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Huawei Approaches Audi and Mercedes for Investment in its Smart Car Firm
Updated: Jan 5
[Edited] In a bid to expand its partnerships beyond Chinese brands, Huawei Technologies has approached Mercedes Benz and Volkswagen's Audi to gauge their interest in acquiring small stakes in its smart car software and components firm.
This move comes as Huawei seeks to defend its business from potential geopolitical tensions and establish itself as a dominant supplier in the software and components market for smart electric vehicles (EVs).
Huawei, which has been under U.S. sanctions since 2019, recently announced its plan to spin off its Intelligent Automotive Solution (IAS) business unit. The unit, which has been operational for four years, is expected to be valued between $28 billion and $35 billion. In an effort to attract foreign investors, Huawei has initiated preliminary talks with Mercedes, offering a 3% to 5% stake with the valuation to be negotiated.
However, Mercedes has shown limited interest in the offer, as the German automaker prefers to maintain control over its software to uphold its premium brand positioning. On the other hand, Audi's level of interest in Huawei's proposal remains unclear. Sources suggest that Audi and Huawei are planning a partnership to develop autonomous driving technologies specifically for the Chinese market. These technologies would be incorporated into vehicles produced by Audi's joint venture with FAW Group starting from 2025.
While Huawei's approach to Mercedes and Audi signifies its ambition to collaborate with global automakers, it also reflects the growing trend of international automakers seeking partnerships with Chinese companies to tap into the high-end features demanded by tech-savvy Chinese consumers.
Volkswagen, for instance, has been working with EV manufacturer Xpeng and autonomous driving chip designer Horizon Robotics to develop intelligent and connected electric cars tailored for the Chinese market. Similarly, Audi has partnered with SAIC Motor to enter a segment of the Chinese market where it previously had no presence.
Richard Yu, who oversees Huawei's smart car business, acknowledged the challenges faced by European, U.S., and Japanese companies in choosing Huawei as their main supplier of intelligent solutions due to U.S. sanctions.
However, Huawei has managed to form partnerships with smaller electric car makers like Seres Group and established automakers such as Chongqing Changan Automobile. Changan Auto has already expressed its intention to invest in Huawei's smart car business, potentially owning up to 40% of the spun-off unit.
In November, Yu revealed that Huawei had invited other Chinese automakers, including Chery Automobile, Jianghuai Automobile Group, and BAIC Motor, to invest in the smart car firm. The company also expressed its hope that FAW Group and Dongfeng Motor would join as investors.
As Huawei continues its efforts to establish itself as a major player in the smart car industry, its approach to Mercedes and Audi demonstrates its determination to secure partnerships with renowned global automakers. However, the response from these companies remains uncertain, and the outcome of these discussions will shape Huawei's future in the smart car market.
Huawei has approached Audi and Mercedes-Benz for potential investments in its smart car subsidiary.
The move is part of Huawei's diversification strategy amid challenges in its core telecommunications business.
Huawei's smart car unit aims to develop advanced technologies for connected vehicles and autonomous driving.
Source: REUTERS