When the Huawei-Changan JV eventually sells equity to investors, the valuation could reach 250 billion yuan (US$35 billion), as reported by Reuters on Wednesday.
Initially, Changan Automobile and its parent company China South Industries Group are expected to acquire approximately 35 percent and 5 percent of the new company, respectively, with estimated contributions of 87.5 billion yuan and 12.5 billion yuan.
The report also suggests that minority shareholders will include FAW and Dongfeng Motor, currently in discussions to purchase up to 5 percent each.
The business divisions involved in Huawei’s establishment of the new company can be broadly categorized into applications - intelligent driving solutions, smart car lights - and fundamentals: xhips and algorithms. For Huawei, continuing to control foundational technology leaves greater room for future development.
Established in 2019, Cars are Huawei’s only loss-making business. In 2022, cars accounted for only 0.3 percent of revenue, but cumulative investment has reached 21.5 billion yuan. Staff peaked at 7,000 last year, though the total number of employees is now less than 5,000.
Against this background, Huawei is spinning off the business and opening up investment to major automakers, essentially exchanging application technology for funds.
According to Reuters, at least in the next two to three years, Huawei may remain the single largest shareholder, with a stake ranging from 40 percent to 50 percent.
