Huawei and Chinese car maker, Changan Auto started a new automotive company, marking a major shift in its car components business.
Reuters reported that Changan Auto and its parent firm, China Ordnance Equipment Group are in talks to buy 35% and 5% stakes respectively in the new Huawei firm. These shares could be valued at 200 billion to 250 billion yuan, reveals two people related to this matter.
Aside from Changan Auto, Huawei also keeping the investment window open for other major names from the auto industry. As per the new report, there are some Huawei partners that could join the firm as minority shares including FAW Group and Dongfeng Motor Group. These two may also acquire 5% shares each.
Meanwhile, Huawei is likely to remain the single largest shareholder with 40% to 50% overall share ownership. However, the company could change the situation and sell more of its shares in the upcoming two to three years.
The ownership split and valuation have not been finalized and may be modified. The transaction will also need regulatory approval to finalize the share distribution.
Huawei said on Sunday that this new company aims at research and development, production, sales, and services of smart automotive systems and components for smart vehicles.
The Chinese tech maker is looking for a headquarters location in Chongqing, in China’s southwestern municipality similar to Changan. Importantly, Yu Chengdong, Chairman of Huawei’s Automotive Solutions Business could lead the new firm, as he has been guiding the entire smart solution business unit since the beginning.
Over the past three years, Huawei made a number of successful collaborations with Chinese car makers including SERES and Changan Auto for collaborative brands AITO and AVATR respectively.
The recent AITO M7 has made a record-breaking 100,000 sales in the country, popularizing the solution and Huawei’s brand value among consumers and helping the car makers achieve high orders.