Seres vs. Li Auto: The Race to Become China’s Answer to BBA

In the previous article "Aito VS Li Auto: The Duel of Titans, Who is the Winner?", Dolphin Research provided a detailed review of the reasons behind the success of $Li Auto(LI.US) and $SERES(601127.SH), and how Li Auto has built a moat through blue ocean strategy exploration and excellent product definition. However, this model is a double-edged sword, with the advantage of enjoying the beta benefits brought by the blue ocean track while building its own alpha through first-mover advantage.

But advantages and disadvantages coexist, as the extended-range technology itself does not have a high moat, causing Li Auto's market share in extended-range vehicles to continue to decline. The "blue ocean track exploration + product definition-led model" is inherently a high-risk, high-reward game model.

In this article, Dolphin Research will continue to answer in the in-depth comparison of Seres VS Aito:

1. Compared to Li Auto, how valuable is the Aito model?

2. Behind these two model battles, is it the product-led value that determines the winner, or is it Huawei's strong brand stickiness that crowns Aito?

3. Amidst the intense market fluctuations, whose investment is more valuable at the current point in time?

The following is the main text:

1. Compared to Li Auto, how valuable is the Aito model?

Seres mainly adopts a follower strategy, completely relying on Huawei's technology, brand, and channel ecosystem, essentially belonging to the Huawei ecosystem empowerment model. In this cooperation, Seres takes a backseat in manufacturing, often referred to in the market as an "OEM factory."

The advantages of this strategic model are:

Seres' follower strategy, combined with Huawei's brand power, compared to Li Auto's "blue ocean track exploration + product definition-led model," is a lower-risk, higher-certainty, and easier-to-succeed model, which is also Huawei's long-standing strength in latecomer advantage strategies.

a. Achieving overtaking on curves through Huawei empowerment: Seres officially launched the Aito brand in 2022, and after deepening cooperation with Huawei's smart selection car model in 2023, Seres achieved almost the same car sales revenue scale as Li Auto in just 1-2 years, and currently can compete with Li Auto in terms of market value.

The core reason behind this is that with Li Auto as the pioneer in the blue ocean track, Seres, or rather Huawei, reduced trial and error costs (such as the high trial and error cost of Li Auto's Mega). Therefore, after confirming the feasibility of the blue ocean track, they only needed to follow and improve on the popular models already created by Li Auto, with the added advantage of Huawei's brand power, channels, and traffic, even outperforming Li Auto in the 300,000+ track as a follower.

b. Huawei's own brand power endows Aito with higher brand premium capability, leading to higher unit prices and gross margins in car sales:

Unlike Li Auto's "product-driven" development path (blue ocean positioning + pain point resolution), Huawei, as a tech giant with inherent high brand momentum, naturally possesses stronger brand premium capability.

In September 2023, after the launch of the revamped Aito M7 with a clear Huawei logo and comprehensive integration of marketing resources, it essentially maximized Huawei's brand power for Aito, leading to significant increases in Seres' sales and stock price.

From an industry trend perspective, the automotive competition experienced a critical turning point at the end of 2022 (from supply shortage to supply surplus, gradually turning the blue ocean track into a red ocean track). At the beginning of 2023, Tesla initiated a large-scale price war to boost sales, and car sales prices have been on a continuous downward trend since 2023, with almost no car company spared.

The continuous decline in unit prices is partly due to the ongoing decline in battery costs, but more importantly, it is due to severe oversupply in car sales, forcing car companies to cut prices to boost sales. Since 2023, almost no player has been able to achieve upward movement in model structure, not even Li Auto and Nio, which have established themselves in the 300,000+ track.

However, Seres has bucked the trend, leveraging Huawei's brand power and high-end product layout to achieve continuous upward movement in average car prices and model structure, becoming a rare "counter-cyclical" player in the industry.

Unlike new forces that attack from top to bottom in model structure, Aito's model structure has been continuously moving upward—from the lowest-priced Aito M5 to Aito M7 to Aito M8+M9.

Moreover, not only have prices moved upward, but in actual sales results, high-priced models now account for the majority: starting from February 2024, the Aito M9 has become the highest proportion product in Seres' model structure, accounting for nearly half in the first full delivery quarter of Q2 2024.

In April-May 2025, when another heavyweight product, the Aito M8, was launched, the Aito M8+M9, both priced above 300,000, accounted for 73% of Aito's model structure.

