Business Essentials for Professionals


Huawei Trying To Enter Electric Vehicle Industry As It Tries To Acquire A Small Automaker’s EV Unit

Huawei Trying To Enter Electric Vehicle Industry As It Tries To Acquire A Small Automaker’s EV Unit
The largest telecom equipment maker of the world Huawei is making a strategic shift in its business strategy and is now trying to enter into the area of electric vehicle making. According to a report published by the news agency Reuters, the Chinese firm is now holding talks for taking control of a small domestic automaker's electric vehicle unit.
Sources with knowledge of the matter reportedly told Reuters that negotiations for a deal with the Chongqing Sokon to acquire a controlling stake in the latter's Chongqing Jinkang New Energy Automobile is being conducted by Huawei which has been significantly hit sanctions imposed by the United States.
If the deal goes through, Huawei would be making intelligent cars under its own brand name. The main asset of Jinkang is the US EV brand Seres, which was formerly known as SF Motors. A possible deal will also indicate the intentions of Huawei of diversifying into more areas outside of just offering auto operating systems and its intention to have an end-to-end presence in the EV business.
There were no comments available from Huawei and Sokon.
Following two years of sanctions imposed by the US that have which cut its access to crucial supply chains for its smartphone business – which ultimately forced the company to sell a portion of its smartphone business, it seems that Huawei is aggressively pushing to implement a major change of focus for its business and into the area smart cars, if the deal is finalised.
Earlier this month at the Shanghai Auto Show, Huawei’s rotating chairman Eric Xu underscored the shift while announcing deals with three state-owned Chinese carmakers – including the BAIC Group, for supplying of "Huawei Inside" which is a smart vehicle operating system.
With China heavily promoting greener vehicles to reduce carbon emissions, other Chinese tech companies such as Xiaomi Corp are also trying to enter the EV industry and be present in the largest EV market of the world.
"As individual consumer demand for smart EVs has been picking up notably since mid-last year, the track is now clear and solid in front of the tech giants," said Yale Zhang, managing director of Automotive Foresight. "Despite of their years of success and experience in smartphone markets, it will still take a few years for them to build a car brand acceptable in the EV sector."
An undisclosed share of the privately-owed Chongqing Sokon Holdings, which is the largest shareholder of Shanghai-listed Sokon, is also being targeted by Huawei as a part of the deal, said the Reuters report quoting sources.
The report also said that the negotiations for Huawei are being led by head of the company’s consumer business group Richard Yu who also headed the company as it had become the largest smartphone maker of the world some years back and has since shifted his focus completely to the electric vehicle industry.
It was reported that the telecom giant is trying to finalize the deal as soon as July.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc