August 19 Evening Update: Significant New Development in Changan Auto-Huawei Partnership
Changan Automobile announced that its joint venture, Avita Technology (Chongqing) Co., Ltd. (hereinafter "Avita Technology"), plans to sign an equity transfer agreement with Huawei in Chongqing on the morning of August 20. Under the agreement, Avita Technology will purchase 10% of the equity in the Huawei wholly-owned company, Yingwang, for RMB 11.5 billion. Additionally, Avita Technology will sign a shareholder agreement with Huawei and Yingwang.
Following the transaction, Avita Technology will hold a 10% stake in Yingwang, while Huawei will hold 90%. This sets Yingwang's valuation at RMB 115 billion. The transaction will be financed through cash from Avita Technology's own funds.
According to Changan Auto's 2023 annual report, as of the end of 2023, Avita Technology had total assets of RMB 12.644 billion and total liabilities of RMB 10.55 billion. In 2023, Avita Technology achieved revenue of RMB 5.645 billion but reported a net loss of RMB 3.693 billion. The announcement highlights that Avita Technology is a crucial strategic partner for both Huawei and Yingwang. This transaction is expected to help Avita Technology gain more resources from Huawei and further advance Changan Auto's brand upgrade strategy. Changan Auto plans to use this opportunity to strengthen its strategic cooperation with Huawei and drive the company's transformation into an intelligent low-carbon mobility technology firm.
Moreover, Changan Auto and Huawei are also scheduled to sign a comprehensive upgraded strategic cooperation agreement on August 20, 2024, in Chongqing. The agreement will encompass enhanced collaboration in brand and ecosystem development, cloud and AI technologies, green energy, and supply chain cooperation, aiming to leverage both parties' strengths and contribute to industrial upgrading.
According to the announcement, Yingwang's board of directors will consist of seven members, with Huawei entitled to nominate six directors and Avita Technology entitled to nominate one.
On November 26, 2023, Huawei announced plans to integrate its core technologies and resources related to smart automotive solutions into a new company, marking a significant step towards the independent operation of its automotive business unit. Changan Auto was the first to publicly announce its investment in Yingwang before its establishment, planning to acquire up to 40% equity.
On January 16, 2024, Huawei's automotive business unit officially registered the new company, Yingwang. Insiders indicated that, with more partners joining, Yingwang is set to become a diversified equity, technology open platform. On July 28, 2024, Seres also announced its investment in Yingwang, becoming the second automaker to publicly invest in the company after Changan Auto.
Prior to this, in early July 2023, Huawei sold 919 trademarks and 44 design patents related to its series of products to Seres for RMB 2.5 billion. The market value of these intangible assets was assessed at RMB 10.233 billion.
