It's dramatic.
Regarding the car BU, the relevant person in charge of Huawei just made a big Flag in the internal speech, and the next day the foreign media broke the rumor that "Volkswagen intends to acquire Huawei's automatic driving department".
Since last night, major social platforms have been swept away by this topic. The protagonists of the story, Volkswagen Group and Huawei, have responded, but not completely – no comment.
Regarding the rumor, the new intelligent driving understands that there are two very different voices at the moment:
Fake news, the probability is almost zero
A person close to Huawei revealed to The New Intelligent Drive that the two sides are negotiating a joint venture, "the public pays, Huawei pays." But Huawei asked for billions of euros, and Volkswagen refused. ”
Another car circle practitioner also questioned this, "It cannot be an acquisition, there is no benefit to Huawei, and billions of euros are not enough for Huawei to share dividends." ”
It is possible that the self-driving department was sold to make cars better
This voice believes that the domestic head automakers have an international vision, and there will be more concerns when selecting suppliers that are included in the entity list.
After Huawei's autonomous driving department is split and independent, it can better play the role of supplier, accumulate enough data and practical training experience, and then feed Huawei in the future.
Not only that, in the eyes of an industry person, automatic driving is currently more like a gimmick function, but at the same time it is very expensive, "Huawei can first concentrate resources to build the whole vehicle, as for the functional module that will come in handy in the future, who is not used." ”
So, what the hell is going on?
Negotiating an acquisition is a real deal
As for the widely publicized acquisition case, some people also pointed out that this may be a translation error by foreign media or an ambiguity caused by improper wording. After all, this kind of information distortion between Chinese and foreign translators occurs from time to time.
Earlier, an NIO Investor cheered on "Li Bin" on Twitter, and embarrassingly, he mistook Li Bin, general manager of the Changzhou manufacturing base of Ideal Automobile, for Li Bin, founder and CEO of Weilai Automobile.
Considering this possibility, the new intelligent driving began to turn to the source of this rumor, that is, the German financial media "Manager Magazin".
Using Chrome's built-in translation feature, the title of this article and the Chinese of the lead are displayed as:
Volkswagen and Huawei Negotiate Multibillion-Dollar Deal in China
Volkswagen has promised to provide "unconventional solutions" to its new problem market, China. Perhaps taking over the Huawei subsidiary would help. Talks are ongoing.
It is worth noting that the term "acquisition" is not explicitly mentioned in the translation. But we continued to dig and found such a passage.
The result of this passage using Baidu translation is as follows:
Unusual alliance
As a result, an unusual alliance is taking shape behind the scenes: For months, volkswagen and Chinese tech giant Huawei have been discussing the acquisition of a division specializing in autonomous driving. The subsidiaries (divisions) of the technology group have 700 employees, of which about 50 are absolute professionals. These include technologies that Volkswagen does not yet have access to and that can be used well, especially in China. However, people familiar with the matter say the prices vary widely. They will be between a single-digit billion.
In the context of this passage, the word "bernahme" is translated as "acquisition."
From the above information, volkswagen and Huawei did negotiate the acquisition of the autonomous driving division; the battle line has been pulled for at least a few months; and there is a huge difference in the expectations of the two sides for the transaction price.
Even if the acquisition is actually made in the end, it may only be an acquisition of a subdivision technical team in Huawei's autonomous driving department.
Selling the autonomous driving sector? Not likely
In fact, it is also very normal for the two sides to negotiate prices. And in the view of the new intelligent driving, no matter what route Huawei takes to conquer the automobile market in the future, the automatic driving department will not be completely packaged and sold.
Let's first think about the question, if Huawei sells the autonomous driving department to the public, what can it get?
Obviously, Huawei will receive a sum of money first. Against the backdrop of a mobile phone business stretched thin and the auto business yet making blood, this sounds like good news.
In addition, some people said that the landing of automatic driving is still far away, it is difficult to return cash flow in the short term, and the models created by Huawei in cooperation with other car companies are also difficult to carry the high expectations of the market.