Contrary to the industry-wide phenomenon of "high-end models selling less than low-priced models," the high-end Aito M8+M9 models actually outsold their mid-range counterparts like the M7+M5, and even with the M8/M9 priced higher than competing Li Auto L8/L9 models (the 2025 Li Auto L8/L9 series has been revamped and launched), they still surpassed Li Auto in terms of sales and market share, reflecting the unique premium advantage brought by players like Huawei with strong brand power.

Seres' higher-end model structure means higher car sales prices, further implying higher car sales gross margins: in 2024, overall car sales reached 24% (in fact, the Aito brand's car sales gross margin is expected to be higher, around 26%).

In other words, for every car sold, Li Auto could only earn 55,000 yuan in 2024, while Seres (new energy vehicles) could earn 76,000 yuan, with the Aito brand's single-car gross margin possibly reaching 100,000 yuan! The brand premium power of Aito under Huawei's support is evident.

However, while Huawei + Seres together is a success, the comparative relationship between the two shows Seres' obvious disadvantage:

a. Due to Seres' weak voice, it lacks the ability to define new energy blockbuster models, and Huawei leads the cooperation relationship, so Seres needs to give Huawei high sales commissions and R&D cost sharing:

From Seres' development and brand history, apart from the currently most market-recognized Aito brand (in cooperation with Huawei), Seres has also been trying to create its own new energy vehicle brand, forming three major brands: Dongfeng Xiaokang, Ruichi, and Blue Electric.

However, Dongfeng Xiaokang and Ruichi's model definitions are mainly microvans/microbuses, and the only passenger car brand, Blue Electric, launched the Blue Electric E5 model in March 2023, but with annual sales of only 34,000 units in the 100,000-level model in 2024, it is not considered a true success.

From Seres' track record, the older Aito SF5+M5+M7 models, with insufficient Huawei involvement, have not been able to truly shake Li Auto's L series extended-range base (sales sustainability is also low). Additionally, the founder's background is in traditional Tier 1 and microvan/microbus traditional car manufacturing, so they do not have the capability to define new energy blockbuster passenger cars (especially mid-to-high-end blockbuster cars), making it very difficult to truly break away from Huawei cooperation.

Therefore, in the cooperation with Huawei, Seres, as the absolute weaker party, needs to give Huawei a high sales commission.

Although Seres has not specifically disclosed the commission ratio given to Huawei, it can be inferred from the financial data comparison with several car companies:

In 2024, Seres had almost the same revenue scale as Li Auto, achieving a car sales gross margin 4 percentage points higher than Li Auto (Seres 24% VS Li Auto 20%), but in the final core operating profit margin (core operating profit margin = gross margin - sales and management expense ratio - R&D expense ratio), it was even nearly 1 percentage point lower than Li Auto, and the core issue actually lies in the sales and management expenses, which is also what Dolphin Research believes to be the main part of the profit sharing given to Huawei under the smart selection car model:

From the comparison of absolute sales and management expenses and expense ratios of car companies:

When Seres had almost the same revenue scale as Li Auto in 2024, its sales and management expenses were nearly twice that of Li Auto, with an absolute value of nearly 24 billion, making it an absolute "giant" among car companies with a total car sales volume of 500,000 units (about 400,000 new energy vehicles) in 2024.

Seres' sales and management expense ratio in 2024 also reached an astonishing 16% (while the overall gross margin was only 24%), which is also nearly twice the level of Li Auto's sales and management expense ratio.

However, from the number of sales and service employees of car companies, the number of sales and service employees reported by Seres in 2024 was only 1,700, which is 13% of Li Auto's sales and service employees and less than half of XPeng, which also uses a dealership model. In 2024, sales personnel accounted for less than 9% of Seres' total employees, significantly lower than the 30%-50% proportion common among new forces.

Therefore, it can be seen that Seres uses the least number of sales and service personnel, yet corresponds to a giant sales and management expense expenditure. It can be determined that the sales and management expenses are the main part of the profit sharing given to Huawei based on the Aito brand's revenue under the smart selection car cooperation model.

From the breakdown of Seres' sales and distribution expenses, advertising, image store construction, and service fees are the highest proportion of Seres' sales expenses. In 2024, these expenses accounted for 94% of the 19.2 billion sales expenses, which involves the important sales channel issue under the smart selection car model.

