According to sources, Chinese multinational technology company Huawei is in talks to take ownership of a small domestic automaker’s electric vehicle (EV) unit, in what is seen as a strategic change for the world’s largest telecom equipment manufacturer.
As per the sources, Huawei, which has been hit by US sanctions, is in talks to buy a majority stake in Chongqing Sokon’s Chongqing Jinkang New Energy Automobile.
Huawei will be able to produce intelligent cars under its brand name as a result of the change. Jinkang’s key asset is the US EV brand Seres, formerly known as SF Motors.
It will also be the first evidence that Huawei is looking to expand beyond just auto operating systems and establish an end-to-end presence in the EV market.
If finalized, Huawei’s drive into smart cars will mark a significant shift in business focus following two years of US sanctions that have limited its access to key supply chains and forced it to sell a portion of its smartphone business.
At the Shanghai Auto Show earlier this month, the company’s rotating Chairman Mr. Eric Xu announced agreements with three state-owned Chinese carmakers, including BAIC Group, to supply “Huawei Inside,” a smart vehicle operating system.
Huawei’s move into EVs comes as technology companies such as Xiaomi Corp have stepped up their efforts in the world’s largest market for such vehicles, as Beijing pushes for greener vehicles to minimize carbon emissions.
According to sources, as part of the deal, Huawei wants to buy an undetermined stake in privately-owned Chongqing Sokon Holdings, the biggest shareholder of Shanghai-listed Sokon.
The talks with Sokon are being led by Mr. Richard Yu, the head of Huawei’s consumer business division, who led the company to become one of the world’s largest smartphone makers and has recently shifted his attention to EVs. The telecom giant looks to finalize the deal as soon as July.
Huawei is also attempting to gain ownership of EV brand ArcFox of BAIC’s BluePark New Energy Technology, which recently unveiled its Alpha S model with the “Huawei Inside” system.
BAIC is reportedly more interested in having Huawei as a minority shareholder in ArcFox.
By 2025, sales of new energy vehicles, such as pure battery EVs, plug-in hybrid vehicles, and hydrogen fuel cell vehicles, are expected to account for 20 percent of China’s total annual car sales.
Huawei has been heavily involved in the operation and production of the little-known Sokon and its loss-making Seres unit for months.
Seres’ first model, the “Huawei Smart Selection” SF5, made its debut at the Shanghai Auto Show received over 3,000 orders only two days after the pre-sale began. By the end of this year, the company hopes to have the first intelligent car under its brand in mass production.
Huawei has high expectations for the model, which is under development based on the Seres SF5, but the current supply chain of Sokon is struggling to meet those expectations.