Compelling new details have emerged about Huawei’s recent tie-up with Changan Auto, revealing that the technology giant’s Intelligent Automotive Solution (IAS) business unit is already estimated to be worth a staggering 250 billion yuan (~$35.2 billion) just four years after it was established.
Earlier this week it was revealed that Huawei and Changan would establish a new company focusing on advanced automotive systems and components. It has since been revealed that the deal will see Huawei spin off its IAS business unit with Changan Auto expected to acquire 35% of the firm while China Ordnance Equipment Group will own a further 5% of the firm, valuing it between 200 billion and 250 billion ($28 billion – $35.2 billion).
Huawei established Intelligent Automotive Solution with the aim of becoming “the equivalent of German automotive supplier Bosch of the intelligent electric vehicle (EV) era,” Reuters reports. Other Chinese car companies including FAW Group and Dongfeng Motor Group are also said to be in talks to each acquire a 5% stake in the company.
While Huawei is refusing to comment on estimated valuations of IAS, it has confirmed that it is in advanced talks to sell part of the company to a number of investors. Additionally, the firm says it wants to shift technologies and resources into the new spin-off company to further innovate smart car technologies.
Read: Seres Brings Its 5 and 7 SUVs To Munich Auto Show Ahead Of European Launch
The spin-off of the automotive-related business unit remains subject to regulatory approval. Unnamed sources tell Reuters that one of the reasons Huawei is considering selling the business is to recoup some of the money it has spent on research and development. Indeed, the firm has invested roughly $3 billion in the unit since its inception and its R&D team has swollen to include more than 7,000 employees. Despite this, the unit generated just 1 billion yuan ($141 million) in revenue through the first half of 2023, barely a blip on the 310.9 billion ($43.8 billion) in total revenue that Huawei generated.
