Seres buys 10% stake in Huawei smart auto business unit

Seres Group, one of Huawei Technologies’ key partners in the automotive sector, said Sunday that its subsidiary will acquire a 10% stake in Huawei's smart auto business unit in a move seen as a way to further deepen their new energy vehicle partnership.

Shanghai-listed automaker Seres, which has co-developed electric vehicle brand Aito with Huawei, said in a statement that its subsidiary Seres Automotive Co. will pay Huawei 11.5 billion yuan (US$1.6 billion) for the equity in Shenzhen Yinwang Intelligent Technology Co. 

The deal follows a similar one signed between state-owned carmaker Chang’an Automobile and Huawei. According to an agreement, Avatr Technology, a Chang'an-affiliated new energy vehicle company that is also jointly held by Huawei and electric vehicle battery giant Contemporary Amperex Technology Co., will take a 10% stake in Shenzhen Yinwang for 11.5 billion yuan. 

U.S.-sanctioned Huawei set up Shenzhen Yinwang in January with a registered capital of 1 billion yuan and is wholly owned by the Shenzhen-based tech giant, according to records on business registry information platforms Tianyancha and Qichacha.

The records show that Shenzhen Yinwang’s business covers smart car equipment manufacturing, artificial intelligence (AI) system integration services, and AI software development, among other areas.

The launch of Shenzhen Yinwang followed the signing of a memorandum of cooperation in November between Huanwei and Chang’an to start a new smart car joint venture. Under the partnership, Huawei plans to transfer its smart car system business to a new unit with investments from Chang’an and integrate the core technologies and resources of Huawei’s smart car solutions into the new company.

Shenzhen Yinwang was intended to be the spinoff of Huawei’s Intelligent Automotive Solution (IAS) business unit. In April 2019, Huawei officially announced the establishment of IAS, the firm's bussiness for the automotive industry, at the Shanghai Auto Show. According to Huawei, the purpose of establishing the business unit is to sell auto parts and technical solutions to vehicle manufacturers.

The IAS unit was Huawei’s fastest-growing business segment by revenue growth in 2023, raking in revenue of around 4.7 billion yuan, an increase of 128.1% year on year, according to Huawei’s 2023 annual report. 

“In 2023, intelligent electric vehicles continued to gain traction in China, with a penetration rate exceeding 35%. Intelligence and connectivity have gradually become differentiating factors for vehicle performance,” Huawei said in the annual report. 

Richard Yu Chengdong, Huawei's executive director and chairman of its intelligent automotive solution business unit, urged in November domestic carmakers Seres, Chery Automobile, JAC Motors and BAIC Motor to take an equity stake in the Huawei-Changan venture.

Zhang Xinghai, chairman of Seres Group, said the acquisition of Shenzhen Yinwang stake indicates that Seres’ collaboration with Huawei has been comprehensive and sustainable. 

“Sailes is committed to supporting Shenzhen Yinwang in becoming an intelligent open platform in the automotive industry, striving to achieve an annual production and sales target of Aito vehicles in the millions within three years, driving the supply of millions of sets of equipment for Shenzhen Yinwang, and achieving mutual success,” Zhang said in the statement.

Huawei started to pivot to the auto sector to diversify its revenue sources after rounds of U.S. sanctions since 2019 had cut off the firm from global supply chains for American components and once took heavy toll on its consumer business, particularly smartphones.

The tech heavyweight made inroads into electric vehicles and unveiled its Huawei HI intelligent automotive solution in April 2021. The system comprises a computing system, 4D imaging radar, an autonomous driving platform and intelligent thermal management.

But Huawei has repeatedly said it is a components provider rather than a manufacturer of cars, describing itself as just a partner to carmakers and reiterating that it only wants to help carmakers build better vehicles. The firm aims to be a major supplier of the smart software powering next-generation electric vehicles as its strengths are in software, cloud services and communications technology. Industry analysts say that Huawei’s repeated assurances are aimed to mitigate concerns from carmakers that the company could become a serious rival. 

The first new brand launched by Huawei in partnership with a carmaker, Aito is a premium new energy vehicle brand launched by Seres with Huawei in December, 2021 and has already released models including the M5, M7 and M9.

Seres said in July it will pay Huawei 2.5 billion yuan for the trademark and patents of Aito, with the transaction expected to be completed by the end of 2024. The deal is regarded as a move by Huawei to enhance its role as a systems and know-how supplier for autos instead of a competitor.