Huawei Smart Car Business: Exploring Investments from Mercedes Benz and Audi
China’s Huawei Technologies is actively seeking investments in its Huawei smart car software and components firm, Intelligent Automotive Solution (IAS). Mercedes Benz and Audi are the key players Huawei is engaging with for potential collaboration. This strategic move comes as Huawei aims to diversify partnerships beyond Chinese brands and navigate the challenges posed by U.S. sanctions.
Huawei recently announced the spin-off of its four-year-old IAS unit, targeting a valuation between $28 billion and $35 billion. In preliminary talks, Mercedes was offered a 3% to 5% stake; however, the German auto brand showed limited interest, emphasizing its commitment to retaining control over software for premium branding.
The response from Audi regarding Huawei’s offer is yet to be clarified. Nevertheless, both companies are reportedly planning a partnership to develop autonomous driving technologies. These technologies are slated for deployment in Chinese-market vehicles from 2025, manufactured through Audi’s collaboration with FAW Group.
Amid a trend of global automakers seeking partnerships with Chinese companies, Huawei’s move aligns with its efforts to collaborate with established and emerging players in the electric vehicle (EV) market. Volkswagen, for instance, collaborates with EV manufacturer Xpeng and chip designer Horizon Robotics, focusing on intelligent and connected electric cars tailored for the Chinese market.
Audi Strategic Ventures in the Chinese EV Market
Audi has formed partnerships with SAIC Motor to venture into EV segments previously unexplored. This aligns with the broader trend of international automakers tapping into the expertise of Chinese firms in developing advanced features for tech-savvy consumers.
Richard Yu, overseeing Huawei smart car business, highlighted the challenges posed by U.S. sanctions. Despite this, Huawei has secured partnerships with various electric car makers, including Seres Group and traditional automakers like Changan Automobile.
Changan Auto has expressed intent to be a significant investor in Huawei’s smart car business post-spin-off, potentially holding up to 40% alongside other relevant parties. Invitations for investment have also been extended to Seres, Chery Automobile, Jianghuai Automobile Group, and BAIC Motor, with potential interest from Dongfeng Motor.
In summary, Huawei’s strategic move to seek investment from Mercedes Benz and Audi reflects the company’s commitment to expanding its influence in the global Huawei smart car market and mitigating the impact of geopolitical challenges.
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