2024-08-20
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Produced by Huxiu Automobile Group
Author: Xiao Man
Header Image丨Visual China
On August 19, 2024, Chongqing Changan Automobile Co., Ltd. issued the "Announcement on the Progress of the <Memorandum of Investment Cooperation> and Overseas Investment of Joint Ventures".
The announcement shows that Avita Technology will officially invest in Yinwang Intelligent Technology Co., Ltd., holding 10% of the shares. The transaction amount is RMB 11.5 billion, and Huawei holds 90% of Yinwang. Avita, Huawei and Yinwang will sign the "Equity Transfer Agreement" on August 20.
This means that Changan Automobile will not personally participate in investing in the Huawei joint venture.
On November 25, 2023, Changan Automobile and Huawei signed a "Memorandum of Investment Cooperation". Huawei plans to establish a new company to engage in the research and development, design, production, sales and services of automotive intelligent systems and component solutions.
The two parties originally planned to sign the final transaction documents within six months, including the equity purchase agreement, shareholders agreement, target company articles of association, etc. The shareholding ratio of Changan Automobile and its affiliates would not exceed 40%.
At the beginning of this year, Huawei completed the registration of the target company, named Shenzhen Yinwang Intelligent Technology Co., Ltd., whose business scope mainly includes automotive intelligent driving solutions, automotive intelligent cockpits, intelligent automotive digital platforms, etc.
Judging from the final result, it has basically been announced that Changan Automobile will not participate in Yinwang's investment, and Avita will join in instead. This operation can be said to have preserved the substance and taken care of the face.
A source told Huxiu Auto that the decline in shareholding ratio may be related to the withdrawal of state-owned assets.
"The original plan was that Changan and its affiliates (including China North Industries Group Corporation and local state-owned assets) would jointly invest 40%, Changan + China North Industries Group Corporation would invest approximately 20%, and local state-owned assets would invest 20%. However, since Yinwang's headquarters was located in Shenzhen instead of Chongqing, local state-owned assets abandoned the investment," the source revealed to Huxiu Auto.
The withdrawal of Chongqing state-owned assets also affected Changan’s decision to a certain extent, so Changan selectively retained 10% of the investment.
However, there may be a chance for a turnaround. It is reported that the agreement between Changan and Huawei is limited to six months, during which Changan can purchase another 10% stake at the current price. In other words, Changan has a six-month hesitation period to consider the investment.
In fact, there were early signs of changes in the negotiations between Changan and Huawei.
Before the two parties formally signed the agreement, due to the significance and complexity of the project and the internal procedures of the transaction parties, the project progress was delayed compared with the estimate in the memorandum, and was 3 months later than the expected transaction time. It can be seen that the two parties may have some differences on some issues.
However, there is still a certain cooperative relationship between Changan and Huawei. It is reported that the two parties plan to sign the "Comprehensive Upgrade Strategic Cooperation Agreement" on the morning of August 20, 2024. Changan Automobile, Avita and Huawei will comprehensively upgrade their strategic cooperation in the fields of brand and ecology, cloud and AI technology, green energy, and industrial chain cooperation.
Compared with Changan’s withdrawal, Avita’s entry is more surprising.
Changan pushed Avita to the forefront for both historical reasons (Avita is a joint venture established by Changan, Huawei and CATL) and practical considerations.
On the one hand, by purchasing equity, Avita and Huawei are further deeply bound, and the equity resources behind Huawei may deeply empower Avita, which is the key for Avita to leverage its momentum again.
With the Avita 11 and Avita 12 both on sale, the monthly delivery of Avita is only 3,625 units (data for July 2024), and it faces major challenges in market competition. Avita has also been working hard to save sales this year, such as the channel reform from direct sales to distribution, and the upcoming release of new models with lower prices and extended-range versions.
Through this in-depth cooperation with Huawei, Avita may be able to leverage the effect of Huawei's golden signboard and return to the automotive market.
Changan is the target investment target for Huawei's new company, but it is not the only choice.
According to the original idea, Huawei intends to build Yinwang into an open technology platform with diversified equity. The brands behind Wenjie, Zhijie, Xiangjie and Zunjie (namely, SERES, Chery, BAIC and JAC) are all potential shareholders of Yinwang.
On July 29, SERES issued an announcement stating that it plans to invest in Shenzhen Yinwang Intelligent Technology Co., Ltd., and the company has initiated negotiations with Yinwang and its shareholders to join the investment in Yinwang.
However, the specific investment amount, transaction method, transaction price and other terms have not yet been finalized, and SERES' investment in Yinwang is still in the early stages.
If the transaction is completed, Yinwang will become a shareholding subsidiary of SERES.
It is worth mentioning that there was market news that Huawei was committed to seeking investment from FAW and Dongfeng. Judging from the interactions of several manufacturers this year, this statement is not groundless.
At the beginning of this year, two major brands under Dongfeng Group - Lantu Auto and Mengshi have reached a strategic partnership with Huawei; in June this year, FAW Hongqi announced that FAW Software Company has initially integrated the core connectivity functions of HUAWEI HiCar (Huawei's full-scenario intelligent connectivity solution) on the Hongqi Jiuzhang intelligent platform.
It is not difficult to imagine that there may be new entrants into the market.
With the finalization of the first investment enterprise, Yinwang also officially loaded its assets and started commercial operations.
It should be pointed out that the final valuation amount revealed in the announcement is actually quite different from the previous valuation of 250 billion yuan. An industry consultant told Huxiu Auto that the previous valuation amount was inflated.
However, regarding the price of 115 billion yuan, the above-mentioned person also believes that subsequent capital injection is difficult. "The capital market is too cold now, and it is unclear whether this price can be realized in the secondary capital market in the future." The consultant said.
You know, in the automotive industry, no unlisted company has a valuation of over 100 billion yuan, so this price is already at an absolute high.
Since its incorporation, Yinwang has quickly established subsidiaries in Shanghai, Suzhou, Dongguan and Nanjing. To date, Huawei has invested 7,000 R&D personnel in its automotive business, with a cumulative R&D investment of 30 billion.
It is reported that Yinwang will most likely continue Huawei's previous diversified business in the automotive field, that is, it will play the Tier 0.5 role between automobile manufacturers and Tier 1 suppliers, and participate in the entire process of vehicle research and development, manufacturing, and sales, that is, the smart car selection model; it is also a Tier 1 supplier (HUAWEI INSIDE model) and a Tier 2 supplier (providing hardware module model).
At present, with the entry of the first car company, Yinwang will officially start operations and move towards a new stage of independent livelihood.
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