From Aito's sales channels, the channels are mainly divided into two types:

a) Huawei Experience Center Stores: Experience centers mainly focus on attracting traffic and front-end sales, and these stores are generally directly transformed from Huawei's original mobile phone stores, utilizing Huawei's high-traffic advantage to attract potential users, which is a low-cost customer acquisition method using Huawei's existing channels.

The operation of these stores is mainly managed directly by Huawei's terminal system, but the sales brand expands with the continuous expansion of the smart selection car model, selling all brands under the smart selection car, not just Aito. As of the end of 2024, there were 990 Huawei experience center stores.

b) User Center Stores: User center stores are divided into AITO authorized user centers and HarmonyOS Smart Travel user centers. User center stores mainly undertake the full process functions from sales, delivery, after-sales, to financial insurance;

1) AITO Authorized User Center: Seres is responsible for recruiting cooperative dealers, but planning, site selection, authorization, and store management standards must be approved by Huawei, but they mainly sell Aito models. As of the end of 2024, there were 310 AITO authorized stores.

2) HarmonyOS Smart Travel User Center: Mainly led by Huawei, agents are responsible for construction and operation (China Post Putai), but they sell all brands under the smart selection car, and the store construction speed is significantly too slow (planned 800 stores by the end of 2024, aiming for 1,000 stores in 2025), but as of the end of 2024, there were only about 196 stores.

Due to the slow store construction speed, when expanding the smart selection car cooperation model, the store expansion speed could not keep up with the expansion of the smart selection car brand, resulting in "store grabbing" behavior among smart selection car brands, so some brands may build independent networks.

The essence of this channel model is still a manifestation of Huawei's strong voice, using existing mobile phone stores for low-cost transformation and utilizing high-traffic advantages for front-end customer acquisition.

Although the user center store is responsible for recruiting cooperative dealers by Seres (Seres is more of an executor), the actual leadership is still in Huawei's hands (planning, site selection, authorization, and store management standards must be approved by Huawei), and with the expansion of the smart selection car model, there may be issues such as the dilution of Aito's brand power and resource investment.

Therefore, it can be seen that the 94% of sales expenses in 2024, including advertising, image store construction, and service fees, may be the main part of the channel sharing between Seres and Huawei based on the Aito brand.

From the overall charging relationship of the Huawei and Seres cooperation model, it can actually be inferred from the prospectus that the procurement amount from Seres to Huawei may be divided into several charging models:

① Procurement Cost: Seres purchases intelligent driving systems and intelligent cockpit hardware and software from Huawei-controlled subsidiaries at market supply prices, which are included in operating costs and affect gross profit.

Huawei is a supplier, and the company is one of the customers. In Huawei's car BU report, the hardware gross margin in the first half of 2024 reached 67%, indicating a high gross margin for this part of the business.

② Sales Expenses: As mentioned above, due to Huawei's main control over the channel, it may be the main part of the channel sharing between Seres and Huawei based on the Aito brand.

③ R&D Expenses: Huawei is responsible for intelligent cockpit, intelligent driving, and intelligent vehicle control, acting as a supplier to Seres. Huawei has a large number of people stationed at Seres for joint R&D, and Seres needs to pay Huawei for commissioned R&D and design fees (2.08 billion in 2024).

Therefore, from the total procurement amount from Seres to Huawei, the proportion of Aito's revenue is showing an increasing trend year by year, reaching nearly 32% in 2024, meaning that for every car sold by Aito in 2024, earning 340,000 yuan, the procurement part from Huawei reached 108,000 yuan (divided into procurement cost + sales expenses + R&D expenses), and the proportion taken by Huawei from Seres' Aito brand is also showing an increasing trend year by year.

b. Completely relying on cooperation with Huawei, needing to firmly bind cooperation with Huawei, the sharing ratio may continue to increase, making it difficult to enjoy the dual improvement in profits and valuation brought by the arrival of the intelligent driving inflection point:

Although Seres has achieved rapid product launches through cooperation with Huawei's smart selection car model and enjoyed the explosive sales brought by Huawei's brand power players to the Aito brand, bringing continuous high growth in revenue and valuation to Seres.

