Original: The long-term pain of Cyrus is worse than the short-term pain

Whether it is Huawei or Cyrus, asking questions is crucial. Needless to say, Thalys, although Hongmeng Zhixing has expanded to five realms, Wenjie has always been the pillar of sales. From January to August this year, Hongmeng Zhixing delivered a total of approximately 328,100 vehicles, of which the Wenjie brand alone accounted for more than 60%.

Kang Bo, vice president of Thalys, accepted an exclusive interview with the media last week and stated that the adjustment of the cooperation model will not affect the “luxury content” of Wenjie, and Wenjie still belongs to Hongmeng Intelligent Technology. Yijian Auto previously reported that Xu Qinsong, president of Huawei Terminal China, also stated in an internal meeting that Wenjie would not completely break away from Hongmeng Zhixing’s channel system.

However, these statements still do not seem to be enough to dispel external doubts. Some voices say that this adjustment of cooperation is equivalent to the industry returning from the smart car selection model to the HI model, where car companies take the lead in product definition and development, and Huawei assumes the role of supplier, similar to the cooperation between Avita and many premium brands. Even though Cyrus has taken a stake in the company, there are still concerns from the outside world. On the evening of September 20, Yinwang issued a statement, emphasizing that Cyrus is Yinwang’s strategic partner and shareholder. Yinwang will continue to sell related Qiankun Zhijie, Hongmeng cockpit and other solutions to Wenjie, and provide technical support services. “It will continue to support the development of Haowenjie.”

This adjustment has an even greater impact on the world of inquiry. Internal adjustments and divisions such as product development, sales channels, and brand marketing are only one aspect. More importantly, the brand halo of Wenjie itself may also be affected. Compared with other Jiezi brands, Wenjie is more deeply bound and closely connected with Huawei’s brand in the minds of consumers. This was one of the foundations of Wenjie’s early success.

However, under the new cooperation model, it is still a question whether Cyrus can continue to maintain its high-end image in the industry.

The moment finally came when we had to break up

In a sense, the success of Wenjie has brought the original smart car selection model of Cyrus and Huawei to an end.

In 2021, when Cyrus and Huawei begin cooperation, both parties have little choice. Although Thales, which was still a well-off company at that time, had been working hard in the automotive industry for many years, it had never made any achievements and was stagnant at the critical juncture of new energy transformation.

But this is already a last resort for Huawei. At that time, traditional car companies on the market were still deeply wary of Huawei. Chen Hong, the former chairman of SAIC, had a “soul theory” that became popular. Huawei’s car BU faced the embarrassing situation of being unable to land after years of investment. Yu Chengdong urgently needed to open a window for cooperation with car companies, but it repeatedly ran into obstacles. Cyrus was the only car company that chose to fully cooperate with Huawei.

At the end of 2021, the Wenjie brand will be officially released. Different from Huawei’s cooperation with car companies in the past, Wenjie focuses on the smart car selection model, and Huawei is the most involved, controlling the entire process from product definition, channel sales, and even brand marketing.

In the early days of Wenjie Brand, this cooperation model was extremely efficient. Thalys has obtained Huawei’s brand, technology and nationwide sales network, and Huawei can bypass the asset-heavy business of vehicle manufacturing and copy the product definition, marketing and retail capabilities accumulated in the past ten years of mobile phone production to cars.

The year after its launch, Wenjie sales exceeded 75,000 vehicles, nearly 100,000 vehicles in 2023, more than 380,000 vehicles in 2024, and 420,000 vehicles in 2025. Especially in the luxury market, Wenjie occupies a dominant position. The cumulative delivery volume of the Wenjie M9 to date exceeds 300,000 units, and it has topped the market segment sales for 21 consecutive months.

With its success in the industry, Cyrus has become the most successfully transformed automobile manufacturer in China. In 2024, Thalys’s annual revenue increased by as much as 305% year-on-year, turning losses into profits for the first time in the year. In 2025, it will continue to maintain a net profit attributable to the parent company of 5.96 billion yuan for the year.

However, as the industry becomes larger and larger, the disadvantages of the smart car selection model continue to emerge. In addition to purchasing software and hardware such as smart driving and cockpits from Huawei, Cyrus also needs to pay technology licensing and channel marketing fees, and it is difficult to enjoy the cost dilution brought about by economies of scale.

