Seres Swings to $206M Loss as Huawei Partnership Costs Bite

Chinese electric vehicle maker Seres Group has swung from profit to a significant loss in the first half of 2026, forecasting a net deficit of 1.5 billion to 1.8 billion yuan ($206-$247 million), according to a company announcement. The dramatic reversal from a 2.94 billion yuan profit in H1 2025 has sent shockwaves through the market, with shares hitting the daily limit-down on July 13 and raising fundamental questions about the sustainability of Seres’ costly partnership with Huawei.

From Microvan Maker to Luxury EV Leader

Seres — formerly Sokon, a manufacturer of microvans and commercial vehicles — underwent a remarkable transformation after partnering with Huawei in 2021. Its AITO (“Ask the World”) brand became China’s best-selling luxury marque, with the M9 model averaging over 500,000 yuan and achieving peak monthly sales of 16,000 units. The company rose to become Chongqing’s largest private enterprise.

But that success came at a steep price. According to Sina Finance, since the partnership began in 2021, Seres has paid Huawei a cumulative total of over 75 billion yuan in procurement fees — with 20 billion yuan paid in the first half of 2025 alone.

The Numbers Behind the Loss

The H1 2026 results paint a stark picture. Seres’ core subsidiary, AITO Automotive, is expected to lose 1.05-1.3 billion yuan. The breakdown by quarter reveals a sharp deterioration: the company posted a net profit of 754 million yuan in Q1 2026, but swung to a staggering loss of 2.25-2.55 billion yuan in Q2.

Sales figures tell a similarly worrying story. While H1 NEV sales reached 178,777 units — a modest 3.87% year-on-year increase — June saw a dramatic decline, with AITO sales dropping 30.19% year-on-year to just 30,331 units. Against an ambitious annual target of 500,000 units, Seres achieved only 32.15% in the first half, as IT Home reported.

The ‘Huawei Tax’ Under Scrutiny

Analysts estimate that Huawei charges AITO approximately 10% of each vehicle’s price — 8% for marketing channel fees and 2% for technology licensing. For an average-priced AITO model of 400,000 yuan, that equates to 40,000 yuan per vehicle. This “Huawei tax” model has faced growing market skepticism.

Seres has publicly defended the partnership. Chairman Zhang Xinghai stated a “three no-change” core position at the shareholder meeting, reaffirming strategic commitments to both Huawei and battery partner CATL. The company also purchased a 10% stake in Huawei’s smart driving subsidiary Yinwang for 11.5 billion yuan, deepening the ties.

But as 36Kr noted in its analysis of the partnership, the question is whether the “tuition fee” paid to Huawei has been worth it. While Seres was transformed from a struggling manufacturer into a luxury brand leader, the cost burden is now exposing the fragility of the business model.

Why the Loss Happened

Seres cited two primary factors in its announcement. First, rising prices of memory chips, industrial metals, and lithium carbonate have pushed up production costs. AITO vehicles — packed with advanced driver-assistance systems, smart cockpits, and high-compute chips — are particularly exposed to semiconductor and electronics cost inflation.

Second, the company undertook asset impairment charges related to rapid product iteration. The launch of new-generation M9 and M6 models in Q2 rendered older-generation components and tooling less adaptable, forcing book value adjustments.

Market Reaction and Broader Implications

The market’s response has been brutal. Seres’ stock has fallen from a peak of approximately 130 yuan (market cap of ~290 billion yuan) in early 2026 to 59.9 yuan (market cap below 100 billion yuan) by July 10 — a decline of over 65%. The limit-down on July 13 following the loss announcement reflects deep investor concern.

Seres is not alone in facing margin pressure — the entire Chinese EV industry is grappling with price wars, overcapacity, and rising costs. However, Seres’ unique exposure to Huawei’s fee structure makes it particularly vulnerable. As Huawei’s “HarmonyOS Smart Mobility” ecosystem expands to include five “X-jie” brands, AITO’s exclusive access to Huawei resources is also being diluted.

What to Watch

The second half of 2026 will be critical for Seres. Key questions include whether the company can renegotiate terms with Huawei, whether new M9 and M6 models can generate sufficient high-margin sales to offset losses, and how the broader EV price war evolves. For now, the company maintains that it has “ample cash reserves and a stable asset-liability structure” to weather the storm. But with investor confidence shattered and a 65% stock decline, Seres faces its most challenging period since the Huawei partnership began.