The battle for Huawei's dominance has just begun.

A Battle for Market Dominance: Li Xiang's Ideal vs. Yu Chengdong's Wenshi

Li Xiang, the king of the automotive industry on Weibo, thought he had overcome the challenges and emerged victorious. In June, he proudly revealed how he fought against Wenshi last year, boasting that Ideal was selling over 30,000 units per month while Wenshi was struggling.

However, during the National Day holiday, Yu Chengdong made a comeback with the new Wenshi M7, selling over 50,000 units and leaving Li Xiang feeling unsettled.

The battle between Ideal and Wenshi has begun.

"Some of our Ideal salespeople are offering to cover the 5,000 yuan deposit for Wenshi customers who have already made a purchase decision. We have cars in stock," said Ideal salespeople in their communication with customers, showing their determination to win over Wenshi owners.

At the same time, Ideal has launched various measures such as time-limited discounts, insurance subsidies, and dozens of gifts to attract customers.

A rough estimate suggests that the "customer acquisition cost" for Ideal could be as high as 40,000 to 50,000 yuan.

Ideal salespeople revealed that the competition for Wenshi customers is particularly fierce in a certain store in Shanghai, as the city has stopped providing license plates for extended-range vehicles, resulting in higher subsidies compared to other regions.

Ideal acknowledges the magnitude of these discounts, stating, "Competition is intense now, mainly because the management rights have been decentralized this year, and local policies and subsidies are more flexible. However, these are generally limited-time and limited-quantity promotional activities and will not continue indefinitely."

It is surprising that Ideal, with monthly sales of over 30,000 units, has to concentrate its efforts on snatching customers. This shows the strong impact that the Huawei Wenshi, which sold well in September and October, has had on the SUV market in the 200,000 to 300,000 yuan price range.

In mid-September, Yu Chengdong, Chairman of Huawei's Automotive Business Unit, made a bold move by launching the new M7, which had been lacking "presence" for over a year, and lowering its price to the 250,000 yuan range. Within 25 days, over 50,000 units were sold. Yu Chengdong's daily order posters during this period only heightened the industry's anxiety, including that of Li Xiang.

Among the many competitors in the same segment, the one that overlaps the most with Ideal is the sales champion of this year, the L7. When introducing the new M7, Yu Chengdong compared it to the Ideal L7, highlighting the advantages of the new M7 in terms of configuration and price.

As the entry-level product in Ideal's existing product lineup, the L7 achieved sales of 13,000 units in September. However, the new Wenshi M7 is gaining momentum and aims to surpass the L7.

During the intense competition between the two, Ideal held a four-day closed-door "brainstorming" session for its middle and senior management, with the main focus being on converting cash into sustainable competitiveness and sales, securing a winning position before the industry reaches its final stage in 2028.

Wenshi, which launched a surprise attack from outside the door, was inevitably brought to the table. According to insiders, on the first night of the strategic meeting, Ideal's management held a meeting lasting over an hour, focusing on how to respond to Huawei's challenge.Ideal not only elevates Huawei's strategic position to be on par with Tesla and BYD, but also identifies it as the strongest competitor and intentionally spreads the "chill" brought by Huawei to the middle management, sounding the alarm throughout the company.

Because Ideal knows that the battle between L7 and M7 is just the beginning, and the mutual penetration between the two companies will further accelerate.

In fact, Yu Chengdong's car-making team has already started to gather. By the end of this year, the cars co-developed by Huawei and Chery, the Zhijie S7 sedan, and the flagship SUV M9 will join the battle. In Ideal's arsenal, there may also be a million MPV co-developed with Jianghuai and models from BAIC. On Ideal's side, there is also the flagship SUV MEGA and a planned flagship MPV priced at 500,000 yuan.

The decision made by Li Xiang and his team will be the focus of the battle against Huawei.

Ideal predicts that by 2028, in order to become one of the remaining four or five giants in the industry, the company must achieve a sales volume of 3 million units, which is ten times the company's target for this year.

In the face of the current market situation, how to "spend money wisely" has become the consensus reached internally at Ideal. According to the financial report, as of the end of the second quarter, Ideal had 73.77 billion yuan in cash on hand, equivalent to the combined amount of cash held by NIO and Xiaopeng during the same period. Next, determining the direction and making aggressive investments will be the key to Ideal's breakthrough.

In terms of products, Ideal's thinking on the demand side is to continue to focus on the home segment as the main battlefield and extend its product planning to 2027. On the other hand, Li Xiang is also accelerating the breakthrough of production capacity bottlenecks. On October 10th, he posted a message stating that the impact of the upgrade of the Changzhou factory and the qualification switch of the Beijing factory at the end of September has been resolved, and "this month we can challenge the delivery volume of 40,000 units ahead of schedule."

At the same time, Li Xiang also reflected on the "latecomer disadvantage" of Ideal in terms of Huawei's killer feature of intelligent driving, and frankly stated that "the lessons learned from insufficient investment can only be solved by strengthening investment."

Industry insiders in the intelligent driving sector pointed out that Ideal, which is good at "seizing the opportunity", originally planned to wait for the technology to mature before making a bigger push in intelligent driving, when the cost would be lower and the detours would be fewer. However, Ideal has now realized that the turning point has arrived and the window of opportunity for intelligent driving is fleeting. Fortunately, it is not too late, and the subsequent level of investment will determine the outcome.

Regarding Li Xiang's speech and planning at the meeting, Ideal only stated that "it does not represent the official stance." However, after the closed-door meeting, on October 10th, Ideal publicly announced the recruitment of more than 50 positions related to intelligent driving, covering various categories such as algorithms, intelligent driving models, software and hardware, decision planning, high-precision maps, and simulation testing. It also stated that Ideal will insist on making intelligent driving a standard feature in future car models and strive to achieve Level 4 autonomy.

Insiders close to Ideal revealed that they believe that by 2025, the second half battle of smart cars will be over. By then, those who can make it will make it, and those who can't will be left behind. Because the foundation of data models and training volume has already been established, what is needed behind is a large number of early adopters. This is the decisive battle time for the next three years. Ideal will use its large-scale models to overtake in the intelligent driving race.It can be foreseen that after the end of the year, both NIO and Huawei will further engage in close competition in terms of product matrix and technology. In the upcoming elimination round, any weaknesses could provide opportunities for the opponent to surpass. This includes the overall coordination of the smart vehicle collaboration, capacity allocation planning, as well as the development of NIO's technology and the direction of its pure electric products.

However, the "mutual entanglement" and product competitiveness between these two new energy stars may actually attract more users and divert them to their respective sales pools. Li Xiang also believes that NIO, along with Huawei, BYD, and Tesla, have the potential to become the final "Big Four". It can be said that they are in a "love-hate" relationship.

Insiders close to NIO revealed that Li Xiang and Richard Yu occasionally chat with each other through WeChat. However, on the surface, fierce competition is the norm. One aims to dominate the domestic market and surpass BBA, while the other strives to become the industry's number one. Both of them have ambitions to become giants.

Who will be the first to enter the circle of BYD and Tesla, or even surpass them? Only by excelling in technology, product, and delivery capabilities can one have a chance to secure a ticket. Li Xiang said that these three conditions are indispensable, and the most exciting years in the automotive industry have officially begun.