By Julie Zhu and Yilei Sun
HONG KONG / BEIJING (Reuters) – China’s Huawei plans to make electric vehicles under its own brand and could launch some models this year, four sources said, as the world’s largest maker of telecommunications equipment plagued by US sanctions is a strategic shift investigation.
According to two of the people familiar with Huawei, Huawei Technologies Co. Ltd is in talks with the state-owned Changan Automobile and other car manufacturers to use their car factories.
Huawei is also in talks with the BluePark New Energy Technology-backed BAIC group to manufacture Beijing vehicles, said one of the two and a separate person with direct knowledge of it.
The plan heralds a potentially major shift in direction for Huawei after two years of US sanctions that reduced access to key supply chains, forcing it to sell part of its smartphone business to keep the brand alive.
Huawei has been placed on a trading list by the Trump administration due to concerns about national security. Many industry executives see little chance that the sale of billions of dollars worth of US technology and chips to the Chinese company, which has denied denial, will be reversed by its successor.
A Huawei spokesman denies that the company intends to design vehicles or manufacture vehicles from Huawei.
“Huawei is not a car manufacturer. Through ICT (information and communication technology) we want to be a supplier of digital car-oriented and newly added components, which enables car OEMs (manufacturers of original equipment) to build better vehicles. “
Three of the sources said Huawei began designing the EVs internally and approaching home suppliers, with the aim of officially launching the project.
Richard Yu, head of Huawei’s consumer business group that led to it becoming one of the world’s largest smartphone makers, will shift its focus to EVs, one source said. A mass market segment will be targeted according to the EVs, another source said.
All sources did not want to be named because the discussions are private.
The Chongqing-based Changan, which manufactures cars with Ford Motor Co., declined to comment. BAIC BluePark did not respond to repeated requests for comment.
Shares in Changan’s major listed company Chongqing Changan Automobile rose 8% after Reuters reported on the discussions. BluePark shares have risen with their maximum daily limit of 10%.
GROWTH EV MARK
Chinese technology companies have increased their focus on EVs in the world’s largest market for such vehicles, as Beijing strongly promotes greener vehicles as a way to reduce chronic air pollution.
Sales of new energy vehicles (NEVs), including pure battery electric vehicles, as well as plugged in hybrid and hydrogen fuel cell vehicles, are expected to account for 20% of China’s total annual motor sales by 2025.
Industry forecasts put China’s NEV sales at 1.8 million units this year, up from 1.3 million in 2020.
Huawei’s ambitious plans to make its own cars will join a series of Asian technology companies that have made similar announcements in recent months, including Baidu Inc and Foxconn.
“The new and complex U.S. restrictions on semiconductors for Huawei have slowly strangled the company,” said Dan Wang, a technology analyst at research firm Gavekal Dragonomics.
“It therefore makes sense for the company to turn to less disk-intensive industries to maintain its operations.”
In the United States, Amazon.com Inc. and Alphabet Inc. also develop car-related technologies or invest in new cars.
For years, Huawei has been developing a range of technologies for EVs, including in-car software systems, car sensors and 5G communications hardware.
The company has also entered into partnerships with car manufacturers such as Daimler AG, General Motors Co and SAIC Motor to develop joint car technologies.
It has accelerated the appointment of engineers for car-related technologies since 2018.
According to official Chinese patent records, Huawei was granted at least four patents related to EVs this week, including methods of charging between electric vehicles and examining battery health.
Two of the sources said that Huawei in the EV market is currently a joint venture for smart vehicles that he established with Changan and the CATL manufacturer of the batteries in CATL.
(Reporting by Julie Zhu in Hong Kong and Yilei Sun in Beijing; Additional reporting by David Kirton in Shenzhen; Editing by Sumeet Chatterjee and Richard Pullin)