(Yicai) Nov. 23 -- Shares of Changan Automobile surged by the daily limit after the Chinese automaker was rumored to plan to invest in a smart car unit of Huawei Technologies.

Chongqing-based Changan Auto [SHE: 000625] remained 10 percent elevated for about one and a half hours and closed 6.8 percent up at CNY17.4 (USD2.40).

Market rumors circulating online today claim telecoms giant Huawei intends to spin out its smart car solutions business unit with a valuation of CNY250 billion (USD35.1 billion) and the only carmaker in the consortium of investors is Changan Auto.

Some speculators said that Changan Auto will invest CNY37.5 billion (USD5.3 billion) to acquire a 15 percent stake in the unit while others said the portion is double that. The buyer group is said to be led by the Chongqing State-Owned Assets Supervision and Administration Commission.

People from both companies responded to Yicai’s inquiries and said they are not clear about the basis and source of the rumors.

This is not the first time that Huawei has been rumored to spin off its smart car BU and last time in August the rumor also claimed that Chongqing SASAC was one of the investors. However, Huawei denied it.

Huawei and Changan Auto already work together. The phonemaker that has branched out to develop automotive software provides the car company with smart HarmonyOS cockpits and driving functions for ChanganAuto's joint-venture brand Avatr Technology, a premium new energy vehicle developer. Moreover, it has joined hands with Changan Auto’s NEV unit Deepal to develop intelligent vehicles.

Editor: Emmi Laine