After finishing with revenues over $100 billion — 721 billion yuan — for 2018, Huawei is expecting to drop $30 billion of revenue from its forecast due to the trade war with the United States.
“In the next two years, I think we will reduce our capacity, our revenue will be down by about $30 billion compared to forecasts,” Huawei founder Ren Zhengfei said in Shenzhen on Monday.
“Our sales revenue this year and next will be about $100 billion.”
Ren said over the next two years, the Chinese giant would look to switch out some of its technical foundations, which could hit US component makers, after which the company would become stronger.
“We are strong, I think there is no way we will be beaten to death,” he said.
Ren also confirmed that Huawei’s international smartphone shipments had dropped by 40%, but said Chinese growth is “very fast”.
On the recent sale of its subsea cable business, Ren said the decision was a not a swift one.
“We were quite successful in that business,” he said. “It’s not because we were attacked and the business went badly, and sold it.”
“We thought that’s not part of our core business that’s why we decided to sell it, and for the other businesses we will not have spin-off or sale — we might shrink our size.”
Ren claims historic IP thefts not possible
The Huawei founder brushed aside accusations of intellectual property theft by the company, saying the company has always behaved itself.
“Even if we were small, we have very strong business ethics and integrity, otherwise we cannot come to where we are today,” Ren said.
“The claims of Huawei theft of IPR, that’s not possible.”
Ren’s statement will likely draw raised eyebrows in Cisco headquarters, which sued the Chinese giant for infringing on its patents and copying its source code in 2003.
Almost a decade later, Cisco called Huawei out for stating the suit was unjustified, and challenged Huawei to release an expert report from the time of the incident.
“In fact, within a few months of filing suit, Cisco obtained a worldwide injunction against sale by Huawei of products, including our code for a Cisco-proprietary routing protocol called EIGRP, and Huawei publicly admitted that the code had been used in their products and they pledged to stop,” Cisco’s senior vice president, general counsel, and secretary Mark Chandler said at the time.
Huawei is currently facing charges in the US for allegedly stealing trade secrets from T-Mobile. The alleged activity occurred during 2012-13, and relates to Huawei’s attempts to build a robot similar to the one T-Mobile was using at the time to test mobile phones.
The US indictment related to the case alleges Huawei offered bonuses to employees for stealing information, before needing to clarifying for its US employees that such behaviour would be illegal.
“The charges unsealed today clearly allege that Huawei intentionally conspired to steal the intellectual property of an American company in an attempt to undermine the free and fair global marketplace,” FBI Director Christopher Wray said in January.
The Chinese giant has pleaded not guilty.
Speaking on Monday, Ren said although Huawei has a large number of patents, it has not been aggressive in seeking royalties from other companies.
“Over the past eight years, we were not aggressive seeking IPR royalties to companies that use our IPR, that’s because we were busy pursuing our business growth,” he said.
“We may try to get some money from those companies who use our IPR, but we will not be as aggressive as Qualcomm.”
Both Volkswagen and Tesla are preparing cheaper EVs
A new report is going around that claims new, more affordable electric vehicles will be coming to market. According to the report, both Tesla and Volkswagen have given new EV programs the green light to create cars selling for between $25,000 and $30,000. That is a price point that will undoubtedly make transitioning to electric vehicles more affordable for people worldwide.
Pricing is one of the main concerns cited by vehicle shoppers for not choosing electric vehicles compared to a traditional car. Many have been waiting for EVs to reach price parity with similarly equipped traditional vehicles. That parity has been achieved in some parts of the luxury segment making EVs more popular in that part of the market.
Advancements in batteries have helped bring the price of electric vehicles down as the battery pack is one of the most expensive parts of the car. More drivers are interested in EVs as driving ranges have increased significantly in recent years. One barrier that remains in the way is the lack of charging infrastructure in many parts of the world.
Many also cite long charge times as a reason they’ve yet to adopt an electric vehicle. With new electric cars in the $25,000-$30,000 price range, one more barrier of entry will be removed. Tesla announced in September that it was planning a smaller long-range electric car using new battery technology that would start at $25,000. Elon Musk also noted that the vehicle will be fully autonomous and revealed a timeframe of about three years from now. The VW car is dubbed the Small Battery Electric Vehicle.
Volkswagen is aiming at a car about the size of its Polo. Volkswagen has offered no indication of when exactly its vehicle might come to market. Reports indicate that the 2024 through 2025 model range is a good guess for when the vehicles might arrive.
Hyundai and Kia fined $210 million over vehicle recalls due to engine trouble
The National Highway Traffic Safety Administration announced consent orders this week with Hyundai and Kia related to recalls of vehicles equipped with the Theta II engines. The automakers were hit with combined penalties amounting to $210 million. The NHTSA found that Hyundai and Kia conducted untimely recalls of over 1.6 million vehicles that used the Theta II engines.
The NHTSA also found that the automakers reported certain inaccurate information to it during the recalls. The consent orders establish monetary and non-monetary measures that will enhance Kia and Hyundai’s safety practices. Kia will create a new US safety office headed by a Chief Safety Officer. Hyundai will build a US test facility for safety investigations.
Both companies have promised to develop and implement a sophisticated data analytics program to better detect safety concerns. The agreements will also see each company retain an independent, third-party auditor who will directly report to the NHTSA. These auditors will conduct comprehensive reviews of the Safety Act practices and compliance with the consent order.
The NHTSA is also making both companies commit to substantial organizational improvements to enhance their ability to identify and investigate potential safety issues in the US while consistently and transparently communicating with the NHTSA. Hyundai is subject to a total civil penalty of $140 million with a $54 million upfront payment. It’s obligated to spend another $40 million on specified safety performance measures and an additional $46 million deferred penalty that will become payable if specified conditions aren’t satisfied.
Kia is subject to the total civil penalty of $70 million with a $27 million upfront payment. It’s obligated to spend another $16 million on specified safety performance measures with a $27 million deferred penalty payable if certain conditions aren’t satisfied. The consent orders don’t impact other ongoing investigations by the NHTSA regarding allegations of fires not related to crashes in Hyundai and Kia vehicles equipped with the Theta II engines.
The NHTSA is opening an investigation into the Tesla Model S and Model X
The NHTSA announced this week that it was opening a preliminary investigation into potential safety concerns raised by owners of Tesla Model S and Model X cars. The agency has received 53 complaints alleging failures of the left or right front suspension fore links. Of those 43 complaints, 11 incidents occurred while driving.
In its statement issued about the investigation, the NHTSA says that the complaints appear to indicate an increasing trend with 34 complaints received in the last two years, with three of them occurring at highway speeds. The agency intends to assess the scope, frequency, and consequences of the alleged fault.
The investigation will cover Tesla Model S cars ranging from 2015 through 2017 model years and Tesla Model X SUVs made from 2016 through 2017. As these vehicles age, they could be prone to defects that didn’t surface when they were newer. As of now, there has been no official statement from Tesla on the investigation.
There is also no indication that a recall has to be issued at this time. Tesla vehicles have had their share of issues with fire potential from battery damage during accidents. Several fatal accidents have also been blamed on inattentive drivers and Tesla Autopilot driver assistance systems not recognizing hazards in the road.
On Wednesday of this week, Tesla announced that it was issuing a recall on over 9000 Model Y and Model X vehicles due to issues with bolts. The Model X also had an issue where roof trim could detach over time, leading to potential accidents or road hazards. Despite the recalls, Tesla shares are booming, having gained more than 600 percent in 2020 despite the pandemic.
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