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Amidst the US sanctions, Huawei plans to push into electric vehicles

Four sources said that China’s Huawei plans to manufacture electric cars under its own brand and may launch some models this year, as the world’s largest telecom equipment maker, hit by US sanctions, explores a strategic shift.

Huawei Technologies Co Ltd is in talks with state-owned Changan Automobile and other auto makers to use their auto factories to build their electric cars, according to two people familiar with the matter.

Huawei is also in discussions with BluePark New Energy Technology of the Beijing-backed BAIC Group to manufacture its electric vehicles, according to one of them and a separate person with first-hand knowledge of the matter.

The plan heralds a potential major shift in Huawei’s direction after nearly two years of US sanctions cutting its access to major supply chains, forcing it to sell part of its smartphone business to keep the brand alive.

The Trump administration has blacklisted Huawei on commercial national security concerns.

Many industry executives see there is little chance that the ban on the sale of billions of dollars of US technology and chips to the Chinese company, which has denied wrongdoing, will be reversed by its successor.

A Huawei spokesperson has denied that the company plans to design electric cars or produce Huawei-branded cars.

“Huawei is not a car manufacturer. However, through information and communication technology, we aim to be a digital vehicle-oriented provider and new additive component provider, enabling automotive OEMs to build better cars.”

Three of the sources said Huawei has begun designing electric cars internally and communicating with suppliers at home, with the goal of formally launching the project early this year.

One source said that Richard Yu, the head of the consumer business group at Huawei who led the company into one of the world’s largest smartphone makers, would shift his focus to electric vehicles. Another source said that electric vehicles will target a large segment of the market.

All sources declined to mention her name because the discussions were private.

Chongqing-based Changan, which manufactures cars with Ford Motor Co, declined to comment. BAIC BluePark did not respond to repeated requests for comment.

Shares of Changan-listed major Chongqing Changan Automobile rose 8% after Reuters reported the discussions. BluePark shares jumped a maximum of 10% daily.

Growth of the electric vehicle market

Chinese technology companies have strengthened their focus on electric vehicles in the world’s largest market for such vehicles, as Beijing has been aggressively promoting environmentally friendly vehicles as a way to curb chronic air pollution.

Sales of new energy vehicles (NEVs), including pure battery electric vehicles as well as plug-in hybrid vehicles and hydrogen fuel cell vehicles, are expected to account for 20% of total annual vehicle sales in China by 2025.

Industry forecasts show China’s sales of NEVs reached 1.8 million units this year, up from around 1.3 million in 2020.

Huawei’s ambitious plans to manufacture its own cars will see it join a group of Asian tech companies that have made similar announcements in recent months, including Baidu Inc and Foxconn.

In the United States, Amazon.com Inc and Alphabet Inc are also developing automotive-related technology or investing in emerging smart car companies.

Huawei has been developing a wide range of technologies for electric vehicles for years including in-vehicle software systems, vehicle sensors, and 5G communication devices.

The company has also formed partnerships with automakers such as Daimler AG, General Motors Co, and SAIC Motor to jointly develop smart car technologies. It has accelerated the recruitment of engineers for auto related technologies since 2018.

Huawei obtained at least four patents related to electric vehicles this week, including charging methods between electric cars and battery health checks, according to official Chinese patent records.

Huawei’s entry into the electric vehicle market is currently separate from the joint smart vehicle company that it co-founded with Changan and CATL electric battery maker in November.
The sources said.

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