Huawei approaches Audi, Mercedes about investing in its smart car firm,
sources say
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[December 11, 2023] SHANGHAI/
HONG KONG (Reuters) - China's Huawei Technologies has asked Mercedes
Benz and Volkswagen's Audi if they are interested in buying small stakes
in its smart car software and components firm, according to three people
with knowledge of the discussions.
The move is aimed at expanding its partnerships beyond Chinese brands,
they said. Huawei, the target of U.S. sanctions since 2019, also hopes
the presence of foreign investors would help defend the business from
potential further geopolitical tensions, according to one of the sources
who was briefed on the matter.
The Chinese technology giant said last month it will spin off its
four-year Intelligent Automotive Solution (IAS) business unit which is
seeking to become the dominant supplier of software and components for
smart electric vehicles (EVs).
Sources have previously said the unit will be valued at somewhere
between $28 billion and $35 billion.
Huawei held preliminary talks with Mercedes in recent weeks, according
to two sources. One source said the German auto brand was offered a 3%
to 5% stake with the valuation to be negotiated.
But Mercedes was not that interested as it wants to remain in charge of
its software to sustain its premium brand positioning rather than
outsource it to a supplier, the source added.
Audi's level of interest in Huawei's offer could not be immediately
determined.
However, two of the sources said Audi and Huawei are planning a
partnership to develop autonomous driving technologies for Audi. Those
technologies would be used in vehicles for the Chinese market from 2025
and which would be built by the German automaker's venture with FAW
Group.
The sources declined to be identified as the discussions were
confidential.
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People check a display near a Huawei logo during a media day for the
Auto Shanghai show in Shanghai, China April 19, 2021. REUTERS/Aly
Song/File Photo
Mercedes declined to comment on what it called speculation. Huawei
and Volkswagen did not respond to requests for comment. The move by
Huawei comes as global automakers in China increasingly seek to
partner with Chinese companies, which have pulled ahead in
developing high-end features for tech-savvy Chinese consumers.
Volkswagen has been working with EV automaker Xpeng and autonomous
driving chip designer Horizon Robotics to develop China-specific
intelligent and connected electric cars.
Audi has also partnered with SAIC Motor to develop EVs in a segment
for the Chinese market it did not previously have a presence in.
Richard Yu, who oversees Huawei's smart car business, told a forum
in April that it had been difficult for European, U.S. and Japanese
companies to choose Huawei as their main supplier of intelligent
solutions due to U.S. sanctions. "Therefore it's a huge challenge
because we have invested tremendously," Yu said at the time.
While many of China's most high-profile EV manufacturers like Nio
and BYD rely on their own software, Huawei has formed partnerships
with smaller electric car makers like Seres Group and some big older
automakers like Chongqing Changan Automobile.
Changan Auto has said it will be an investor in Huawei's smart car
business once it is spun off, owning as much as 40% along with
relevant parties.
Yu said in November that Huawei had invited Seres, Chery Automobile,
Jianghuai Automobile Group and BAIC Motor to invest in the smart car
firm and hoped FAW Group could join as well.
Dongfeng Motor is another potential investor in the firm, sources
have said.
($1 = 7.1865 Chinese yuan)
(Reporting by Zhang Yan and Julie Zhu; Editing by Brenda Goh and
Edwina Gibbs)
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