NextFin News — Huawei is reducing the intensity of its partnership with Seres. Reports circulating in the auto market indicate the companies will move from a full-service “smart selection” arrangement—under which Huawei deeply influenced research, marketing, sales channels and after-sales—to a lighter model focused on technology empowerment. Product development, branding, retail and service for the AITO brand will increasingly be led by Seres itself.

The change effectively asks AITO to stand on its own. Huawei, for its part, gains capacity to devote more attention to the remaining brands inside the Harmony Intelligent Mobility Alliance—Zhijie, Xiangjie, Zunjie and Shangjie—none of which has yet matched AITO’s volume.

Seres shares fell sharply after the reports. The stock dropped more than 6 percent at one point and closed down 5.09 percent, extending a longer decline that has erased a substantial portion of its earlier gains as a Huawei-linked story.

The partnership that produced those gains was transformative. Before the deep collaboration, Seres (then still known primarily as Xiaokang) was a modest maker of micro-vehicles and low-end SUVs with roots in component supply. Its early electric models sold poorly. The 2021 launch of the AITO brand under the smart-selection framework changed the trajectory. Huawei contributed technology, brand visibility and channel access; successive AITO models found strong demand. Seres revenue surged, reaching 145.2 billion yuan in 2024 and 165.1 billion yuan in 2025, with net profit around 5.9 billion yuan in each of those years.

The commercial relationship carried clear costs. Seres’ procurement of intelligent hardware from Huawei rose sharply, reaching more than 42 billion yuan in 2024. Additional fees for channel services, brand and technology authorization have been estimated by analysts at roughly 10 percent of vehicle price. Gross margins stayed relatively healthy, yet net margins remained thin—just over 3 percent in the two peak years. In the first half of 2026 the company swung back to a net loss amid higher material costs and asset impairments.

Market reaction to the lighter model has split. Some investors see an opportunity for Seres to retain more of each vehicle’s margin once certain Huawei service fees decline. Others worry that AITO’s brand strength and retail reach depended heavily on Huawei’s ecosystem and that Seres has limited proven capacity to run a premium brand alone. An earlier independent effort under the Blue Electric name never reached meaningful scale.

Inside the broader Harmony lineup the imbalance is pronounced. In the first eight months of 2026 the alliance delivered roughly 329,400 vehicles; AITO accounted for more than 60 percent of that total even as its own volume declined year on year. The other brands occupy distinct price bands—from mainstream family cars to ultra-luxury—but remain in earlier stages of volume building. Redirecting Huawei’s marketing and channel resources toward them is intended to test whether the smart-selection approach can be replicated at scale.

The competitive environment has also changed. Five years ago Huawei’s technology and retail presence offered clearer differentiation. Today many established automakers field their own advanced driver-assistance and cabin systems, and price competition remains intense across segments. Whether AITO can sustain demand under Seres’ primary leadership, and whether any of the other Harmony brands can approach AITO’s earlier commercial impact, will determine if the lighter model strengthens or dilutes the overall alliance.

For Seres the immediate task is operational. Building independent brand equity, managing a national dealer and service network, and maintaining product cadence without the same level of Huawei orchestration will test capabilities that the company has not previously demonstrated at this scale. For Huawei the adjustment reflects a calculated trade-off: accepting reduced day-to-day control over its most successful automotive partner in exchange for broader coverage across the alliance.

The market will measure the outcome in volumes, margins and share-price recovery. The deeper question is whether a brand that grew rapidly inside a powerful ecosystem can continue to grow once that ecosystem steps partially back.