Multiple media previously reported that under the original model, the two expenses totaled approximately 10% of the vehicle’s selling price, of which approximately 8% were channel marketing expenses and 2% were technology licensing fees.

Thalys’s Hong Kong stock prospectus shows that from 2022 to 2024, the company’s purchases from its largest suppliers increased from 5.8 billion yuan to 42 billion yuan, and the proportion of total purchases also increased from 14.5% to 30.2%. By 2025, this figure will further expand to 56 billion yuan, accounting for 33.8% of total purchases, equivalent to about one-third of that year’s revenue.

Thalys’s sales expense ratio has also been rising, maintaining a high level of nearly 15% in the past two years. In the first half of 2026, despite a year-on-year decrease of 7.9% in revenue, Sales expenses still reached 8.47 billion yuan, and the sales expense rate continued to remain at around 14.7%.

In the past two years, although the gross profit margin of Cyrus’s new energy vehicle business has remained at a high level of more than 26%, the overall net profit margin is only about 4%. In the first half of this year, Thalys turned from profit to loss, and its net profit margin further fell to about -3.81%.

Thalys Financial Report

At the same time, it is becoming increasingly difficult for Huawei to continue to maintain the original cooperation method. When Wenjie was born in 2021, Huawei’s only cooperative brand in the smart car selection mode was Cyrus. But now, Hongmeng Zhixing has as many as five industries, with models ranging from more than a hundred thousand yuan to more than one million yuan. Even if Huawei’s own product development capabilities are sufficient, stores may not be able to accommodate so many cars.

What Huawei now needs to run is Hongmeng Zhixing, not just Wenjie. Compared with the success of Wenjie, the other four circles are still on the climb, and their sales ratio is still not high. In August this year, under pressure from Wenjie sales, Hongmeng Smart’s single-month sales fell 6.5% month-on-month.

According to a previous Auto report, Xu Qinsong, president of Huawei Terminal China, internally asked the team to build the brand mind of Hongmeng Zhixing and continue to promote the development of other “four realms”. The leadership of the four OEMs will be further consolidated and integrated into the Hongmeng Intelligent System.

In the smart car selection mode, the product development and definition of the Jiezi brand are led by Huawei, and there are clear boundaries between them. Even if the Wenjie brand has stronger appeal, it can only stick to the SUV track. For Thalys, whose revenue and sales have dropped this year, the constraints of the smart car selection model have become increasingly obvious.

Shortly after the new model was announced, Cyrus Vice President Kang Bo made it clear that Wenjie would choose the opportunity to enter the sedan, MPV and other competitive product markets on the basis of consolidating the high-end SUV market.

In the past few years, both parties have been preparing for adjustments to the border. In 2024, Cyrus spent 2.5 billion yuan to acquire Wenjie-related trademarks and design patents from Huawei. Subsequently, Cyrus acquired a 10% stake in Yinwang for 11.5 billion yuan, deepening the original supplier cooperation relationship with Huawei into equity binding.

At the same time, Cyrus continues to expand its sales and service network outside of Huawei’s system. Kangbo said that Wenjie currently has more than 400 user centers, covering more than 200 cities across the country.

How much more Huawei halo can the world have?

After the change in cooperation model, the first thing that Cyrus needs to solve is how to convince consumers that the “luxury content” of the industry has not declined.

In an interview with the media two days ago, Thalys Vice President Kang Bo spent almost half of the space explaining this issue. He said that Wenjie is still a core member of Hongmeng Zhixing, and Huawei Terminal will continue to participate in empowerment.

Kangbo said that since Cyrus still holds 10% of Yinwang’s equity, Wenjie will still be able to obtain Huawei’s “latest, best and most practical technologies, products and supply guarantees” in the future, and the OTA upgrades and other rights and interests of the existing 1.2 million Wenjie users will not be affected.

From a technical perspective, there has indeed been no fundamental change in the relationship between Wenjie and Huawei. Software and hardware such as Huawei Qiankun Smart Driving, Hongmeng Cockpit and even electric drives will continue to appear on Qianjie models. The new generation Wenjie M9, which has just been launched, is first equipped with Huawei ADS 5 and Huawei Zhiqing full 800V platform.

