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EXCLUSIVE-China's Huawei, reeling from U.S. sanctions, plans foray into EVs -sources

 (Adds Changan, BluePark share price move in paragraph 12)
    By Julie Zhu and Yilei Sun
    HONG KONG/BEIJING, Feb 26 (Reuters) - China's Huawei plans
to make electric vehicles under its own brand and could launch
some models this year, four sources said, as the world's largest
telecommunications equipment maker, battered by U.S. sanctions,
explores a strategic shift.
    Huawei Technologies Co Ltd          is in talks with
state-owned Changan Automobile             and other automakers
to use their car plants to make its electric vehicles (EVs),
according to two of the people familiar with the matter.
    Huawei is also in discussions with Beijing-backed BAIC
Group's BluePark New Energy Technology             to
manufacture its EVs, said one of the two and a separate person
with direct knowledge of the matter.
    The plan heralds a potentially major shift in direction for
Huawei after nearly two-years of U.S. 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.             
    Huawei was placed on a trade blacklist by the Trump
administration over national security concerns. Many industry
executives see little chance that blocks on the sale of billions
of dollars of U.S. technology and chips to the Chinese company,
which has denied wrongdoing, will be reversed by his successor.
            
    A Huawei spokesman denied the company plans to design EVs or
produce Huawei branded vehicles.
    "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."
    Huawei has started internally designing the EVs and
approaching suppliers at home, with the aim of officially
launching the project as early as this year, three of the
sources said.
    Richard Yu, head of Huawei's consumer business group who led
the company to become one of the world's largest smartphone
makers, will shift his focus to EVs, said one source. The EVs
will target a mass-market segment, another source said.
    All the sources declined to be named as the discussions are
private.
    Chongqing-based Changan, which is making cars with Ford
Motor Co      , declined to comment. BAIC BluePark did not
respond to repeated requests for comment.
    Shares of Changan's main listed company Chongqing Changan
Automobile             rose 8% after Reuters reported the
discussions. BluePark's shares jumped by their maximum 10% daily
limit. 
               
    GROWING EV MARKET 
    Chinese technology firms have been stepping up their focus
on EVs in the world's biggest market for such vehicles, as
Beijing heavily promotes greener vehicles as a means of reducing
chronic air pollution.
    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. 
    Industry forecasts put China's NEV sales at 1.8 million
units this year, up from about 1.3 million in 2020.             
    Huawei's ambitious plans to make its own cars will see it
join a raft of Asian tech companies that have made similar
announcements in recent months, including Baidu Inc          and
Foxconn          .             
    In the United States, Amazon.com Inc          and Alphabet
Inc           are also developing auto-related technology or
investing in smart-car startups.
    Huawei has been developing a swathe of technologies for EVs
for years including in-car software systems, sensors for
automobiles and 5G communications hardware.
    The company has also formed partnerships with automakers
such as Daimler AG           , General Motors Co        and SAIC
Motor             to jointly develop smart auto technologies.
    It has accelerated hiring of engineers for auto-related
technologies since 2018.
    Huawei was awarded at least four patents related to EVs this
week, including methods for charging between electric vehicles
and for checking battery health, according to official Chinese
patent records.
    Huawei's push into the EV market is currently separate from
a joint smart vehicle company it co-founded along with Changan
and EV battery maker CATL             in November, two of the
sources said. 

 (Reporting by Julie Zhu in Hong Kong and Yilei Sun in Beijing;
additional reporting by David Kirton in Shenzhen; Editing by
Sumeet Chatterjee and Richard Pullin)
  
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