(Yicai Global) March 12 -- Huawei Technologies has denied assertions made by company insiders yesterday to Yicai Global that the Chinese telecoms giant is preparing to purchase a USD1 billion stake in new energy vehicle manufacturer Chongqing Sokon Industry Group.

“Please wait for an announcement,” Chongqing, southwestern Sichuan province-based Sokon Industrial said.

There have long been rumors that Huawei, whose smartphone business has been greatly damaged by US trade sanctions, is going to diversify into electric cars but the company has always stressed that it prefers to be a component supplier to smart vehicles, providing almost all the software but not the hardware.

Sokon and Shenzhen-based Huawei have worked together before. They recently co-developed the Hump range extender system which has turbo boosted the carmaker’s latest Seres S5 model to give it a battery range of over 1,000 kilometers.

Then earlier this week, the two parties signed another deal to advance their partnership in the NEV sector, according to online new portal Caijing. But there has been mounting speculation about the extent of their collaboration.

Sokon intends to sell its electric cars in Huawei’s 20,000 nationwide outlets, one company insider said. This has also been refuted by the mobile phone maker.

Huawei sent a team of engineers two weeks ago to work with Sokon on a new project, another staff member told Yicai Global.

“It seems that Huawei is planning to use its systems in Sokon cars to set its own standards in the auto industry,” the staffer said. Although Huawei also provides customized motors and electronic control systems to other automakers, the firm can only have a greater say in the setting of product standards if it develops the entire car, which it can only do if it is there from the beginning.

Huawei plans to build an ecosystem for every car function, such as the smart cockpit, control system and unmanned driving, using its own chips and operating systems, it said earlier. The company already offers the all-in-one DriveOne electric drive system, which integrates seven of the vehicle’s mechanical and power components such as the DC converter, battery control unit and power distribution unit.

Sokon’s stock price [SHA: 601127] was trading up 7.81 percent today at CNY20.73 (USD3.19) at 2:15 p.m. China time today. Its stock price has gained over 50 percent in the last two months, giving it a market capitalization of CNY22.8 billion (USD3.5 billion).

Editor: Kim Taylor