Chang'an Automobile acquires a 10% stake in Huawei's Yinwang subsidiary, marking a significant investment by Avatr.
In a significant move, Avatr Technology, a joint venture of Chang'an Automobile, has acquired a 10% stake in Huawei's subsidiary Yinwang for RMB 11.5 billion (USD 1.6 billion). This investment represents a substantial financial commitment for Avatr at a crucial juncture.
The deal, fully funded by Avatr, will be paid in three installments, each contingent on specific conditions. As a shareholder, Avatr will benefit from the profits generated through Yinwang's two-way supply model with Huawei and existing partners.
Yinwang, with its mission to create an open platform for the electrification and intelligence of the automotive sector, will operate on a two-way supply model, delivering products to both Avatr and existing Huawei partners like Aito, Stelato, Luxeed, and Maextro. Sales of Huawei's four "Smart Selection" models are expected to generate substantial revenue through Yinwang's two-way supply model, potentially helping Avatr alleviate monetary pressures.
This collaboration between Chang'an and Huawei for Avatr is distinct from Huawei's Smart Selection series. Deepal brand, another Chang'an brand, was the first to feature Huawei's Qiankun ADS SE in a vehicle model priced under USD 28,000. The Avatr brand uses Huawei's advanced smart driving system and HarmonyOS cockpit.
Chang'an Automobile is moving towards a focus on smart, low-carbon technology, as indicated by its deal with Huawei. The evolution of this collaboration will be closely watched.
Avatr, the first major initiative of the newly independent Yinwang, reported revenues of RMB 5.645 billion (USD 792.9 million) in 2023 but also recorded a net loss of RMB 3.693 billion (USD 518.7 million). Since its inception, Avatr has accumulated losses exceeding RMB 8 billion (USD 1.1 billion).
Despite the financial challenges, Avatr's involvement in Yinwang grants it a seat at the table for critical decisions. Deepal's sales reached 83,000 units, also showing substantial gains. In the first half of 2024, Avatr sold 29,000 units, reflecting a 170% year-on-year growth.
Chang'an chairman Zhu Huarong stated that supporting Avatr is intended to serve as an example of an open platform that engages the entire automotive industry. However, there are no specific details available about which additional companies Yinwang will attract as strategic partners in the future.
This strategic partnership between Chang'an Automobile and Huawei through Avatr Technology is set to reshape the automotive industry's electrification and intelligence landscape. The industry eagerly awaits the fruits of this collaboration.
