Huawei Eyes Smart Car Investment with Audi, Mercedes Talks: Sources

Huawei Eyes Smart Car Investment with Audi, Mercedes Talks: Sources

In what could turn out to be a major development for the global EV industry if it becomes true. Huawei apparently met Audi and Mercedes, exploring a possible joint venture or partnership for its EVs, as per a Reuters report. The meeting was held behind closed doors and was set up to explore the possibility of the German automakers acquiring small stakes in Huawei’s smart car software and components firm.  The move by Huawei aims to expand its partnerships beyond Chinese brands and, in part, mitigate the impact of US sanctions imposed since 2019. The company hopes that having foreign investors will help safeguard its business against potential geopolitical tensions.

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 billion and 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.

The Context: Huawei's Pursuit of Automotive Excellence

Huawei, a telecommunications behemoth, is not a novice in the world of innovation. In the face of challenges posed by US sanctions since 2019, the company is strategically seeking alliances beyond its traditional technology domains.

The Closed-Door Meetings: Audi and Mercedes in the Spotlight

Sources reveal that Huawei held confidential meetings with Audi and Mercedes, the epitomes of German automotive excellence.

Aims and Ambitions: Unveiling Huawei's Strategy

  1. Global Expansion Amid Sanctions:Huawei's pursuit of partnerships with Audi and Mercedes is not merely a strategic business move; it's a bold step towards global expansion amidst the challenges posed by US sanctions.
  2. A Potential Joint Venture:The closed-door meetings between Huawei and the German automotive giants hint at the exploration of a potential joint venture.
  3. Acquiring Foreign Investors:Huawei's proactive approach involves seeking foreign investors to acquire stakes in its smart car software and components firm.

Huawei's Vision for Smart Cars: Beyond Chinese Borders

Huawei's foray into the smart car industry is not limited to domestic ambitions. The company envisions a future where its smart car technologies transcend borders, contributing to the evolution of mobility solutions worldwide.

Challenges and Opportunities: Navigating the Path Ahead

While the prospect of a collaboration between Huawei, Audi, and Mercedes is tantalizing, it is not without challenges.

Valuation Estimates: A Lucrative Proposition

Industry sources, as reported by Reuters, have estimated the value of Huawei's Intelligent Automotive Solution unit to fall within the impressive range of billion to billion.

Mercedes in the Mix: Preliminary Talks and Reserved Interest

In the preliminary stages of this transformative move, reports suggest that German automaker Mercedes has entered discussions with Huawei, expressing interest in acquiring a 3% to 5% stake in the spun-off unit. However, sources indicate that Mercedes may not be as eager as initially suggested.

Paving the Way for Automotive Evolution

As Huawei takes strides in spinning off its IAS business unit and engages in talks with Mercedes, the automotive industry witnesses a paradigm shift.  Huawei recently announced its intention to spin off its Intelligent Automotive Solution (IAS) business unit, which focuses on becoming a leading supplier of software and components for smart electric vehicles (EVs).

Reuters quotes industry sources, estimating the unit’s value to be between billion and billion, if it goes through in the next year and a half. During Huawei’s preliminary talks Mercedes, the German automaker reportedly offered to buy a 3% to 5% stake. However, Mercedes C-class may not be that keen and has been showing little interest, and plans to to retain control over its own software and to uphold its premium brand positioning, Reuters reported, quoting internal sources.