On December 11, according to Reuters, people familiar with the matter revealed that Huawei had asked Mercedes-Benz and Audi if they were interested in buying a small stake in its smart car software and components company.
Huawei, which has been the target of US sanctions since 2019, wants to bring in foreign investors in the newly established car company to protect the business from potential geopolitical situations that could aggravate, according to one of the sources.
Last month, Huawei signed a Memorandum of Understanding (MOU) with Changan Automobile to spin off its car business into a new joint venture. The sector could be valued at between $28 billion and $35 billion.
After sending invitations to four smart car partners, Celis, Chery, JAC, and BAIC, Dongfeng and FAW were also rumored to be seeking a small stake in Huawei's new joint venture.
Huawei has held preliminary talks with Mercedes-Benz in recent weeks, offering the German car brand to buy a 3 to 5 percent stake in the new company, at a valuation to be agreed, the sources said.
However, people familiar with the matter added that Mercedes is not so interested. Mercedes-Benz wants to maintain its software autonomy to maintain its premium brand positioning, rather than outsourcing related operations to third-party vendors.
In terms of autonomous driving, Mercedes-Benz was approved to deploy the Level 3 autonomous driving system Drive Pilot in Nevada at the beginning of the year, becoming the first automaker to be approved in the United States. Mercedes-Benz's automatic lane change assist feature is also scheduled to enter the North American market this year.
The extent of Audi's interest in Huawei's invitation has not yet been determined. Audi and Huawei are planning to work together to develop autonomous driving technology that will be used in Audi models sold in China after 2025, according to people familiar with the matter. The models will be produced by a joint venture between Audi and FAW Group.
As early as 2018, Huawei and Audi began a cooperation in the field of intelligent and connected vehicles, when technicians from both parties integrated Huawei's MDC mobile data center into the Audi Q7 prototype for operation in urban autonomous driving environments and publicly displayed it.
After the unveiling of the ARCFOX model equipped with Huawei's autonomous driving technology in 2021, Michael Hofmann, then executive vice president of R&D at Audi China, hinted that the company could further adopt Huawei's autonomous driving solution, that is, Huawei's ADS system on domestic models.
However, there has been no new progress in the follow-up of related cooperation. If Audi accepts Huawei's invitation to cooperate this time, it is likely to improve its own intelligent driving level. With German brands lagging behind their Chinese competitors in terms of overall intelligence and electrification, Audi urgently needs to accelerate the pace of transformation.
Zhang Yichao, an automotive analyst, told Jiemian News that if the two sides consider cooperation, Audi, as a leading global automaker, may have demands in terms of intellectual property ownership, functional exclusivity and differentiation, and global collaboration under the premise of taking into account local regulations.
Audi's sales in China this year have widened the gap with Mercedes-Benz and BMW, which are also first-tier luxury brands. Volkswagen Group CEO Oliver Blume admits that "we are not defending the position of the Audi brand as a major competitor. In his opinion, the main reasons why Audi is falling behind are precisely software problems and slow progress on electric vehicles.
Huawei Automotive