China’s Huawei Technologies has been approaching Western car giants as potential investors in its newly announced ‘smart car’ spin-off, three people with knowledge of the discussions said.
The tech giant has so far initiated discussions with Mercedes Benz and Volkswagen’s Audi for small stakes in its ‘smart car’ software and components firm.
The move is aimed at expanding its partnerships beyond Chinese brands, sources said.
US sanctioned-Huawei also hopes the presence of foreign investors would help defend the business from potential further geopolitical tensions, one of the sources who was briefed on the matter said.
Also on AF: Huawei To Build First Euro Factory Despite EU Scrutiny
The Chinese technology giant said last month it will spin off its four-year Intelligent Automotive Solution (IAS) business unit which is seeking to become the dominant supplier of software and components for smart electric vehicles (EVs).
Sources have previously said the unit will be valued at somewhere between $28 billion and $35 billion.
State-backed Changan Auto will be an investor in in the firm, once it is spun off, owning as much as 40% along with relevant parties.
Huawei has also invited Seres, Chery Automobile, Jianghuai Automobile Group, BAIC Motor and FAW Group to invest in the firm.
Dongfeng Motor is another potential investor in the firm, sources have said.
Mercedes not interested, separate Audi tie-up planned
Huawei held preliminary talks with Mercedes in recent weeks, according to two sources. One source said the German auto brand was offered a 3% to 5% stake with the valuation to be negotiated.
But Mercedes was not that interested as it wants to remain in charge of its software to sustain its premium brand positioning rather than outsource it to a supplier, the source added.
Audi’s level of interest in Huawei’s offer could not be immediately determined.
However, two of the sources said Audi and Huawei are planning a partnership to develop autonomous driving technologies for Audi.
Those technologies would be used in vehicles for the Chinese market from 2025 and which would be built by the German automaker’s venture with FAW Group.
US sanctions weigh on prospects
The move by Huawei comes as global automakers in China increasingly seek to partner with Chinese companies, which have pulled ahead in developing high-end features for tech-savvy Chinese consumers.
Volkswagen has been working with EV automaker Xpeng and autonomous driving chip designer Horizon Robotics to develop China-specific intelligent and connected electric cars.
Audi has also partnered with SAIC Motor to develop EVs in a segment for the Chinese market it did not previously have a presence in.
Richard Yu, who oversees Huawei’s ‘smart car’ business, told a forum in April that it had been difficult for European, US and Japanese companies to choose Huawei as their main supplier of intelligent solutions due to US sanctions.
“Therefore it’s a huge challenge because we have invested tremendously,” Yu said at the time.
While many of China’s most high-profile EV manufacturers like Nio and BYD rely on their own software, Huawei has formed partnerships with smaller electric car makers like Seres Group and some big older automakers like Chongqing Changan Automobile.
- Reuters, with additional editing by Vishakha Saxena
Also read:
Huawei Comeback Drive Fuelled by Hit EV and Patriotic Fervour
Apple Outshone by Huawei, Xiaomi on China’s Singles Day
Huawei, US-Sanctioned Firms Win as China Dumps Western Tech
Huawei Supplying AI Chips to China’s Baidu in Blow to Nvidia
Huge Huawei Sales Boom Turns Around China Smartphone Market
Huawei Keeps Mum on China-Made Chips Behind Mate 60 Phones
