May 8, 2021

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Huawei is diving deeper into electric cars

Seres Huawei Smart Selection SF5 electric vehicle shown during the Shanghai Auto Show in Shanghai, China, April 19, 2021.
Image Credit: Reuters

Two people with direct knowledge of the matter have said that China’s Huawei is in talks to take over a small domestic electric vehicle unit, in a move that would be a strategic shift for the world’s largest manufacturer of telecommunications equipment.

But a company spokesman denied such a move.

The sources said Huawei, which has been subject to US sanctions, is in talks with Chongqing Sokon to acquire a controlling stake in Chongqing Jinkang New Energy Company.

They added that this step would allow Huawei to create smart cars bearing its own name. Jinkang counts American electric car brand Seres, formerly known as SF Motors, as its main asset.

It will also provide the first evidence that Huawei is looking to go beyond just introducing automotive operating systems and gain a global presence in the electric vehicle business.

But a Huawei spokesman said, “Huawei does not manufacture cars,” adding that it is not looking to acquire controlling stakes, although it has not been located.

Sokon did not respond to requests for comment.

The push for smart cars, if completed, would signal a major shift in Huawei’s business focus after two years of US sanctions that cut off access to major supply chains, forcing it to sell a portion of its smartphone business.

Emphasizing the shift, rotating chairman Eric Shaw announced agreements with three Chinese state-owned companies, including the BAIC Group, to supply Huawei Inside, a smart car operating system, at the Shanghai Auto Show earlier this month.

Huawei car

The Arcfox Alpha-S electric sedan, manufactured by BAIC Motor Electric Vehicle Co. Affiliate of BAIC Group and equipped with Huawei Technologies’ HI smart vehicle platform.
Image Credit: Bloomberg

Huawei’s entry into electric vehicles comes as tech companies such as Xiaomi Corp are ramping up their efforts in the world’s largest market for such vehicles, as Beijing has been aggressively promoting environmentally friendly vehicles to reduce carbon emissions.

“With the individual demand for smart electric cars increasing significantly since the middle of last year, the path is now clear and strong for the tech giants,” said Yale Chang, managing director of Automotive Foresight.

“Despite their years of success and experience in the smartphone market, it will take a few years for them to build an acceptable car brand in the electric vehicle sector.” As part of the deal, Huawei also plans to buy an unspecified stake in privately-owned Chongqing Sokon Holdings, the largest shareholder in Shanghai-listed Sokon, according to a source.

The two people said Richard Yu, the head of Huawei’s Consumer Business Group who led the company to become one of the world’s largest smartphone makers and recently shifted his focus to electric cars, is leading the talks with Sokon.

The other source said the telecom giant was looking to finalize the deal as soon as possible in July.

Huawei is also seeking to control Pike’s EV ArcFox brand of BluePark’s new energy technology, which recently launched the Alpha S model equipped with the “Huawei Inside” system, the two individuals and another person with first-hand knowledge said.

They added that Paik is more keen that Huawei is just a minority shareholder in ArcFox

A BAIC representative referred the query to BluePark, which did not immediately respond to a request for comment.

And all sources declined to mention her name.

In February, Reuters reported that Huawei plans to manufacture electric vehicles under its own brand and could launch some models this year.

Sales of new energy vehicles, including pure battery electric vehicles, as well as hybrid vehicles and hydrogen fuel cell vehicles, are expected to account for 20% of total annual vehicle sales in China by 2025.

For months now, Huawei has been deeply involved in the operation and manufacture of the little-known Sokon and the loss-making Seres unit.

Huawei car

The company aims to launch the first smart car under its own brand for mass production as soon as possible by the end of this year.
Image Credit: Reuters

Under this partnership, Ceres’ first model, the “Huawei Smart Selection” SF5, appeared at the Shanghai Auto Show and received more than 3,000 orders within two days after the pre-sale began last week, according to Ceres.

Huawei sells SF5 vehicles in its stores across China including its online store

Someone said the company aims to launch the first smart car under its own brand for mass production as soon as possible by the end of this year.

The same person said Huawei has high expectations about the model, which is being developed based on the Seres SF5, but Sokon’s current supply chain is struggling to meet those expectations.

“The automotive supply chain is very long and complicated,” the person said. “Huawei has its power in software and platform but its ideas cannot be realized without strong technical improvements in the supply chain.”