However, due to the fact that most of the revenue based on the Aito brand is given to Huawei for profit sharing, Seres' own R&D expenses are very low, even with the maximum compression of R&D expenses, the real profit retained in Seres' financial statements is still not high (Seres' overall gross margin of 24% ultimately resulted in a net profit margin of less than 4%, even with the maximum compression of R&D expenses).

And this continuously compressed R&D expense (of which 2.1 billion of the 5.6 billion R&D expenses in 2024 is commissioned R&D and design fees, possibly still paid to Huawei's R&D expenditure), makes Seres lack its own R&D investment, further weakening Seres' bargaining power, and increasing its dependence on Huawei, which will lead to two results:

① The continuous increase in the sharing ratio of Seres to Huawei (as mentioned above), ultimately Seres may only earn the "OEM factory" profit margin, and even if sales increase significantly, the profit margin improvement space is relatively limited.

② Because Huawei is responsible for intelligent investment (Huawei is responsible for the R&D of core intelligent hardware and software such as intelligent cockpit, intelligent driving, and intelligent vehicle control), Seres can only obtain profits from car manufacturing hardware and cannot enjoy the dual improvement in profit margin and valuation brought by the arrival of the intelligent driving inflection point.

Therefore, from a long-term investment perspective, Seres' growth space is relatively limited, making it difficult to enjoy the dividends of the arrival of the intelligent driving inflection point (even if car sales receive To C end software authorization fees, it is expected to be directly shared with Huawei), ultimately evolving into a completely manufacturing-oriented attribute, only enjoying the valuation of traditional hardware stocks.

This also makes Seres, in addition to the profit sharing mentioned above by Dolphin Research, pay two parts of capital expenditure, both to more firmly bind cooperation with Huawei:

① Spent 2.5 billion to acquire the Aito trademark from Huawei: In July 2024, Seres acquired the "Aito" trademark and related assets from Huawei;

② Invested 11.5 billion in equity in Huawei's car BU: In August 2024, Seres purchased a 10% stake in InnoVision (formerly Huawei's car BU) for 11.5 billion yuan in cash.

c. Extremely dependent on Huawei for product definition and new car launches, but as Huawei's smart selection car business continues to expand, Huawei's focus is relatively dispersed

In this model, Seres is extremely dependent on Huawei for product definition and launches, but due to the continuous expansion of Huawei's smart selection car business, several issues may arise:

1) Aito's brand power is diluted: Whether from the above-discussed Huawei experience stores used for attracting traffic, which currently attract traffic for all models under the smart selection car model, or in publicity, Aito, which was originally exclusive to Huawei, is now being promoted alongside brands under HarmonyOS Smart Travel, leading to a certain dilution effect on Aito's brand power under the expansion of the smart selection car model.

2) Huawei's focus is dispersed, and there may be competition among several brands under the smart selection car: From the speed of Aito's model launches, compared to other car companies (such as Li Auto/XPeng), Aito's model launches and revamps are still relatively slow.

After the launch of the Aito M9 in 2024, no new models have been launched. The M8 was not launched until April 2025 (originally rumored to be launched at the end of 2024), and in Aito's 2025 model plan, apart from the already launched revamped Aito M9/new M8, the only model to be launched in the second half of the year is the Aito M7 (expected major revamp, September 2025), and the revamped Aito M5, which is expected to be launched next year to compete with Li Auto L6, is significantly slower than competitors in terms of model launch speed.

The fundamental reason is that Huawei's focus is limited, needing to simultaneously manage the full process of model definition, manufacturing, and sales for the five realms under the smart selection car model.

Although the models under the smart selection car model try to differentiate in product definition and price range, there is still inevitable competition (the positioning of the Smart Realm R7/Shang Realm ES39 and Aito M5/M7 overlap to some extent), especially since the other four realms, including the HI model Avita, have begun to adopt a parallel pure electric/extended-range mode.

3. In the "Duel of Titans," whose investment is more valuable at the current point in time?

a. Li Auto: Facing another "strategic inflection point" moment of divergence

From the review of Li Auto's stock price, Li Auto is once again facing a similar divergence inflection point as last year's "Mega" moment, with the current core contradiction being the game between pressure on the extended-range base and the pure electric strategy awaiting validation.

From the current weekly sales and order trends of Li Auto, the L series extended-range base is not optimistic. After the L series revamp on May 8, the peak weekly order volume was only 15,000 units, and less than two weeks after the revamp, the order volume has dropped to less than 10,000 units, corresponding to a monthly sales volume of just over 40,000 units.

