Huawei and Changan Announce Major Collaboration: A Milestone in Automotive Innovation

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Huawei and Changan Announce Major Collaboration: A Milestone in Automotive Innovation

Nov 28th ,2023

On November 26, Chongqing Changan Automobile Co., Ltd. (referred to as "Changan Automobile") announced that the company had signed an "Investment Cooperation Memorandum" with Huawei on November 25 in Shenzhen.


The announcement revealed that, after negotiations between the two parties, Huawei plans to establish a company specializing in the research and development, design, production, sales, and service of intelligent automotive systems and component solutions. Changan Automobile intends to invest in this company and engage in strategic cooperation, with both parties jointly supporting the company to become a leader in the automotive intelligent systems and components solutions industry, based in China and serving globally.


Notably, just three days earlier, rumors circulated online about Huawei's Intelligent Automotive Solution Business Unit (referred to as "Vehicle BU") being spun off from Huaweis system and Changan Automobile acquiring a stake in it. The rumor claimed that Changan Automobile acquired a 15% stake in the Vehicle BU for 37.5 billion yuan, with Changan Automobile's controlling shareholder, China Ordnance Equipment Group Co., Ltd., holding about 5%. There were also claims that Changan Automobile would obtain approximately 30% of the Vehicle BU's shares at a valuation of 300 billion yuan.


In response to these rumors, both Changan Automobile and Huawei stated they were unaware of them.


According to the "Investment Cooperation Memorandum" signed by both parties, Huawei intends to integrate the core technologies and resources of its intelligent automotive solution business into the new company. Changan Automobile and its affiliates intend to invest in this company and support its future development in collaboration with Huawei.


The new company's business scope includes intelligent driving solutions for automobiles, intelligent cockpits, digital platforms for smart cars, smart car clouds, AR-HUD, and intelligent car lights. In this transaction, Changan Automobile and its affiliates plan to invest to acquire a stake in the target company not exceeding 40%, with the specific share ratio, investment amount, and period to be negotiated separately by both parties.


The new company aims to become a world-class leader in intelligent driving systems and components for automobiles and serve as an open platform for the automotive industry. It will open its equity to existing strategic partner automakers and investors with strategic value, becoming a company with diversified equity. The company will continue to serve its customers with high quality and collaborate with partners to promote innovation and leadership in intelligent automotive technology, fostering the prosperity and development of the automotive industry.


In the current wave of electrification and intelligentization, China's automotive industry already has a leading edge in the field of new energy. Intelligence will become the next strategic high ground in the global automotive industry competition, and the strategic window for intelligence has already arrived.


"Changan Automobile and Huawei will leverage their respective strengths and resources and work deeply and strategically with partner automakers. This collaboration will accelerate the large-scale commercialization of intelligent technologies, allowing global users to enjoy first-class intelligent experiences. It will drive the Chinese intelligent automotive industry towards scaled, intensive, and shared development, enhancing the resilience of the automotive industry chain and supply chain, promoting high-quality development of the Chinese automotive industry chain, leading breakthroughs in core technologies, and advancing Chinese automotive brands towards world-class status," said Zhu Huarong, Chairman and Party Secretary of Changan Automobile.


Before this cooperation, Changan Automobile and Huawei had already collaborated multiple times. In 2019, Huawei and Changan Automobile established a joint innovation center to deepen their strategic cooperation. Subsequently, Changan Automobile joined hands with Huawei and the battery company CATL to create Avita Technology, with Huawei providing high-level assisted driving functions and HarmonyOS intelligent cockpit for Avita Technology. In August of this year, Changan Deep Blue also signed a cooperation framework agreement with Huawei's Vehicle BU, focusing on the field of automotive intelligence and jointly advancing the research and development and application of new technologies in the field of intelligent electric vehicles.


In this cooperation with Changan Automobile, Huawei's rotating Chairman Xu Zhijun reiterated the concept that "Huawei insists on not manufacturing cars but leverages its own ICT technology advantages and marketing capabilities to help automakers make and sell good cars."


"China needs to create an open platform for electrification and intelligentization in the automotive industry, a platform with a 'locomotive'. We deepen our cooperation with Changan, and at the same time, we will work hand in hand with more strategic partner automakers to continuously explore new models of open and win-win cooperation. Together, we will seize the opportunity of the automotive industry's transformation to electrification and intelligentization and realize the dream of the rise of China's automotive industry," said Yu Chengdong, Executive Director and Director of Huawei's Intelligent Automotive Solution BU.


It is understood that Huawei's current cooperation model with automakers comes in three forms: the shallowest is serving as a component supplier, selling parts and technical solutions to whole-vehicle enterprises in the traditional Tier 1 and Tier 2 roles; the second is the Huawei Inside (HI) model, where Huawei's full-stack intelligent automotive solution is applied to products, and authorization is given to use the HI logo on the car body, as seen on models such as the Aito M5 HI version and Avita 11; the third is the Huawei Smart Selection mode, where Huawei participates more in product definition, design, marketing, and channels, and cooperates more deeply with automakers, with the representative being the AITO brand co-created by Huawei and Seres.


"With the hot sales of the AITO and Maimang series models, Huawei's Smart Selection car business will continue to focus on HarmonyOS Smart Drive, accelerating cooperation with Seres, Chery, and other automakers in technology innovation, product definition, quality control, channel sales, and brand marketing. We are building a new smart travel ecosystem and continuously launching more intelligent, safer products and services with better experiences in collaboration with our partners," said an informed source from Huawei.