China is considered the world’s most important automobile market. So it’s no surprise that plans were announced this week in “Manager Magazine,” which says Volkswagen, Europe’s largest automaker, wants to collaborate with a Chinese company for artificial intelligence and automated driving.
VW’s internal software division Cariad and its future partner, AI company Horizon Robotics, have now confirmed the planned creation of a joint venture. The Germans want to put about 2.4 billion euros into the cooperation and have a 60 percent stake in the company. In the narrow sense, approximately 1.3 billion euros was allocated for the joint venture. If the authorities agree, the step should be implemented in the first half of 2023. According to corporate circles, the merger will be a central building block in Volkswagen’s digitalization and China strategy.
VW has been in China for a long time
VW has been working in the People’s Republic for a long time in the production of vehicles with domestic suppliers and also in the production of battery cells for a while. With the joint venture, they also want to build local expertise in the business with their own software and electronic systems and become less dependent on suppliers.
The latest merger concerns the joint design of software and custom microchips for highly automated and ultimately autonomous driving. China is a particularly dynamic market here. Horizon Robotics primarily deals with networking platforms for artificial intelligence (AI), machine learning, and transportation systems.
Horizon Robotics is currently a partner of other automakers and suppliers, including Continental. The (D) Dax group from Hannover announced last year that it has formed a joint venture with the Chinese. Horizon Robotics was founded in 2015 and develops artificial intelligence processors and algorithms for automated driving functions and road safety.
High Chinese standards
VW has lost market share in China over the past two years, mainly due to the chip crisis. According to the group, the semiconductor supply is evolving again. However, there was also a problem with initially unserviceable customer requests for entertainment systems and other firmware.
Recently in Wolfsburg it was said that there is a clear need to catch the relevant equipment. This includes the goal of developing more locally to better meet Chinese demands. Software subsidiary Cariad already has a regional branch there.