Huawei aims to boost its flagging auto business and attract major investors through partnership with state-owned Changan.
Huawei has formally established its new smart auto systems and components spinoff, backing it with 1 billion Chinese yuan (US$141 million) paid-in capital.
The new company, currently fully Huawei-owned but planned to become a joint venture with Chinese car firm Changan, was announced three months ago. It contains all of the technologies and assets of Huawei's struggling smart auto business unit.
Huawei has spent $3 billion on the unit over the past four years, and revealed it was its only loss-making business in 2022, achieving just RMB1 billion ($141 million) in revenue – a fraction of the RMB311 billion ($43.7 billion) total.
In a speech this week, Changan chairman Zhu Huarong said Huawei had affirmed its earlier commitments that it would not build cars itself but instead aimed to develop a “public resource platform” for the industry.
The new company will focus on seven major areas – smart driving, intelligent cockpit, smart car digital platform, intelligent car cloud, AR-HUD, and smart driving lights. The initial phase would involve just Huawei and Changan, with Changan taking up to 40% of the new company.
But Huawei aims to open up the company to other technology suppliers and auto firms. Reportedly, it has already issued invitations to its other auto partners Seres, Chery, JAC Motors, and BAIC Group.
Worth up to $35 billion
Analysts have estimated the new company would be worth up to 250 billion yuan after it sells stakes to investors, Reuters reported. Other potential minority shareholders include state-owned automakers FAW Group and Dongfeng Motor Group, which were considering holding stakes of 5% each, Reuters said.
In the first collaboration between Huawei and Changan under the new company, Huawei will supply its full-stack integration solution, Huawei HI, to Changan's EV sedan Avatr. Last year, Huawei worked with Deepal, another Changan EV vehicle brand, on smart driving solutions.
Headquartered in Chongqing, western China, Changan is one of China's 'big four' state-owned auto firms, with market cap of RMB125 billion ($17.6 billion). It shipped 2.35 million vehicles in 2022, recording a net profit of RMB7.8 billion ($1.1 billion) on total revenue of RMB121.3 billion ($17.1 billion).
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