stated report According to Reuters, China’s Huawei is in talks to take over the electric vehicle unit from a small local auto maker, in what is seen as a strategic shift for the world’s largest telecom equipment maker.
Huawei, which has been hit by US sanctions, is in talks with car maker Sokon to acquire a controlling stake in electric passenger car maker Jinkang New Energy.
The move allows Huawei to create smart cars with its own name, and it also provides the first evidence that Huawei is looking to go beyond just introducing automobile operating systems and gain a global presence in the electric vehicle business.
This push toward smart cars could indicate a major shift in Huawei’s business focus after two years of US sanctions that cut access to major supply chains, forcing it to sell part of its smartphone business.
Confirming the transformation, Huawei announced at the Shanghai Auto Show earlier this month agreements with three Chinese state-owned auto companies to supply the Huawei Inside smart car operating system.
Huawei’s entry into electric vehicles comes at a time when technology companies, such as Xiaomi, are ramping up their efforts in the world’s largest market for such vehicles, as Beijing has been aggressively promoting environmentally friendly vehicles to reduce carbon emissions.
And given that consumer demand for smart electric cars has risen significantly since the middle of last year, the path is now clear and strong for the tech giants.
Despite their years of success and experience in the smartphone market, it takes a few years for them to build an acceptable car brand in the electric car sector.
As part of the deal, Huawei also plans to buy an unspecified stake in privately-owned Sukon Holdings, which is the largest shareholder in Shanghai-listed Sucon.
Richard Yu, who led Huawei to become one of the world’s largest smartphone makers, is leading the talks with Sokon, and Huawei is looking to finalize the deal as soon as possible in July.
Huawei is also seeking to control electric vehicle brand ArcFox – owned by BAIC – that recently launched the Alpha S model equipped with the Huawei Inside system, but BAIC is more keen that Huawei is just a minority shareholder in ArcFox.
Reuters reported in February that Huawei plans to manufacture electric vehicles under its own brand and could launch some models this year.
New energy vehicle sales, including battery electric vehicles, hybrid vehicles and hydrogen fuel cell vehicles, are expected to account for 20 percent of total annual vehicle sales in China by 2025.
For months, Huawei has been deeply involved in the operation and manufacture of Sokon and the losing Seres unit, and under this partnership, the first prototype of the Seres unit named SF5 appeared at the Shanghai Auto Show, and received more than 3000 orders within two days.
Huawei sells the SF5 in its stores across China, including its online store VMall.com.
Huawei aims to launch its first smart car under its brand as soon as possible by the end of this year, and has high expectations for the model, which is under development based on the SF5, but the current supply chain is struggling to meet these expectations.