By LU Keyan, ZHOU Shuqi
Telecom giant Huawei is said to be selling its Intelligent Automotive Solution (IAS) business to a consortium led by Chongqing State-owned Assets Supervision and Administration Commission with Changan Automobile, the only car company involved, acquiring 15 percent of IAS for 37.5 billion yuan (US$5.3 billion).
Chongqing is where Seres, the Huawei partner behind the Aito Wenjie EV, is headquartered. Both Changan and Huawei denied the rumors, but the stock market reacted quickly, with Changan Automobile's stock briefly hitting limit-up.
Not forgotten after all
As early as August, rumors broke out that Huawei was trying to spin off IAS as it did with Honor in 2020, and was in talks with Chongqing. In October, business media outlet Caixin speculated that Huawei only sold businesses out of necessity, such as the sale of Honor and the x86 server business due to a shortage of US chips. The IAS situation was nothing like that.
A Huawei employee who asked not to be named told Jiemian News: “We were told a decision would be made in January, but as sales of the Aito M7 took off, everyone seems to have forgotten about it.”
Before selling Honor, employees were consulted on whether to stay or leave. As of now, IAS employees have not received similar notifications. Nevertheless, job transfers and recruitment last month led to speculation that it was in preparation for a sale.
Huawei’s IAS was founded in 2019. Two years later, Seres was the first EV partner and the Aito was a huge success. But this year, Aito sales slumped and it was not until September when the New Aito M7 was introduced that sales improved.
Cutting losses comes first
IAS is Huawei's only business unit that incurs losses, with annual R&D investment exceeding 10 billion yuan. Revenue in the first six months was 1 billion yuan.
Huawei founder REN Zhengfei stated in an internal statement in August last year that the company needed to reduce all marginal businesses and focus on revenue and profits.
An insider from IAS told Jiemian News that IAS's goal for this year was to reduce losses by 2 billion yuan and strive to turn losses into profits next year, one year ahead of plan.
To reduce operating and R&D costs, in late April, the Intelligent Driving Department, the largest department in IAS, underwent a sudden reorganization, with more than 1,000 members of the map team being laid off or transferred. The cost of high-precision maps is high, with the collection cost per kilometer over a thousand yuan, several times that of ordinary navigation maps.