Ask the world M9

What consumers are worried about may not be these technical cooperations. In previous media interviews, Cyrus Vice President Kang Bo always emphasized that the industry is jointly created by Huawei and Cyrus, but more consumers may recognize Huawei’s blessing.

In the past five years, Wenjie has never been regarded as a car brand that simply purchased Huawei technology. As the first cooperative brand under Huawei’s smart car selection model, Wenjie is more deeply bound to Huawei than other products. In the early days, some stores even directly promoted the banner of “HUAWEI Wenjie”. Even if it was later discontinued, consumers still believed that Wenjie was equal to Huawei for a long time.

Wenjie’s ability to go from almost no brand foundation to a market worth RMB 300,000 to RMB 400,000 or even RMB 500,000 to RMB 500,000 in such a short period of time is inseparable from this special status.

Even as Huawei cooperates with more and more car companies and has expanded to five realms and three realms, Wenjie is still the most prominent representative of “Huawei cars” in the minds of consumers.

The “Research on New Energy Vehicle Brand Health in the First Half of 2026” previously released by Jielan Road pointed out that Wenjie is still the new energy vehicle brand that consumers most easily associate with when they mention “Huawei”. In the survey, the overall mention rate of Wenjie reached 66.8%, of which the primary mention rate reached 58.4%. In contrast, the mention rate of Xiangjie, Zhijie and Zunjie is only about 20%, and the mention rate of Jingzi brand is less than 1%.

In the past, strong ties with Huawei were the foundation for Wenjie’s success. However, with the adjustment of the cooperation model between Cyrus and Huawei, this strong brand mentality has become one of the biggest concerns for the future development of Wenjie.

No matter how Cyrus emphasizes to the outside world that Wenjie still belongs to the Hongmeng Zhixing system, the product definition, development and even marketing of Wenjie will no longer be dominated by Huawei. Huawei technology can still continue to be installed on Wenjie models, but “personally defined and operated by Huawei” has begun to become a unique label for the other four worlds.

Especially as Huawei continues to expand its circle of automotive friends, simply being equipped with Huawei automotive technology is no longer a differentiated advantage. Not to mention the Five Realms and Three Realms, even fuel-burning vehicles like the Nissan Altima have begun to advertise that they are equipped with a full-blooded Hongmeng cockpit. Huawei’s halo in Wenjie may not be able to sustain it for too long.

Consumers will see fewer and fewer Weijie cars in Huawei stores in the future. With the adjustment of the cooperation model, Wenjie will implement the “exclusive franchise” model in the future. According to previous media reports, starting from January 1, 2027, Huawei stores will be officially divided into two types, one specializing in Wenjie, and the other selling Zunjie, Xiangjie, Zhijie and Monkjie. Dealers need to make a choice between Huawei and Thalys. If the exclusive franchise breaks out, the contracting entity will be changed to Thalys.

Yijian Auto previously reported that the purpose of this arrangement is to let the outside world perceive that Wenjie and Hongmeng Zhixing have not been “completely decoupled”, and the two parties still maintain a system-level connection.

Considering that Hongmeng Zhixing currently has a large number of models and brands and models of different price ranges are mixed in the same stores, such an adjustment will have certain benefits for Wenjie itself. After Wenjie establishes its exclusive network, at least it no longer has to compete with the other four circles for limited store space and sales resources. But this also means that the brand association between Wenjie and Huawei is getting weaker and weaker, and it is no longer synonymous with “Huawei Automobile”.

Even after the adjustment was just announced, the priority of Wenjie within Hongmeng Intelligence seems to have dropped. According to media reports, in the Hongmeng Zhixing section of Huawei Mall, the ranking of Wenjie has been adjusted from first to fifth, and the Hongmeng Zhixing applet has also been adjusted.

Hongmeng Zhixing Mini Program

Perhaps in order to appease Wenjie car owners, while adjusting the cooperation model, Cyrus announced an upgrade of its user service policy, launching Wenjie smart home service, AI cloud smart inspection service, small spray overtime compensation, etc. The “Wenjie Grand Hotel” service that was canceled in the past has also been launched again.

In any case, taking back the dominance of the world is a short-term pain that Cyrus has to experience. For a luxury brand that already has more than a million users and annual sales of more than 400,000, car companies will not be willing to play the role of manufacturer.

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