Huawei Aims to Achieve Profitability of Auto Business in 2025

During an internal Huawei meeting on December 8, Richard Yu, the head of the firm’s consumer and automotive units, said that vehicle operations should become profitable in 2025. Meanwhile, 2021 marks the third year of the unit’s establishment and the second year of Yu assuming the role of its CEO, LatePost reported on December 20.

Huawei’s vehicle business unit was established in May 2019. Eric Xu, the rotating chairman of Huawei at that time, announced that the company had officially entered the automobile industry, but that it would not build its own cars independently. A former Huawei employee said that the first department set up by the vehicle business unit was the marketing department, and the first task was to determine what products can be sold for profit.

Xu said at the Huawei Global Analyst Summit in April 2021, “There are 30 million vehicles in China’s automobile market. Even if we give up the overseas market, it’s enough for us to obtain a profit of 10,000 yuan [$1,434] from every car per year.”

In mid-2019, there were only 60 or 70 people in the firm’s vehicle business unit, and after one and a half years, it grew to 4,000 people and nine secondary departments, including five major product departments for intelligent driving, intelligent cockpit, network, electric products and cloud services. At the Huawei Developer Conference in October 2020, Xu said that Huawei had invested $500 million in smart cars and would not consider the short-term profit and loss for the time being.

At that time, there were two modes of cooperation between Huawei and car companies. One was selling parts to car companies, and the other was requiring car companies to carry intelligent driving, intelligent cockpit solutions and other components developed by Huawei.

In May last year, Yu took over as CEO of the business unit and started the cooperation mode of “Smart Selection,” which required Huawei to participate in vehicle development as supplier. Car companies were responsible for manufacturing, and the cars produced were sold in Huawei’s stores.

Huawei has now finalized the cooperation of “Smart Selection” with Seres, Chery, BAIC and JAC Motors. Huawei and Seres are preparing for another car under the AITO brand, which will be equipped with Huawei’s self-developed intelligent driving solutions, including intelligent driving computing platform, lidars and cameras, and is expected to be launched by the end of next year. The firm has reduced the cost of intelligent driving solutions to 18,000-20,000 yuan, which will create more revenue.

Huawei’s car developed with Chery will be released in April of next year. According to people close to Huawei, the car with an internal code of “E03” is based on Chery’s “E platform” and is intended to compete with Tesla’s Model 3. The car, which will cost more than 200,000 yuan, uses CATL batteries and will not use Huawei’s self-developed intelligent driving solution.

SEE ALSO: Huawei Reaches Cooperation on Automobiles With Chery and JAC Motors

The smart car co-developed by Huawei and BAIC is expected to be launched in 2024 and sold in Huawei stores. The cooperation progress between Huawei and JAC Motors is the slowest, and the release time of the first model will be later than 2024.

At the 14th China Auto Bluebook Forum in July this year, Yu said that Huawei has invested significantly in automobiles, spending more than one billion dollars per year. It is currently Huawei’s only loss-making business, with 7,000 direct employees and more than 10,000 indirect employees. Entering its third year, the vehicle business unit is still a long way away from making a profit.