Huawei Technologies has approached Audi and Mercedes-Benz, inquiring about their interest in acquiring minor stakes in its smart car software and components company.
This move by Huawei aims to broaden its collaborations beyond Chinese automotive brands, indicating an expansion strategy. Additionally, according to one of the sources briefed on the discussions, Huawei anticipates that the involvement of foreign investors could potentially safeguard the business from potential further geopolitical tensions, considering the U.S. sanctions it has faced since 2019.
Last month, the Chinese technology giant announced its decision to spin off its Intelligent Automotive Solution (IAS) business unit, established over four years, with aspirations to emerge as a leading supplier of software and components for smart electric vehicles.
Earlier reports suggested that the unit’s valuation is anticipated to fall within the range of $28 billion to $35 billion.
According to a source, Mercedes-Benz demonstrated limited interest, preferring to retain control of its software to uphold its premium brand positioning rather than outsourcing it to a supplier like Huawei.
Regarding Audi’s response to Huawei’s proposal, immediate details on their level of interest were not available.
However, two sources indicated that Audi and Huawei are contemplating a collaboration to develop autonomous driving technologies tailored for Audi vehicles in the Chinese market from 2025. These vehicles would be manufactured through Audi’s partnership with FAW Group.
Huawei’s outreach coincides with the growing trend among global automakers in China seeking partnerships with local companies, particularly due to advancements made by Chinese firms in developing sophisticated features for tech-savvy Chinese consumers.
Volkswagen (VW) has engaged in collaborations with EV automaker Xpeng and autonomous driving chip designer Horizon Robotics to create intelligent and connected electric cars specifically tailored for the Chinese market.
Audi, too, has forged a partnership with SAIC to venture into EV production in a segment previously unexplored by the company, targeting the Chinese market.
Richard Yu, responsible for overseeing Huawei’s smart car business, highlighted the challenges faced by European, U.S., and Japanese companies in selecting Huawei as their primary supplier for intelligent solutions due to U.S. sanctions.
While prominent Chinese EV manufacturers like Nio and BYD rely on their proprietary software, Huawei has established partnerships with smaller EV manufacturers such as Seres Group and larger traditional automakers like Changan.
Changan has announced intentions to invest in Huawei’s smart car business after its spinoff, potentially owning up to 40%, along with other relevant stakeholders. Huawei has invited Seres, Chery, Jianghuai Automobile, BAIC, and hopes for FAW Group’s participation as investors in the smart car company, with potential interest from Dongfeng Motor as well, according to sources familiar with the matter.
Source: Reuters