At the forefront of the evolution in the automotive industry, Huawei, the Chinese telecom giant, is making significant strides in transforming vehicle technology amidst increasing automation and electrification. This shift is highlighted by a prominent display at Huawei's electric vehicle (EV) division in Shenzhen, which compares the transitions from horse-drawn carriages to automobiles and notably, from internal combustion engines to driverless electric vehicles.
Despite facing intense scrutiny and sanctions from the United States, Huawei is resolutely pursuing opportunities in the burgeoning automotive sector, aiming to secure influential positions as the market rapidly evolves. The company is focused on supplying hardware components such as telecommunications equipment, infotainment systems, and developing advanced software and chip technology for driverless vehicles. Xu Zhijun, Huawei’s current chair, emphasised this strategic direction in a recent interview, stating, “No matter how good Huawei’s cars were, at best they would be like mobile phones, accounting for 10 to 20 per cent of the market.” He articulated a vision positioning Huawei as a "Chinese version of Bosch," referring to the esteemed German industrial company known for its substantial revenue generation in mobility parts and services.
Industry experts note that Huawei's integration into the automotive market is emblematic of China's rising dominance in the resources, manufacturing, and technology sectors essential for the production of EVs, which traditionally have been a stronghold of American, European, and more recently, Japanese and South Korean manufacturers. Vincent Sun, an analyst with Morningstar, remarked on the synergy between Huawei's existing telecommunications and chip design capabilities and the increasingly tech-centric nature of modern vehicles. He cautioned traditional automotive firms to bolster their research and development efforts to avoid obsolescence, drawing parallels with Nokia’s decline in the mobile phone era.
The transition towards electric vehicles is expected to unleash monumental economic potential, with projections from IDTechEx estimating that global service revenues from robotaxis alone could exceed $1.2 trillion annually as the industry matures.
Huawei's automotive ambitions have not been without challenges, particularly due to geopolitical tensions that have cast a shadow over its international operations. The company has been embroiled in controversy, with allegations of security risks tied to its association with the Chinese government, particularly from U.S. entities. Senator Marco Rubio recently asserted that Huawei's goals include enhancing the Chinese Communist Party's capabilities for the surveillance and disruption of communications internationally.
In a significant strategic shift, Huawei has invested approximately $5.6 billion in EV-related research and development over the past five years. The company reported a notable increase in revenue from its automotive unit, achieving Rmb4.7 billion (approximately $655 million) last year, although this represents less than one per cent of its total revenues of Rmb704 billion.
In a bid to further consolidate its position, Huawei separated its EV operations into a distinct entity known as Yinwang, which focuses on marketing systems and components specific to EV technology. This new entity has secured stake purchases from notable partners such as Avatr Technology—tied to Changan Automobile—and CATL, the world's largest battery manufacturer. Such partnerships have valued Yinwang at approximately $16 billion, indicative of its rapid growth potential in an area poised for expansion.
Collaboration with traditional Chinese automotive brands has been crucial, providing these legacy companies a pathway to embrace the EV market, particularly as they combat declining sales and issues related to overcapacity in petrol-powered vehicles. Huawei's initiatives include the delivery of software and hardware solutions to various manufacturers, including the advanced autonomous driving systems for models from BYD, which is a strong competitor in the global electric vehicle market.
Significantly, Huawei's sales with its primary automotive partners—Chery, Seres, BAIC, and JAC—totalled 353,600 units in the first ten months of the year. Notably, Aito cars produced in collaboration with Seres have achieved a market share of nearly 4 per cent in the battery and plug-in hybrid EV segments, closely competing with established market players such as Tesla and BYD.
Huawei is also gearing up for future growth in the commercial vehicle sector, promoting its capacity to connect logistics fleets to a robust infrastructure of global data centres. Christoph Weber from AutoForm noted the growing merger of the tech and automotive industries, suggesting that companies with limited historical experience in the automotive market, like Huawei, can quickly affect the dynamics of market share in burgeoning segments.
In summary, Huawei's substantial investments and strategic collaborations within the electric vehicle industry underscore its determination to emerge as a key player amidst the growing amalgamation of technology and transportation, alongside rising competition from domestic and international manufacturers.
Source: Noah Wire Services