Huawei Plans New Electric Car As US Sanctions Crush Cellphone Business

If you thought the hype surrounding electric vehicles and the hunt for a “Tesla killer” had ended with the exposure of the Nikola fraud by short-sellers last year, well, that couldn’t be further from the truth.

And not only because Saudi-backed Lucid motors is getting ready to go public via a deal with a SPAC put together by investment banker Michael Klein. As the CCP pushes for more electric vehicles to be sold in China, more domestic companies are entering the fray.

One example is Huawei, which – according to Reuters – is planning to make electric vehicles under its own brand and could launch some models this year as it pivots away from making smartphones after the Trump Administration cut off access to critical American components.

Since building cars from scratch is no easy task, Huawei is instead is in talks with state-owned Changan Automobile and other automakers to use their car plants to make its Huawei branded electric vehicles, according to Reuters.

Huawei is also in talks with another Chinese firm: BAIC Group’s BluePark New Energy Technology. Like Foxconn’s deal with Lucid, BluePark would be responsible for mass producing the cars presumably designed by Huawei.

According to Reuters, the plan heralds “a potentially major shift in direction for Huawei after nearly two-years of US sanctions that have cut its access to key supply chains, forcing it to sell a part of its smartphone business to keep the brand alive.

The Trump Administration targeted Huawei over concerns that western countries using its technology and products in their 5G networks would give the CCP unprecedented access to private and sensitive information belonging to foreign governments. A spokesman for Huawei warned that while the company doesn’t presently manufacture cars, it is aiming to provide “digital car-oriented and new-added components”.

“Huawei is not a car manufacturer. However through ICT (information and communications technology), we aim to be a digital car-oriented and new-added components provider, enabling car OEMs (original equipment manufacturers) to build better vehicles.”

The company’s EVs will reportedly target mass-market consumers, while “foreign” electric cars like those produced by Tesla and other foreign automakers (like Ford, which has partnered with a domestic Chinese firm to make electric cars for the Chinese market) presumably will target wealthier Chinese consumers. It’s a divide that reflects the Chinese smartphone market, where domestic phones from Huawei and Xiaomi are seen as more pedestrian than Apple products purchased in the country.

The prospects for growth in China’s EV market are high: Sales of new energy vehicles (NEVs), including pure battery electric vehicles as well as plug-in hybrid and hydrogen fuel cell vehicles, are expected to make up 20% of China’s overall annual auto sales by 2025. And inndustry forecasts put China’s NEV sales at 1.8MM units this year, up from about 1.3 million in 2020.

And Huawei isn’t alone. Its ambitious plans to make its own cars are allowing it to join a raft of Asian tech companies that have made similar announcements in recent months, including Baidu Inc and Foxconn.

Huawei was awarded at least four patents related to EVs this week.

Of course, the Huawei electric car is only one of several new EV projects that are still in the early stages. For example, Fisker, the one-time Tesla rival, has reportedly partnered with Foxconn to build electric cars as it clearly sees better business prospects in China.