Li Auto's Q2 sales target of 123,000-128,000 units, with April/May sales already announced, implies a June target sales volume of 48,000-53,000 units. From Li Auto's weekly sales data, the upward trend in weekly order volume after the L series revamp only lasted for 4 weeks before starting to decline again. If this weekly sales trend continues, Li Auto's June monthly sales are expected to be only around 40,000 units, making it difficult to achieve the Q2 sales target without further price cuts, which still reflects the erosion of Li Auto's L series first-mover advantage as mentioned by Dolphin Research above.

Reviewing Li Auto's stock price before and after the "Mega" launch last year:

The first launch of Li Auto Mega was on March 1, 2024, and in January-February 2025, Li Auto's L series was hit by competition from the new Aito M7 and M9, resulting in a significant decline in delivery volume, dropping rapidly from the peak of 50,000 units in December 2023 to only 20,000 units in February 2024.

However, Li Auto's stock price rose sharply from a phase low of $28 in early February 2024 to $46 at the end of February (coinciding with the launch and delivery of Li Auto Mega in March), showing a completely opposite trend to the decline in delivery volume.

Essentially, the stock price increase before the Mega launch (from early February to early March) was driven by high expectations for the Mega pure electric model, leading to a dual uplift in profit expectations and PE valuation multiples for 2024 (the profit expectation for 2024E reached nearly 18 billion at the high point before the Mega launch, with a delivery expectation of nearly 750,000 units for 2024, and the 2024E PE multiple quickly rose from 15 times in early February to 21 times in early March 2024, and the 2024E P/S multiple rose from 1 time to 1.6 times).

But when it was seen that the Mega's stable monthly sales were less than 1,000 units, it led to a double-kill moment for Li Auto's profit expectations and valuation multiples, ultimately reaching a historical low of $18 in early June 2024. Later, Li Auto managed to save its extended-range base, which was heavily impacted by Aito, by making the model structure sink (Li Auto L6), and the stock price continued to fluctuate between $20-30.

Therefore, it can be seen that Li Auto's blue ocean track strategy is essentially a high-risk, high-reward investment model. Once successful, it will bring a dual uplift in profit expectations and valuation multiples, but once it fails, it will trigger a Davis double-kill moment.

From Li Auto's situation in 2025, since the L series revamp has been fully played out, with minor revamp efforts and relatively weak actual order progress, the L series extended-range model's dividend period has been gradually consumed, especially in 2025, apart from Aito, many car companies are entering the extended-range track one after another, playing against Li Auto L and Aito M series, making the decline in Li Auto L series market share unavoidable.

Li Auto's strategic focus this year is also clearly on the two pure electric models i8 and i6 to be launched in the second half of the year. The i8 once again targets the 300,000+ pure electric "niche" market with a pure electric family SUV positioning, and after the i8, which is expected to be launched in July 2025, establishes a mid-to-high-end pure electric SUV tone, the volume model i6 will be launched to target the 250,000-300,000 pure electric sinking market.

Although it is too difficult to judge whether the i8 will succeed at this point, the probability of success for the i8 this time is indeed relatively higher than the failed pure electric Mega model in 2024:

a) Li Auto i8 has better product power compared to current 300,000+ pure electric competitors:

Li Auto i8 is better than 300,000+ pure electric competitors (such as Nio ES6/EC6) in terms of model size and space, fast charging (800V+5C supercharging), and pure electric range (CLTC pure electric range of 670-720km).

b) Relatively sufficient supercharging station preparation:

Compared to last year's Mega launch with only over 300 supercharging stations, Li Auto currently has 2,414 supercharging stations, which indeed alleviates range anxiety more than when the Mega was first launched last year.

c) Brand recognition sedimentation: Reuse of household SUV mind resources established by the L series

This time, the i8, with better product power compared to competitors and Li Auto's own brand power established by the household SUV benchmark, indeed gives the market more confidence. Referring to the direct competitors Nio ES6+EC6 with nearly 8,000 monthly sales, Dolphin Research gives the i8 model 6,000 monthly sales under a neutral assumption.

