(Yicai) Nov. 27 -- Changan Automobile’s shares surged by their daily trading limit after the Chinese carmaker confirmed that it will establish a joint venture for smart auto systems and components with Huawei Technologies.

Changan Auto [SHE: 000625] rose 10 percent in Shenzhen to end the day at CNY19.56 (USD2.73) a share. The stock has gained 20 percent since Nov. 23.

Huawei will set up the JV, into which the telecoms equipment giant will inject its smart auto unit’s technologies, assets, and staff, while Changan Auto and related parties will take a stake of up to 40 percent in the venture, the Chongqing-based carmaker said late yesterday.

The new company will research, develop, produce, sell, and service intelligent auto systems and components, including driving solutions, cockpits, digital platforms, and cloud platforms, Changan Auto pointed out. 

On Nov. 23, a rumor circulated online that Huawei intended to spin out its smart auto unit at a valuation of CNY250 billion (USD35 billion) and that Changan Auto was the only carmaker in the consortium of investors.

China needs to build an electrification and smart open platform jointly participated in by the auto industry, Richard Yu, chairman of Huawei’s smart auto solutions business group, said at the deal’s signing ceremony on Nov. 25.

Shenzhen-based Huawei will deepen its cooperation with Changan Auto and also join hands with other strategic auto partners to explore new forms of openness and win-win cooperation, he noted. The new JV will be open to equity participation by other carmakers, according to another Huawei executive.

Seres Group, Huawei’s partner in making the Aito smart electric vehicle brand, welcomes the JV’s setup and has been invited to invest in it, the Shenzhen-based automaker said late yesterday. Seres has the deepest ties with Huawei in the auto business, it pointed out.

Huawei has focused on developing auto-smart solutions and has partnered with various carmakers in recent years. Avatr Technology, a JV between Changan Auto and battery giant Contemporary Amperex Technology, uses Huawei’s assisted driving features and smart cockpits in its models. Deepal, a new energy vehicle brand of Changan Auto, partnered with Huawei in August. 

Changan Auto sold 2.1 million vehicles in the first 10 months of this year, an 11 percent increase from a year earlier. Sales of its NEV brands skyrocketed 89 percent to just over 364,000.

Editors: Dou Shicong, Martin Kadiev