In this case, selling the "hot potato" of the automatic driving department can return the blood for Huawei to a certain extent, and Huawei can also concentrate on conquering its own vehicle, and the automatic driving function can be achieved by purchasing the tier 1 solution.
Judging from the information mentioned in the media above, if the acquisition is finalized, the money will be in the order of "billions of euros". We're counting at 5 billion euros, or about 36 billion yuan — not enough to pay dividends to Huawei employees. According to Xinhua News Agency, Huawei will issue a dividend for 2021, which is expected to be 1.58 yuan per share, with a total amount of more than 50 billion yuan.
In other words, whether it is for the development of Huawei Group or for car manufacturing, this money may only be a drop in the bucket.
On the other hand, there are data showing that the profits of traditional car manufacturers do not all come from car sales, but more from after-sales service, of which 70%-80% of the revenue from after-sales service comes from customers who have passed the warranty period. In contrast, the profits of smart cars come from the user's stickiness to the software.
Taking Tesla as an example, in Q4 2021, its vehicle gross profit margin was 30.6%, and its operating profit margin was 14.7%, surpassing all mass production OEMs. This is still in the case that Tesla has not fully pushed the FSD (the current user fee for appointments is about $10,000, and the subsequent monthly subscription fee is also $199).
At present, automatic driving has been recognized as the "soul of smart cars", whether it is a new car-making force or a traditional old car company, they are vigorously building an autonomous driving team. According to the understanding of new intelligent driving, Xiaopeng Automobile's autonomous driving research and development team has reached nearly 1,000 people.
From any point of view, it is not very reasonable for Huawei to give its soul to people in order to create the shell of the car.
If Huawei insists on not building cars and continues to take the Tier 1 route, then the possibility of selling the autonomous driving department is even less likely to be sold - talent is its heaviest asset and the strongest competitiveness.
Joint venture, a result of both worlds
Overall, the deal may not be attractive enough for Huawei. If it's a joint venture, that's a different story.
In October last year, it was revealed in the media that Huawei and Volkswagen Group were forming a joint venture. Huawei will provide solutions to the Volkswagen Group as a supplier. In the form of Volkswagen Group, huawei mainly provides technical IP (intellectual property), including software technologies such as automatic driving, and Huawei's chip IP.
Although neither side has responded positively to the rumors about the joint venture, it may be a two-pronged outcome.
For Huawei, the mobile phone business has been frustrated, and the autobuo business is also relatively limited. Some Huawei employees revealed, "Huawei's intelligent driving technology was originally quite strong, and everyone had the momentum to do it, but things are not easy to sell and difficult to perform." ”
Based on this situation, it is particularly important to break into the supply chain of the public.
According to a new report from research firm Canalys, global electric vehicle sales reached 6.5 million in 2021, an increase of 109% year-on-year; of this, 85% came from the Chinese mainland market and Europe. In terms of brands, the Volkswagen Group ranks second in the global electric vehicle market (the first is Tesla) with a market share of 12% and occupies a leading position in the European market.
If Huawei can deeply bind with Volkswagen and verify its own technology with Volkswagen's platform, it can increase its market share in China and increase its influence in the European and American markets.
For Volkswagen, although it has been investing heavily in intelligence in recent years, the progress may not be satisfactory, especially in the face of the menacing Tesla and china's new car-making forces.
Not only that, the blockbuster electric vehicle ID series has a common response in the Chinese auto market, and Volkswagen urgently needs a player who has both intelligent driving technology strength and insight into the use habits of Chinese consumers to help them carry out localization work, and the user stickiness of Huawei mobile phones may also be copied to the car. The form of the joint venture can also ensure the problem of data security to a certain extent.
Previously, Huawei has reached a cooperation with the Audi brand of volkswagen group to provide ads autonomous driving technology solutions to the latter. There is actually a basis for cooperation between the two sides.
As for whether it will eventually be an acquisition or a joint venture, New Intelligent Driving will continue to pay attention.
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