Huawei said it has no immediate comment when contacted by TechCrunch. VW China said it has no comment.

The potential merger will be a powerful one. Huawei’s autonomous unit sits under the telecom equipment and smartphone behemoth’s “smart vehicle solution” business unit, which started only in 2019. The founding of the smart car BU spurred much speculation over whether Huawei would develop its own cars, though the firm has repeatedly denied any manufacturing plans and said it instead wants to be the “Bosch of China”, or a components supplier for car brands.

Huawei appears to have adhered to this strategy, at least so far. Last year, the Shenzhen-based company showcased its automated driving solutions that had been preinstalled in a mass-produced sedan from Arcfox, a new electric car brand under Chinese automaker BAIC. Huawei supplied the electric sedan’s chipset and in-car operating system.

For VW, a tech firm with autonomous driving capabilities could help advance its ambitions to make the vehicles of tomorrow. Indeed, the German giant struck a partnership with Argo AI, a Pittsburg-based startup backed by Ford and VW. Last September, the duo unveiled the first product of their joint effort, a self-driving electric van.

It would surprise no one that VW was in search of a similar tech partner in China, its largest market as of 2020. A number of China’s autonomous vehicle companies have already fostered deep relationships with automakers; Baidu has a joint venture with Geely and Didi has a JV with BYD.

The reported acquisition comes at a delicate time for Huawei’s AV team. Su Jing, former head of the Chinese firm’s autonomous driving product, left the company in January after making what Huawei called “inappropriate comments” on Tesla, accusing Autopilot’s lethal accidents of “killing people.”

Since his departure, the Huawei veteran’s next step has drawn much speculation. What we know is Su’s dislike of robotaxis. In an interview last year, the outspoken executive said “any company that sees robotaxis as its ultimate commercial goal is doomed. Those who will be able to deliver robotaxis will be the ones working on passenger cars. That market is definitely going to be mine, just not yet.”

An acquisition of Huawei’s autonomous driving business won’t be cheap. The company’s smart car unit had plans to spend a total of $1 billion on R&D for the year 2021. It also aimed to build an R&D team boasting 5,000 staff, with over 2,000 of them working on autonomous driving alone. The question is: Huawei has invested so heavily in smart driving already, with a growing pool of customers, why would it give this budding business away?