

The AITO M9 settled any remaining questions about ceiling. Launched December 26, 2023, at ¥469,800 to ¥569,800, the luxury SUV collected 60,000 orders in its first eighty-six days. It achieved the highest safety score in C-NCAP history at 93.9%. It won China Car of the Year 2025. And it outsold BMW, Mercedes, and Audi in China’s ¥500,000-plus segment for eleven consecutive months in 2024, delivering more than 150,000 units in its first year. A Chinese brand, less than three years old, had cracked the luxury market — through manufacturing excellence and technological integration, not brand heritage.

The economics of the Huawei partnership have no real precedent in automotive history. All vehicle revenue is booked by Seres, which then pays Huawei approximately ¥141,000 per vehicle in technology licensing, component procurement, and distribution fees. Through mid-2025, cumulative payments to Huawei exceeded ¥75 billion. In 2024, Seres moved to convert dependency into partnership: purchasing the AITO trademark for ¥2.5 billion and investing ¥11.5 billion for a 10% stake in Huawei’s Yinwang (引望) intelligent automotive subsidiary. The company that had surrendered its brand identity was now buying it back — and acquiring equity in the technology platform that made the brand valuable.

Behind the Huawei-facing brand sits genuine manufacturing capability that Seres built over four decades. The Chongqing production complex — the Fenghuang Smart Factory and the newer Super Factory in Liangjiang New Area — represents annual capacity of approximately 600,000 vehicles. A 10,000-ton IDRA die-casting press, among the world’s largest, integrates 222 separate components into ten aluminum castings. The proprietary 1.5-liter turbocharged range-extender engine achieves 44.8% thermal efficiency — among the highest of any internal combustion engine in production — and sold more than 470,000 units externally in 2024. R&D spending reached ¥7.05 billion that year, with 6,201 engineers comprising nearly a third of the 16,102-person workforce. The invisible manufacturer is, by any measure, a serious industrial enterprise.

The product portfolio now spans four models calibrated across China’s premium EV market. The M5 occupies the mid-size premium segment from ¥229,800. The M7, the volume workhorse, sits at ¥249,800 to ¥329,800 and has accumulated more than 400,000 sales since its September 2023 refresh. The M9 flagship commands ¥469,800 to ¥569,800 and has established itself as the best-selling vehicle in China above ¥500,000. The M8, launched in April 2025, fills the gap between M7 and M9 with over 80,000 pre-orders before deliveries began. All models are available in both extended-range electric (EREV) and battery-electric (BEV) configurations, powered by CATL batteries and Seres’ proprietary Mofang (魔方) multi-powertrain platform.

The Sanctions Chessboard

The dual listing on the Hong Kong Stock Exchange in November 2025 — raising HK$14.3 billion at 133 times oversubscription with twenty-two cornerstone investors — funded the next chapter: international expansion across a geopolitical landscape that permits no simple strategy. AITO, with its full Huawei technology stack, faces automatic barriers in any market that sanctions Huawei — effectively excluding the United States, Canada, and much of Western Europe. The solution is a bifurcated approach. AITO targets sanctions-free markets first: the partnership with Abu Dhabi Motors, signed February 2026, marked the brand’s inaugural international presence. The Seres brand, built on a separate technology stack using Bosch and Valeo components, targets Europe — where Norway, Germany, and Greece already carry the Seres 5 BEV.

The question now is whether strategic humility has limits. Seres’ asset-liability ratio of 87.4% is among the highest of any listed automaker globally, reflecting enormous capital commitments to the Huawei ecosystem. Net margins of 4.1%, while firmly profitable, reflect the cost of the technology premium that makes AITO competitive. And the company’s dependence on a single partner — however spectacularly profitable — represents a concentration risk that no financial metric adequately captures. Overseas revenue in 2024 totaled just ¥4.2 billion, less than 3% of the total.

The spring maker from Chongqing bet everything on Huawei and won. Whether that bet evolves into genuine strategic autonomy or deepens into permanent dependency may determine whether Seres’ turnaround becomes the foundation of a lasting institution — or the most profitable cul-de-sac in automotive history.

Last updated: March 15, 2026