By Julie Zhu and Yilei Sun
HONG KONG / BEIJING (Reuters) – China’s Huawei plans to manufacture electric vehicles under its own brand and may launch some models this year, four sources said, while the world’s largest telecommunications equipment maker, hit by U.S. sanctions, explores a change strategic.
Huawei Technologies Co Ltd is in talks with state-owned Changan Automobile and other automakers to use its car factories to manufacture its electric vehicles (EVs), according to two people familiar with the matter.
Huawei is also in talks with Beijing-backed BAIC Group’s BluePark New Energy Technology to manufacture its EVs, said one of the two and another person with direct knowledge of the matter.
The plan announces a potentially major change in direction from Huawei, after nearly two years of U.S. sanctions that cut its access to major supply chains, forcing it to sell a portion of its smartphone business to keep the brand alive.
Huawei was put on a commercial black list by the Trump administration for national security reasons. Many industry executives see little chance that the blocks to the sale of billions of dollars in US technology and chips to the Chinese company, which denies wrongdoing, will be reversed by its successor.
A Huawei spokesman denied that the company plans to design EVs or produce Huawei-branded vehicles.
“Huawei is not a car manufacturer. However, through ICT (information and communication technology), we intend to be a digital supplier of new and automotive-oriented components, allowing OEMs (original equipment manufacturers) to build better vehicles.
Huawei began to design EVs internally and approach suppliers at home, with the goal of officially launching the project earlier this year, said three of the sources.
Richard Yu, head of Huawei’s consumer business group that led the company to become one of the world’s largest smartphone makers, will shift its focus to EVs, a source said. EVs will target a mass market segment, said another source.
All sources declined to be named because the discussions are private.
Chongqing’s Changan, which is making cars with Ford Motor Co, declined to comment. BAIC BluePark did not respond to repeated requests for comment.
Shares in Changan’s main listed company, Chongqing Changan Automobile, rose 8% after Reuters reported the discussions. BluePark’s stock has jumped from its daily limit of 10%.
GROWING EV MARKET
Chinese technology companies have intensified their focus on EVs in the world’s largest market for these vehicles, as Beijing strongly promotes greener vehicles as a means of reducing chronic air pollution.
Sales of new energy vehicles (NEVs), including pure battery electric vehicles, as well as plug-in hybrids and hydrogen fuel cell vehicles, are expected to represent 20% of China’s annual car sales by 2025.
Industry forecasts put NEV sales in China at 1.8 million units this year, up from about 1.3 million in 2020.
Huawei’s ambitious plans to make its own cars will see it join a number of Asian tech companies that have made similar announcements in recent months, including Baidu Inc and Foxconn.
“The new and complicated U.S. restrictions on semiconductors for Huawei are slowly strangling the company,” said Dan Wang, technology analyst at research firm Gavekal Dragonomics.
“So it makes sense that the company is opting for sectors with less chip consumption to maintain operations.”
In the United States, Amazon.com Inc and Alphabet Inc are also developing auto-related technology or investing in smart car startups.
Huawei has been developing a range of EV technologies for years, including in-car software systems, in-car sensors and 5G communication hardware.
The company also formed partnerships with car manufacturers such as Daimler AG, General Motors Co and SAIC Motor to jointly develop intelligent automotive technologies.
He has accelerated the hiring of engineers for automotive-related technologies since 2018.
Huawei received at least four EV-related patents this week, including methods for charging between electric vehicles and for checking battery health, according to official Chinese patent registrations.
Huawei’s entry into the EV market is currently separate from a joint smart vehicle company that it co-founded with Changan and battery manufacturer EV CATL in November, two sources said.
(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)