The i6, as a pure electric model targeting the 20-30 million yuan range, currently has main competitors such as Model Y, Xiaomi YU7, XPeng G9/Le Tao L60/ZEEKR 7X/Smart Realm R7, etc. Although there is not much information about this model, Dolphin Research expects that based on the unique positioning of a large space household SUV and the brand momentum sinking advantage, Dolphin Research gives the i6 model 10,000 monthly sales under a neutral assumption.

Based on this, Dolphin Research conducts a deduction of the possible situation of Li Auto's stock price under three assumptions:

① Under a pessimistic assumption:

The extended-range base is lost, and the pure electric blue ocean strategy of i8+i6 faces failure again. Li Auto's annual sales in 2025 are between 460,000-500,000 units, with i8+i6 contributing only 20,000-30,000 annual increments. Based on a 1-1.3 times 2025E P/S multiple, the corresponding stock price is between $17-23; but currently, even a minor revamp of Mega can achieve sales, so the probability of this situation is relatively small, or when expectations are pessimistic to this price level, it is instead an opportunity.

② Under a neutral assumption:

The extended-range base is stabilized through price cuts and promotions in the face of intensified competition, and the pure electric blue ocean strategy of i8+i6 has initially succeeded. Li Auto's annual sales in 2025 are 560,000 units, with i8+i6 contributing 70,000 increments (equivalent to a stable monthly sales of 15,000 units for i8+i6). Based on a 1.5-1.6 times 2025 P/S multiple, the corresponding stock price of Li Auto is around $33;

③ Under an optimistic assumption:

The pure electric blue ocean strategy of i8+i6 is completely successful (i8 stable monthly sales of 8,000 units, i6 stable monthly sales of 10,000 units), and although the extended-range base faces intensified competition, on the one hand, Li Auto can temporarily stabilize through price cuts and promotions, and on the other hand, the market will give higher long-term sales expectations and valuations for the success of Li Auto's pure electric strategy (switching to 2026E or even further for valuation).

Once the pure electric strategy succeeds, the pure electric product matrix of i9+i8+i7+i6 will quickly form in 2026, and the extended-range base may continue to launch major revamped models through the "big battery" + "small fuel tank" solution. Dolphin Research gives a 2026 sales expectation of 820,000 units (L series extended-range 500,000 units, Mega 20,000 units, pure electric matrix 300,000 units), giving a 1.6 times P/S multiple for 2026, corresponding to a Li Auto stock price of around $45, returning to the stock price peak.

Dolphin Research's investment opinion on Li Auto:

Therefore, the key to investing in Li Auto may be the investment rhythm issue. Although the pure electric i8+i6 strategy this time has much higher certainty than last year's Mega, it is still too difficult to predict whether Li Auto's pure electric strategy will succeed at this point.

The main market divergence is still whether the pure electric strategy can succeed, so the sales expectations for the i8+i6 models this year are actually not high, around 40,000-50,000 units.

However, Dolphin Research believes that with higher product power (higher range, larger space) + household SUV positioning + relatively complete supercharging station layout, it is not too difficult for Li Auto i8 to achieve around 5,000 sales in July when it is launched and officially delivered in August, and it is expected that Li Auto's extended-range series sales in June will be higher than in May, so at this moment, the market is likely to start pulling up expectations and overall valuation for pure electric (refer to the situation before and after the Mega release last year, where pure electric valuation was higher than extended-range), especially once it is seen that Li Auto i8 can achieve 5,000 monthly sales, expectations for the i6 to be released in September will continue to rise.

After the i8 is officially delivered in August, although the Li Auto L series base will face the impact of the major revamped Aito M7 in September, the i6 will be launched immediately after. If the i8 can stabilize at 5,000-6,000 sales, even if the L series base may be impacted and decline to some extent, there will be support from expectations for the i6, so Li Auto's stock price will not experience a significant decline.

But if the i6 can continue to achieve over 10,000 monthly sales, it indicates that Li Auto's pure electric strategy is relatively successful, and in 2026, a pure electric matrix + extended-range two major matrices will be formed, and Li Auto's stock price still has the potential to double, continuing to evolve towards the optimistic scenario predicted by Dolphin Research, especially as the intelligent inflection point is approaching, and some intelligent valuation may be factored in.

