(Yicai) Nov. 27 -- Huawei Technologies new strategy of setting up joint ventures with carmakers such as Changan Automobile can benefit the phonemaker by generating trust, according to experts.

Huawei has invested a lot in intelligent driving technologies and smart cockpits, but the telecoms equipment giant cannot manufacture vehicles on its own, and leading automakers don’t easily adopt Huawei’s smart solutions, Zhong Shi, an automotive analyst, said to Yicai. Building a platform and amassing more industry-related assets will probably help attract more partners, he added.  

Shenzhen-based Huawei and Chongqing-headquartered Changan Auto announced yesterday that they will set up a JV dedicated to smart auto solutions and Changan Auto will own up to 40 percent of the equity. However, the pair has not determined the specific investment or the shareholding ratio as the JV should lure more car partners.

Previously, automakers did not have enough trust in Huawei, according to Cui Dongshu, secretary-general of the China Passenger Car Association. So trust between Huawei and carmakers can be strengthened and future members of the JV can enjoy profit-sharing and information transparency via deepened collaboration, Cui added.

Some analysis said that the automobile business requires a large deal of funds and other resources so forming JVs and introducing car companies as shareholders should be the best choice for Huawei at its current stage in the automotive software business. 

Since Huawei established its smart auto solutions unit in 2019, the firm invested USD3 billion in it and recruited a research and development team of 7,000 members. The unit earned CNY2.1 billion (USD293.5 million) in revenue last year and in the first half of this year, the corresponding sum was CNY1 billion.

For now, Huawei offers three partnership models to automakers. With the Huawei Inside model, manufacturers can equip their cars with Huawei's smart solutions whereas with the Smart Selection model, they can even get help in R&D and sales. So far, only two car models follow the Smart Selection track. They are the Aito M5 and M7 that are produced by Seres.

Editor: Emmi Laine