After the transaction, Avatr will hold a 10 percent stake in Newcool, while Huawei will hold 90 percent.
Avatr Technology, the electric vehicle (EV) brand supported by Changan Automobile, CATL, and Huawei, will purchase a 10 percent stake in Huawei's parts unit, Newcool, marking the division's first external investment.
Avatr will sign the equity transfer agreement with Huawei on August 20 in Chongqing, with the transaction amounting to RMB 11.5 billion ($1.6 billion), according to a stock exchange announcement by Changan today.
After the transaction, Avatr's shareholding in Newcool will be 10 percent, while Huawei will hold 90 percent, Chongqing-based Changan said.
The deal means that Newcool is valued at RMB 115 billion.
Avatr is a key strategic partner of Huawei and Newcool. The transaction will help Avatr gain more support from Huawei and accelerate Changan's strategy of bringing its brand upward, the announcement noted.
Changan will take this opportunity to strengthen its strategic cooperation with Huawei and transition into a smart low-carbon mobility technology company, the automaker said.
Avatr will use its own cash to acquire shares in Newcool, with the transfer payment made in three installments.
Newcool's board consists of seven members, with Huawei entitled to nominate six and Avatr entitled to nominate one, according to the announcement.
On November 25, 2023, Changan signed an investment cooperation memorandum with Huawei, committing to support the establishment of a company that provides intelligent automotive systems and components solutions, according to a previous stock exchange announcement.
Huawei planned to establish the target company, and Changan and its affiliates aimed to acquire no more than 40 percent of the equity, according to the announcement from last year.
Changan and Huawei's joint venture was tentatively named Newcool, Changan's chairman Zhu Huarong said during its global partner conference on January 16.
According to the agreement, Huawei committed not to engage in automotive manufacturing or the operations of the new company, as Zhu said at the time.
Avatr originated from Changan and Nio (NYSE: NIO), established on July 10, 2018, with each holding a 50 percent stake. Nio has since largely exited the company.
In late August 2021, Changan, CATL, and Huawei jointly announced the updated Avatr brand, stating they would build EVs based on a co-created CHN architecture, where C stands for Changan, H for Huawei, and N for CATL.
($1 = RMB 7.1413)
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