Note that Li Auto's performance this year almost entirely depends on the implementation of pure electric, as there is almost no room for extended-range. Although the probability is relatively low, if pure electric fails again, there is still room for downward adjustment at the current price of $28, but after retreating to the pessimistic price level, the risk is basically fully released.

b. Seres: Brand power player Huawei's support is worry-free in the short term, but valuation elasticity is limited

Based on Dolphin Research's analysis of Seres' "Huawei empowerment" model, it can be seen that Seres' role in the cooperation is more like an OEM factory for Huawei's automotive brand, rather than a main manufacturer with the ability to independently create new energy blockbuster models, with weak voice in the cooperation.

Under this model, Seres' valuation mainly relies on the sales growth expectations brought by Huawei's brand support (i.e., the PE valuation logic of a hardware manufacturer).

But overall:

1) In the short term, it has relatively high certainty: From 2025 overall, Seres itself, under Huawei's brand power support, continuously launched revamped M9 and new Aito M8, and sales returned to the growth path, especially the Aito M8 (currently with an order volume of about 100,000 units), so the overall certainty of sales in 2025 is relatively high, meaning that Seres is worry-free in the short term.

In September, Seres will also welcome the major revamped version of Aito M7 (possibly switching from the original oil-to-electric platform to a native new energy platform), and with the establishment of a high-end brand position, the sinking of the model structure + major product revamp to improve product power, it is expected that the probability of this model continuing to become a blockbuster is not low.

2) Current market divergence: The current market divergence for Aito may mainly lie in the fact that due to the follower model, in 2025, apart from launching the M6 version targeting Li Auto L6 (hitting all of Li Auto's extended-range model matrix), it is unclear about Huawei's pipeline strategy for Aito in 2026, so the overall sales growth expectations for Aito in 2026 are not high.

Dolphin Research conducts a deduction of the possible situation of Aito's stock price under three assumptions:

① Under a pessimistic assumption:

The revamped Aito M7 performs average (average monthly sales of 10,000 units), the growth trend of Aito M8 order volume slows down (annual sales of 150,000 units), and the Aito brand's annual sales in 2025 are 440,000 units, giving Seres an 18-20 times 2025 expected PE multiple, corresponding to an Aito valuation of 160-180 billion, which is about 20%-30% lower than Aito's current stock price.

② Under a neutral assumption:

Dolphin Research assumes that the Aito M7 performs normally after launch (average monthly sales of 15,000 units), and the Aito brand's annual sales in 2025 are 460,000-470,000 units, giving Seres a 22-23 times 2025 PE multiple, corresponding to an Aito valuation of 220-230 billion, which is basically flat with Aito's current market value, with not much room.

③ Under an optimistic assumption:

If the revamped Aito M7 is successfully launched (targeting Li Auto L6+L7), achieving monthly sales of 20,000 units or even more after its launch in September (Li Auto L7's peak sales of 20,000 units), and with the launch of the M6 version targeting Li Auto L6 next year, the market may raise its sales expectations for Seres Aito in 2026, as well as this year's PE multiple for Seres.

Dolphin Research gives Seres Aito brand's annual sales in 2025 of 500,000 units, and 650,000 units next year, giving a 25 times PE multiple for 2025 or a 23 times PE multiple for 2026, corresponding to an Aito valuation of 260-280 billion, with an upward elasticity of 17%-26%, noting that this time inflection point is around the launch of the major revamped Aito M7 in September and good orders.

Dolphin Research believes that even under optimistic conditions, Seres' upward elasticity is limited, and the core reason for facing a valuation bottleneck is:

a. Continuously supplying Huawei with blood through the Aito brand, making it difficult to enjoy the trend of profit margin improvement brought by the release of scale effects:

Seres, due to its inability to independently create blockbuster cars through the Aito brand, will continue to be in a weak position in cooperation with Huawei. Currently, it seems that the actual sharing ratio based on the Aito brand is still increasing (the proportion of Huawei procurement amount/Aito revenue is continuously rising).

Therefore, Seres is difficult to enjoy the profit margin improvement dividend brought by sales expansion—profit growth mainly relies on revenue scale expansion, rather than the release of scale effects on the profit end.

b. The ownership of intelligent driving dividends limits valuation premium

Software authorization revenue is mainly obtained by Huawei, and Seres, as the "manufacturing end," is difficult to enjoy the valuation premium brought by breakthroughs in intelligent driving technology, with the valuation center still anchored in the high-end brand OEM model.