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According to a Reuters exclusive, Huawei is seeking to sell a stake in its four-year-old smart vehicle software and components to automobile manufacturers Mercedes Benz and Volkswagen’s Audi, partly to make it more resilient to US sanctions
The news comes as the Chinese tech giant looks to expand its brand partnerships outside of China, after being the target of US sanctions over the last four years.
The company’s Intelligent Automotive Solution (IAS) business unit is aiming to become the largest supplier of software and components for smart electric vehicles (EVs) and is worth $250 billion Yuan ($34.67 billion), according to the company.
According to the article, Mercedes Benz were offered a 3–5% stake in the business, but preferred to retain control of its software instead of outsourcing it.
Confidential sources also confirmed that although Audi’s interest could not be determined immediately, the two firms are planning a partnership to co-develop Audi’s autonomous driving technologies, which would be used in the Chinese market from 2025.
In 2019, Huawei faced significant sanctions from US following an Executive Order signed by President Donald Trump. Since then, many European countries such as Germany, UK, France, and Italy, have also imposed sanctions of various degrees on the company, forcing the Chinese firm to diversify into new markets, from automotive software to AI-powered pig farming solutions.
As such, according to at least one of Reuters sources, it is hoped that attracting investment from the German automotive players will protect the firm from being embroiled in further geopolitical tension.
A large proportion of Huawei’s revenue comes from patents, which last year stood at $560 million through almost 200 bilateral patent licenses. Both Mercedes-Benz and Audi are currently entered into patent agreements with the company.
Both Mercedes and Audi declined to comment.
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