Avatr Technology, a joint venture of Chang’an Automobile, has landed a 10% stake in Huawei’s subsidiary, Yinwang, by inking an equity transfer agreement on August 20. The deal, valued at RMB 11.5 billion (USD 1.6 billion), will be fully funded by Avatr and paid in three installments, each contingent on specific conditions.
Despite this transaction, Huawei remains firmly in control, holding a majority stake in Yinwang. But Avatr’s new role grants it a seat at the table, allowing it to influence critical decisions related to strategy, human resources, and investments.
Huawei has pledged to back Yinwang’s mission of creating an open platform for the electrification and intelligence of the automotive sector. Avatr’s entry is just the beginning, as Yinwang aims to attract more strategic partners.
As part of the agreement, Huawei will transfer the necessary technology, assets, and personnel to Yinwang once the first payment is made. Going forward, Huawei has committed to stepping back from any activities that would compete directly with Yinwang’s business.
A Huawei insider told 36Kr that Yinwang will operate on a two-way supply model, delivering products to both Avatr and existing Huawei partners—Aito, Stelato, Luxeed, and Maextro. As a shareholder, Avatr is positioned to benefit from the profits generated through these arrangements.
In 2023, Avatr reported revenues of RMB 5.645 billion (USD 792.9 million) but also recorded a net loss of RMB 3.693 billion (USD 518.7 million). Since its inception, the company has accumulated losses exceeding RMB 8 billion (USD 1.1 billion). The RMB 11.5 billion (USD 1.6 billion) investment in Yinwang represents a significant financial commitment for Avatr at this crucial juncture.
Once Yinwang starts its operations, sales of Huawei’s four “Smart Selection” models—Aito, Stelato, Luxeed, and Maextro—are expected to generate substantial revenue through the two-way supply model. For Avatr, long under financial strain, this investment is a strategic move to alleviate monetary pressures.
However, the broader implications of this deal may signal Chang’an’s shift toward becoming a brand focused on smart, low-carbon technology.
Yinwang is far from the first collaboration between Chang’an and Huawei. The Avatr brand already leverages Huawei’s advanced smart driving system and HarmonyOS cockpit, while its Deepal brand was the first to feature Huawei’s Qiankun ADS SE in a vehicle model priced under USD 28,000.
The partnership has yielded promising results. In the first half of 2024, Avatr sold 29,000 units, reflecting a 170% year-on-year growth, while Deepal’s sales reached 83,000 units, also showing substantial gains. Yet, both brands remain unprofitable, with Chang’an relying on gasoline vehicle profits to sustain them. For Chang’an to fully realize its brand transformation, it must double down on smart technology, boost sales, and streamline operations to reach profitability.
Chang’an chairman Zhu Huarong said that supporting Avatr is intended to serve as a vivid example of an open platform that engages the entire automotive industry.
Avatr is set to be the first major initiative of the newly independent Yinwang. How this collaboration between Chang’an and Huawei will evolve into a distinct partnership, separate from Huawei’s Smart Selection series, will be closely watched.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Xu Caiyu for 36Kr.