Huawei's Smart Car Division Becomes Independent... State-Owned Changan Automobile Capital Enters

Chinese company Huawei is separating its smart car division to make it independent, and the state-owned enterprise Changan Automobile will invest equity in this company, according to local Chinese media reports on the 26th.

Local economic media such as Caixin and First Financial reported that Huawei and Changan Automobile signed a 'Memorandum of Understanding on Investment Cooperation' in Shenzhen the day before, and Huawei decided to establish a new company that will independently manage the smart car driving system and related research and development (R&D), production, sales, and service sectors. Changan Automobile plans to invest equity in this newly independent company, with an agreement that the shareholding ratio will not exceed 40%. The specific equity ratio, investment amount, and investment period will be separately negotiated by both parties.

[Image source=AFP Yonhap News]

In a press release, Huawei stated, “The new company will participate in the research and development, production, and sales of intelligent automotive systems and component solutions,” and added, “The new company will collaborate with partners to promote innovation and leadership in smart car technology and foster the prosperity and development of the automotive industry.” Changan Automobile, a state-owned enterprise headquartered in Chongqing, expressed its position, saying it will “jointly support becoming an industry leader in intelligent automotive systems and component solutions.”

First Financial interpreted, “It is rare in the industry for a leading technology company to disclose equity and for an original equipment manufacturer (OEM) company to invest equity,” and added, “The introduction of a strategic industrial partner will become a new growth engine for Huawei’s smart car business.”

Despite massive investments, Huawei’s smart car division has not been able to avoid losses. According to Caixin, among the divisions with annual R&D investments exceeding $1 billion (approximately 1.3036 trillion KRW), the automotive division is the only one operating at a loss. According to the company’s half-year financial report this year, the automotive division’s revenue was 1 billion yuan (approximately 182.4 billion KRW) in the past half-year, which is negligible compared to the total revenue of 310.9 billion yuan. Caixin reported that “not only German Volkswagen but also state-owned enterprises in regions such as Chongqing, Shanghai, and Hefei are interested in Huawei’s automotive division.”

This content was produced with the assistance of AI translation services.