Component shortages allegedly derail delivery of Chinese electric vehicles

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31st January 2024 – (Shanghai) According to a CNA report, electric vehicle (EV) industry insiders have revealed that crucial production delays are affecting top Chinese automakers. Changan Automobile and Chery Automobile, both of which are forging paths in the premium EV market through alliances with Huawei, have reported disruptions in the delivery of their flagship models.

At the heart of the delay lies the MDC 810 computing unit, an essential part of Huawei’s strategic push into the automotive industry. This advanced driver assistance system is a cornerstone of Huawei’s Intelligent Automotive Solution (IAS) business, which is pivotal to the company’s aspirations to lead in the smart electric vehicle components market.

Sources intimate with the matter disclosed that a shortage of key components for the MDC 810 unit is causing the production hiccups. This comes at a critical juncture as Huawei seeks investment to bolster its four-year-old IAS division, which is on the cusp of being spun off as a separate entity. Notably, Changan Automobile has expressed intentions to acquire a significant stake of up to 40% in the new venture.

The production predicament has cast a shadow over the recent launches of three models in the last quarter of 2023. Changan’s Avatr brand has been particularly hard-hit, with the Avatr 12 sedan, starting at 300,800 yuan ($41,880), amassing over 20,000 orders by early December. Vice President Li Pengcheng acknowledged “challenges in key component supplies” as the culprit for average two-week delivery delays, conspicuously omitting Huawei’s involvement.

To mitigate customer dissatisfaction, Avatr has proposed compensation of up to 15,000 yuan for delayed deliveries. Similarly, Chery’s new Luxeed brand has been affected, with its Luxeed S7 sedan facing comparable order backlogs and offering reimbursements of up to 10,000 yuan for postponed handovers. Huawei had previously championed the Luxeed S7 as a rival to Tesla’s luxury offerings, boasting superior performance at a competitive price point.

Seres, a smaller player in the EV arena, has also felt the sting of the supply issue, failing to meet its delivery target for the Aito M9 SUV, a model priced from 469,800 yuan. Additionally, BAIC Group’s ARCFOX brand, which also utilizes the MDC 810 in its Alpha S sedan, has experienced production strains in the past due to these shortages.