Changan Qiyuan

An arsenal that refused to die

长安 (Changan) has been reinventing itself for longer than most nations have existed. Li Hongzhang founded the Shanghai Foreign Gun Bureau in 1862 during the Self-Strengthening Movement, when Qing Dynasty officials scrambled to match Western military technology. By 1865, the enterprise had relocated to Nanjing as the Jinling Manufacturing Bureau (金陵制造局), growing to 1,700 artisans and becoming China’s largest arsenal. The Japanese invasion of 1937 forced another reinvention — a wartime relocation to Chongqing, where the renamed 21st Arsenal would produce weapons for the Republic. After 1949, it served Mao’s military-industrial complex. After 1978, it needed a new purpose entirely.

In 1957, the enterprise produced China’s first mass-manufactured vehicle — the Changjiang Type 46 Jeep, based on the Willys design — before the production line transferred to Beijing in 1963. The automotive instinct was already there, waiting for the right conditions. The civilian pivot came in 1984, when a technical cooperation agreement with Suzuki Motor put the first non-military vehicles — SC112 minivans — on a production line that had manufactured weapons for 122 years. A Shenzhen stock exchange listing in 1997 raised capital for expansion. A 50:50 joint venture with Ford Motor Company, established in 2001, became the profit engine that transformed Changan from a provincial manufacturer into a national automotive group. By 2016, Changan Ford was selling 958,000 vehicles annually and generating approximately ¥10.3 billion in group net profit. The model appeared unassailable. Every assumption it rested on would prove wrong within three years.

When every partnership collapsed at once

The unravelling was not gradual. Changan Ford’s sales dropped from 958,000 units in 2016 to 378,000 in 2018 to 184,000 in 2019 — an 81% collapse that eviscerated the enterprise’s primary profit source. Suzuki, facing declining demand for its small-car lineup in China, sold its 50% stake in 2018 and exited the market entirely. The Changan PSA venture, which had brought the DS luxury brand to China, accumulated ¥2.2 billion in losses and was sold as insolvent in November 2019. Changan Mazda, the remaining JV, declined from 309,000 units to 133,600.

The scale of the combined failure was staggering. Group sales collapsed from 3.06 million vehicles in 2016 to 1.76 million in 2019. Cumulative net losses from 2018 to 2020, excluding non-recurring items, reached approximately ¥11.2 billion. The company that had built its entire business model on foreign partnerships discovered, in the span of three years, that none of those partnerships would save it.

The Shangri-La Plan made things worse. Announced in October 2017 with great ceremony, it promised ¥100 billion in NEV investment, 21 battery-electric and 12 plug-in hybrid models, and — most ambitiously — complete cessation of internal combustion engine sales by 2025. The early electric models were laughable. The CS15 EV, Eado EV460, and BenBen EV360 were “oil-to-electric” conversions — ICE platforms retrofitted with battery packs, uncompetitive in range, design, and driving dynamics. When Beijing cut NEV subsidies in 2019, these subsidy-dependent models collapsed instantly. Monthly NEV sales fell to 1,449 units by August 2019. Changan New Energy, the subsidiary charged with electrification, lost ¥480 million that year. Actual 2020 NEV sales reached approximately 30,000 — just 8.6% of the 350,000 target.

全体起立: The purge that made transformation possible

The response between 2019 and 2021 was triage, not transformation. Changan disposed of the PSA joint venture, diluted its new energy subsidiary to bring in strategic investors, and launched the UNI series in March 2020 to revive own-brand appeal. Own-brand sales began recovering, reaching 2.23 million by 2024 — 83% of total volume — and fundamentally reversing the JV dependency that had defined the company for two decades. The forced independence from foreign profit streams was, in retrospect, the necessary precondition for everything that followed.

But the most dramatic act in Changan’s recovery was not a product launch or a financial restructuring. It was a personnel decision. In February 2022, CEO Zhu Huarong (朱华荣) implemented what became known as 全体起立 — “Everyone Stand Up.” All 100-plus department-level and above managers across 39 departments were dismissed and required to reapply for their positions through competitive assessment. The action was unprecedented in Chinese state enterprise history. State-owned enterprises are not known for purging their own leadership. The bureaucratic culture that sustains them — consensus-driven, risk-averse, promotion by tenure — is precisely the culture that makes rapid strategic pivots nearly impossible. Zhu’s gambit was a declaration that the old rules no longer applied.

The purge worked because it cleared the institutional paralysis that had prevented rapid execution. Within 18 months, three distinct NEV brands launched in sequence. Avatr Technology, established in 2021 with CATL and Huawei as partners, created the premium tier. Deepal, restructured through mixed-ownership reform, launched the SL03 in June 2022 for tech-forward younger buyers. Qiyuan (启源) — meaning “origin” or “source” — debuted on August 27, 2023, targeting mainstream families with vehicles priced between ¥79,900 and ¥319,900.

