Car companies have also begun to seek more ways to resist risks. On May 9, Geely Automobile and Changan Automobile announced the signing of a strategic cooperation framework agreement. The two parties will carry out strategic cooperation centering on new energy, intelligence, new energy power, overseas expansion, travel and other industrial ecology to jointly promote the development of Chinese brands.
Changan and Geely quickly formed an alliance, which was a bit unexpected. Although various alliances among car companies emerge in endlessly, I am still quite uncomfortable when I first hear the story of Changan and Geely. You must know that the product positioning and target users of these two car companies are relatively similar, and it is not an exaggeration to say that they are rivals. Moreover, the plagiarism incident broke out between the two parties due to design issues not long ago, and the market was quite surprised to be able to cooperate in such a short period of time.
The two parties hope to cooperate in new businesses in the future to resist market risks and produce the effect of 1+1>2. But having said that, it is hard to say whether cooperation will definitely win the battle in the future. First of all, there are many uncertainties in cooperation at the new business level; in addition, there is generally a phenomenon of discord among car companies. So will the cooperation between Changan and Geely be successful?
Changan forms an alliance with Geely to jointly develop a new pattern
For the combination of Changan and Geely, many people in the industry reacted with astonishment—this is an alliance of old enemies. Of course, this is not difficult to understand, after all, the current auto industry is at a new crossroads. On the one hand, the auto market is facing the dilemma of sluggish sales growth; on the other hand, the auto industry is transitioning to new energy sources. Therefore, under the interweaving of the dual forces of the cold winter of the auto market and the great changes in the industry, holding a group for warmth is an optimal choice at this time.
Although both Changan and Geely are among the top five automakers in China, and there is currently no pressure to survive, none of them can avoid the increased costs and reduced profits brought about by market competition. Because of this, in this environment, if the cooperation between car companies cannot be extensive and in-depth, it will be difficult to achieve good results.
Changan and Geely are well aware of this principle, so we can see from the cooperation agreement that the cooperation project can be described as all-encompassing, covering almost all the current business scope of the two parties. Among them, intelligent electrification is the focus of cooperation between the two parties. In the field of new energy, the two parties will cooperate on battery cells, charging and swapping technologies, and product safety. In the field of intelligence, cooperation will be carried out around chips, operating systems, car-machine interconnection, high-precision maps, and autonomous driving.
Changan and Geely have their own advantages. Changan’s strength lies in all-round technology research and development, and the creation of new energy business chains; while Geely is strong in efficiency and the formation of synergy and sharing advantages among its multiple brands. Although the two parties do not involve the capital level, they can still achieve many complementary advantages. At least through supply chain integration and R&D resource sharing, costs can be reduced and product competitiveness can be improved.
Both parties are currently facing bottlenecks in the development of new businesses. At present, the technical routes of new energy vehicles and autonomous driving are not clear, and there is not so much money to do trial and error. After forming an alliance, the research and development costs can be shared. And this is also foreseeable in the future cooperation between Changan and Geely. This is a strong alliance with preparation, goal and determination.
There is a trend of cooperation among car companies, but there are few real win-wins
While the cooperation between Changan and Geely has been highly praised, there are also doubts about the cooperation. In theory, the wish is good, and the timing of the cooperation is also right. But in reality, Baotuan may not be able to achieve warmth. Judging from the cooperation cases between car companies in the past, there are not many individuals who really become stronger because of cooperation.
In fact, in recent years, it has been very common for car companies to hold groups to keep warm. For example, Volkswagen and Ford cooperate in the alliance of intelligent network connection and driverless driving; GM and Honda cooperate in the field of powertrain research and development and travel. The T3 travel alliance formed by the three central enterprises of FAW, Dongfeng and Changan; GAC Group has reached strategic cooperation with Chery and SAIC; NIO has reached cooperation with Xpeng in the charging network. However, from the current point of view, the effect is average. Whether the cooperation between Changan and Geely has a good effect remains to be tested.
The cooperation between Changan and Geely is by no means a so-called “huddle together for warmth”, but to gain more room for development on the basis of cost reduction and mutual profit. After experiencing more and more failed cases of cooperation, we would like to see the two big companies co-creating and exploring in a larger pattern to jointly create value for the market.
Whether it is intelligent electrification or the layout of the travel field, the content of this cooperation is the field that the two car companies have been cultivating for many years and have achieved initial results. Therefore, the cooperation between the two parties is conducive to the sharing of resources and the reduction of costs. It is hoped that the cooperation between Changan and Geely will have greater breakthroughs in the future and realize the historical leap of Chinese brands in the new era.
Post time: May-11-2023