Key facts
- Seres Group, Huawei's automotive partner, forecasts a first-half 2026 net loss between 2.2 billion and 2.5 billion yuan.
- This loss is attributed to rising raw material costs and rapid technological evolution in the EV sector.
- The company also performed a write-down on certain assets due to diminishing utility from fast model upgrades.
- The Aito brand, a joint venture with Huawei, is expected to contribute significantly to the projected losses.
- Despite overall sales volume dip, new energy vehicle sales saw a slight increase in the first half of 2026.
- Seres Group's stock has experienced a substantial decline from its peak, raising questions about its standalone valuation.
Seres Group, the main automotive manufacturing partner for Huawei's smart car initiatives, has issued a profit warning, projecting a substantial net loss for the first half of 2026. The company anticipates a loss between 2.2 billion and 2.5 billion yuan, a stark contrast to the 2.47 billion yuan profit recorded a year prior. This downturn is driven by increased costs for critical components such as memory chips, industrial metals, and lithium carbonate, alongside a write-down of certain assets whose utility has diminished due to the rapid pace of technological advancement in the electric vehicle sector.
The Aito brand, jointly developed with Huawei, is expected to be a major contributor to these losses, with a projected net loss of 1.9-2.15 billion yuan for the second quarter of 2026 alone. While overall vehicle deliveries saw a slight year-on-year dip in the first half of 2026, new energy vehicle sales experienced a modest growth. However, June 2026 marked a significant monthly sales decline, indicating potential cooling demand or intensified competition.
In a strategic move to mitigate risk, Seres has carved out its investment in the AI-focused car brand Saidou Technology, transferring the segment to a consortium including state-backed capital and CATL. The company asserts it maintains ample cash reserves and a sound balance sheet to navigate this turbulent period, prioritizing growth and market share. However, Seres Group's stock has shed over 60% from its September 2025 peak, raising concerns about its ability to sustain its valuation without Huawei's exclusive backing, especially as revenue growth has outpaced core profitability.
This situation reflects broader challenges within the global EV industry, characterized by rising production costs, intense competition, and the high expenditure required for research and development and rapid product iteration.