AutoBeta(AutoBeta.net)11/30 Report--

On November 29th, several media reported that Huawei's proposed smart car systems and components company could be valued at as much as 250 billion yuan after selling its stake to investors.

Among them, Changan Automobile and parent company China Arms equipment Group may buy about 35 per cent and 5 per cent of the new company respectively, which will contribute 87.5 billion yuan and 12.5 billion yuan respectively according to the valuation. In addition, the minority shareholders of the new company, including FAW and Dongfeng Motor Group, are in in-depth talks with Huawei to buy up to 5 per cent each. According to media reports, FAW and Dongfeng Motor are likely to buy shares. Huawei still has the largest stake in the new company, with the initiative and control. Huawei is likely to remain the single largest shareholder with a stake of 40 to 50 per cent for at least the next two to three years.

Huawei officials have not yet responded to the news.

In May 2019, Huawei established the Smart car Solutions Division (car BU), when Huawei founder Ren Zhengfei issued Huawei organizational change documents, announcing the establishment of Huawei Smart car solution BU, which is administered by the ICT Management Committee and belongs to Huawei's first-tier division. After the establishment of Huawei BU, it also launched three business models: Tier1 (traditional parts supplier model, which supplies intelligent parts for car companies), HI model (Huawei Inside mode) and smart selection model.

It is understood that last year, the number of intelligent driving personnel reached more than 5000 at most. In March this year, Huawei adjusted the organizational structure of the business and laid off more than 1000 people. According to Interface News, the total number of employees of car BU, including outsourcing staff, is now less than 5000.

It is worth mentioning that Yu Chengdong once said publicly: "Automobile is the only loss-making business of Huawei at present, this area is definitely a very expensive game, an absolutely lossmaking business, and it is definitely a very difficult business to do." According to Huawei's annual report, Huawei's annual revenue last year totaled 642.3 billion yuan, an increase of 0.9 percent over the same period last year, of which the smart car solutions business generated only 2.077 billion yuan in revenue, with less than a fraction of its performance contribution. According to the latest data released by Huawei, the business revenue of smart car solutions in the first half of this year was 1 billion yuan.

However, Yu Chengdong pointed out that Huawei BU is to be profitable by 2025, and the prerequisite for achieving this goal is to help car companies sell 1 million vehicles. Industry insiders believe that Huawei's push for the car BU to be split independently and open to major automakers to invest in shares is equivalent to exchanging applied technology for funds.

At the recent press conference of Wisdom S7 and Huawei, Yu Chengdong said that BAIC and Jianghuai two "boundary" products are already in the process of development. And for the first time publicly confirmed that Huawei BU will move towards independent operation. At present, Huawei has issued an open invitation to Cyrus, Chery, Jianghuai and BAIC, and hopes that China FAW Group will join. Yu Chengdong said: "China's powerful car factories, such as FAW, are welcome to participate in the co-construction and jointly create the products of the leading and ultimate smart car solutions." In this regard, people familiar with the matter revealed that Huawei hopes to create an electric, intelligent and open platform with the participation of the automobile industry.

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