China’s Huawei Technologies is in talks to take control of the electric vehicle unit of a small domestic automaker, said two people with first-hand knowledge of the matter, a move that would constitute a strategic shift for the world’s largest maker. telecommunications equipment in the world.
A company spokesperson, however, denied such a move.
Huawei, which has been battered by US sanctions, is in talks with Chongqing Sokon to acquire a controlling stake in the latter’s Chongqing Jinkang New Energy Automobile, the sources said.
The move will allow Huawei to make smart cars with its own nameplate, they added. Jinkang counts the American electric vehicle brand Seres, formerly known as SF Motors, as its main asset.
It would also provide the first evidence that Huawei is looking to move beyond the simple offering of automatic operating systems and be an end-to-end presence in the electric vehicle industry.
However, the Huawei spokesperson said, “Huawei does not make cars,” adding that it is not looking to acquire controlling stakes, but did not specify where.
Sokon did not respond to requests for comment.
The push towards smart cars, if finalized, would mark a major shift in Huawei’s business focus after two years of US sanctions that reduced its access to key supply chains, forcing it to sell off part of its business of smartphones.
Highlighting the change, the company’s rotating chairman, Eric Xu, announced agreements with three Chinese state-owned automakers, including the BAIC Group, to provide “Huawei Inside”, an intelligent vehicle operating system, at the Shanghai Auto Show earlier this month.
Huawei’s foray into electric vehicles comes as tech companies like Xiaomi Corp have stepped up efforts in the world’s largest market for these vehicles, as Beijing strongly promotes greener vehicles to reduce carbon emissions.
“While individual consumer demand for intelligent electric vehicles has increased notably since the middle of last year, the trail is now clear and solid ahead of tech giants,” said Yale Zhang, General Manager of Automotive Foresight.
“Despite their years of success and experience in the smartphone markets, it will take them a few more years to build an acceptable car brand in the electric vehicle industry.” As part of the deal, Huawei also plans to buy an undetermined stake in Chongqing Sokon Holdings, the largest shareholder of Shanghai-listed Sokon, one of the sources said.
Richard Yu, head of Huawei’s consumer business group that led the company to become one of the world’s largest smartphone makers and recently focused on electric vehicles, is leading talks with Sokon, said the two people.
The telecommunications giant plans to finalize the deal as early as July, the other source said.
Huawei is also seeking control of BAIC’s BluePark New Energy Technology’s EV ArcFox brand, which recently launched its Alpha S model equipped with the “Huawei Inside” system, the two people and another person with first-hand knowledge said.
But BAIC is more keen to have Huawei as a minority shareholder of ArcFox, they added.
A BAIC representative referred the query to BluePark who did not immediately respond to a request for comment.
All sources declined to be named.
In February, Reuters announced that Huawei plans to manufacture electric vehicles under its own brand and may launch some models this year.
Sales of new energy vehicles, including pure battery electric vehicles as well as plug-in hybrid and hydrogen fuel cell vehicles, are expected to account for 20% of overall annual auto sales in China by 2025.
For months, Huawei has been deeply involved in the operation and manufacture of the little-known Sokon and its loss-making Seres unit.
According to Seres, Seres’ first model, “Huawei Smart Selection” SF5, debuted at the Shanghai Auto Show and received more than 3,000 orders within two days of the start of presale last week.
Huawei sells SF5 vehicles at its stores across China, including its online store VMall.com.
The company aims to launch the first smart car under its own brand for mass production at the earliest by the end of this year, one said.
Huawei has high expectations for the model, which is in development based on the Seres SF5, but Sokon’s existing supply chain is struggling to meet those expectations, the same person said.
“The auto industry supply chain is very long and complicated,” the person said. “Huawei has its strength in software and platforms, but its ideas cannot be realized without solid technological improvements in the supply chain.