The triple-brand architecture was deliberate. Avatr and Deepal had diluted Changan’s equity through external partnerships — Changan held only approximately 41% of Avatr and 51% of Deepal. Qiyuan was created specifically as what Chinese automotive media called the 亲儿子 (qīn érzi) — the “biological child” — the only NEV brand Changan fully controls. This matters for more than corporate pride. Full ownership means Qiyuan’s profits, technology, and strategic direction flow entirely to the parent, without the compromise and negotiation that diluted equity demands.

Platform leverage as competitive weapon

Qiyuan reached 411,000 units in 2025 — its second full year — a scaling speed that took Tesla China four years and most Chinese EV startups far longer. The secret was infrastructure that already existed. Where EV startups like NIO and XPeng spent years and billions building dealer networks and factory capacity from scratch, Qiyuan inherited Changan’s 4S dealer network covering every Chinese province, proven factory floors, and supply chain relationships refined over decades. It was the oldest trick in industrial strategy: use existing assets faster than competitors can build new ones. The EPA1 platform, shared with Deepal, allowed some models to be produced on the same assembly line. The Blue Whale 3.0 hybrid powertrain and SDA software-defined architecture, developed in-house, provided technology differentiation without the cost of building from zero.

Changan’s own R&D capabilities provided the technological foundation. The Golden Bell battery safety system, developed internally, addressed consumer anxiety about NEV safety. A December 2025 L3 autonomous driving license positioned the E07 as a technology flagship. These were not borrowed capabilities — they were developed within Changan’s 11 global R&D centres across six countries.

The product lineup reflects this platform efficiency. The A07, a mid-large sedan offering C-class dimensions at B-class prices (¥13.59–15.99万), crossed 100,000 cumulative sales. The A05 compact sedan (¥7.89–10.39万) competes directly with BYD’s Qin PLUS DM-i. The E07 crossover — the first vehicle built on Changan’s SDA architecture — features dual LiDAR and a transformable SUV-to-pickup configuration at ¥19.99–31.99万. The Lumin micro BEV, a pre-Qiyuan model absorbed into the brand, contributed approximately 160,000 of the 411,000 headline figure, meaning the core A/Q/E lineup delivered roughly 250,000 units.

The numbers, however, mask a structural problem. Changan’s group net profit declined 35% in 2024 despite total sales growth. Deepal and Avatr combined lost over ¥14 billion across three years. Qiyuan’s standalone financials are not disclosed but margins on mass-market EVs priced against BYD are almost certainly thin. SASAC has granted special evaluation criteria for state-owned automakers’ NEV businesses — assessing technology advancement and market share growth rather than short-term profitability — but this policy indulgence cannot last indefinitely.

The gap that platform sharing cannot close

The tension at the heart of Changan’s strategy is the gap between its ambition and BYD’s structural advantage. BYD controls 27.2% of China’s NEV market. Changan holds 6.2%. The difference is not merely scale — it is vertical integration. BYD manufactures 75% of its vehicle components in-house, including batteries, semiconductors, and electric motors. Changan sources batteries from CATL through a dedicated joint venture and chips from external suppliers. When BYD cuts prices — as it has done aggressively, triggering a margin war across the Chinese EV industry — it can absorb the impact across a self-contained supply chain. When Changan matches those price cuts, the pain falls on thinner margins supported by less integrated operations.

There is also the cannibalization problem. Qiyuan and Deepal share the EPA1 platform so completely that some models can be produced on the same assembly line — an efficiency that becomes a liability when both brands compete for the same customers. The Deepal SL03’s pricing collapsed from ¥17万 to below ¥10万 after Qiyuan’s A07 launched at comparable specifications. Three brands covering the spectrum from ¥79,900 to ¥319,900 creates the appearance of strategic coverage. Whether it creates value or merely redistributes volume from one Changan subsidiary to another is a question the company’s own financial disclosures cannot yet answer.

The export brand Nevo, launched in Thailand in March 2026, signals ambitions beyond China. A factory in Rayong with 100,000 units annual capacity began production in May 2025. Europe is targeted for 2027 with the E07 and Q05. But Nevo’s brand identity remains unsettled — in Australia, the E07 is sold under the “Deepal” name; in the UK, a Qiyuan model appears as the “Changan E06.” The naming inconsistencies across markets betray a strategy still being negotiated rather than executed. The group’s 2030 targets — five million total vehicles, with 3 to 3.5 million NEVs and 1.2 to 1.5 million overseas — would require roughly tripling current NEV volumes while simultaneously building brand recognition in markets that have never heard of Changan.

In July 2025, SASAC elevated Changan to standalone central enterprise status — the 100th — after a proposed merger with Dongfeng Motor was abandoned following pushback from both companies and their host municipalities. The independence was a vote of confidence from Beijing, granting Changan direct reporting to the State Council and freedom from the defense conglomerate structure that had housed it since the arsenal days. For 163 years, this enterprise has survived by adapting to whatever came next — dynastic collapse, Japanese invasion, Communist revolution, market liberalisation, and now electrification. Whether the latest reinvention proves as durable as the ones before it depends on whether platform sharing and dealer leverage can substitute for the vertical integration that Changan’s most formidable competitor has already built.

Last updated: April 5, 2026