Huawei to relocate smart car operations, partner with Changan

Equity ratio and capital contribution will be decided later through negotiations between Huawei and Changan
A Chinese flag flutters near a Huawei store in Shanghai, China September 8, 2023. — Reuters
A Chinese flag flutters near a Huawei store in Shanghai, China September 8, 2023. — Reuters

China's Huawei has announced to shift important technologies and resources from its smart car unit, known for successfully securing massive sales of many new vehicles, to a new joint company.

This joint entity —a new company— will be 40% owned by automaker Changan Auto. The joint venture aims to focus on research, development, production, sales, and service of advanced systems and components common in the automotive industry, Reuters reported.

According to a press release officially released by the manufacturer, "The new company will ... work with partners to promote innovation and leadership in smart car technology and promote the prosperity and development of the automotive industry."

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Ren Zhengfei, Huawei's managing director and chairman of the smart car unit Yu Chengdong, stated that they would collaborate with more auto firms to "seize the opportunities of the electrification and intelligent transformation of the auto industry," the press release said.

Although Huawei doesn't manufacture cars independently, it would join hands with companies like Changan and Seres Group to enhance the production capabilities of other automakers.

The goal is to work with partners to boost the pace of innovative discoveries in smart car technology and contribute to the growth of the automotive industry.

The specific details, such as the equity ratio and capital contribution, will be decided later through negotiations between the two companies, Chongqing Changan Automobile stated in a filing with the Shenzhen Stock Exchange.

"The two parties will jointly support the target company to become an industry leader in automotive intelligent systems and component solutions based in China," the filing added.

In view of the analysis of August data, Huawei reportedly received over 50,000 orders in October for its renovated M7 model, subsequently positioning Aito among China's top five new energy vehicle manufacturers.

It has an existing partnership with Changan alongside other companies, including Seres Group (601127.SS). Huawei and Seres jointly produce Aito branded cars, including the M7 model.

Huawei has also built the S7 sedan with Chinese automaker Chery under a new marquee, Luxeed, that it intends to position as a competitor to Tesla's Model S.