Three people with knowledge of the discussions claim that China’s Huawei Technologies has approached Mercedes Benz and Volkswagen’s Audi about potential small-scale investments in its smart car software and components company.
They claimed that the action was meant to broaden its alliances beyond Chinese companies. One of the sources briefed on the matter stated that Huawei, which has been the target of U.S. sanctions since 2019, also hopes that the presence of foreign investors will help defend the company from potential further geopolitical tensions.
According to two sources, Huawei has held preliminary talks with Mercedes in recent weeks. As per one source, the German automaker was offered a 3 per cent to 5 per cent stake, with the valuation to be negotiated. However, Mercedes was uninterested because it preferred to retain control of its software in order to maintain its premium brand positioning rather than outsourcing it to a supplier, source state.
Last month, the Chinese technology behemoth announced the separation of its four-year Intelligent Automotive Solution (IAS) business unit, which aims to become the dominant supplier of software and components for smart electric vehicles (EVs). According to sources, the unit will be worth between $28 billion and $35 billion.
Currently, Audi’s reaction to Huawei’s offer was not immediately clear. However, according to two of the sources, Audi and Huawei are planning a collaboration to develop self-driving technologies for Audi. These technologies would be used in vehicles built by the German automaker’s joint venture with FAW Group for the Chinese market beginning in 2025. Also, the sources did not want to be identified because the discussions were private.
Huawei’s move comes at a time when global automakers in China are increasingly looking to partner with Chinese firms that have a head start in developing high-end features for tech-savvy Chinese consumers, Reuters reports. Volkswagen has been developing intelligent and connected electric vehicles in China in collaboration with electric vehicle (EV) automaker Xpeng and autonomous driving chip designer Horizon Robotics. In the meantime, Audi has teamed up with SAIC Motor to develop electric vehicles in a segment of the Chinese market where it previously had no presence.
While many of the most well-known electric vehicle (EV) manufacturers in China, such as Nio and BYD, rely solely on their own software, Huawei has partnered with both larger, more established automakers like Chongqing Changan Automobile and smaller, less well-known EV manufacturers like Seres Group, Reuters reports.
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