Volkswagen Group in a new joint venture with China’s Horizon Robotics

Volkswagen Group will invest $2.33 billion in a joint venture and take a 60 percent stake in the Chinese technology company. It is going to be a joint venture with Horizon Robotics. Together they will work on integrating numerous functions for autonomous driving onto a single chip.

The companies will work together to develop technology that can integrate numerous functions for autonomous driving onto a single chip, VW said in a statement on Thursday. The venture will mean VW has a supplier in each major region – North America, Europe, and China – given its existing supply relationships with U.S. chipmaker Qualcomm and Franco-Italian STMicroelectronics. In contrast to the partnership with Qualcomm, VW’s software unit Cariad will play an active role in developing the chip technology with Horizon, and the know-how will be shared across the VW Group, the automaker’s China chief, Ralf Brandstaetter, said.

“That is why this cooperation with Horizon Robotics is deeper,” he added. Horizon Robotics, founded in 2015, supplies customers including VW Group’s Audi, Continental, Li Auto, and SAIC, according to its website. Investors include automakers such as BYD and Great Wall as well as chipmaker Intel. VW already carries out research and development in China but this is its first joint venture focused specifically on technology, an area where it is currently lagging behind Chinese competitors in the electric vehicle market.

Joint venture

VW, which makes around 40 percent of sales and half of profits in the country, holds a 75 percent stake in a joint venture with JAC, a 50 percent stake with SAIC, and 40 percent with FAW. Horizon’s technology can be installed in everything from cars to smart speakers, according to its website. VW is seeking to accelerate improvements in its software capabilities, including connectivity and ensuring access to high-tech chips.

Struggles at the company’s Cariad software unit resulting in model delays and buggy functions earlier this year prompted VW to appoint new CEO Oliver Blume to replace Herbert Diess. The automaker is also partnering with Robert Bosch to develop a common software platform to bring automated driving technologies to its vehicles. The automaker has a budget of 89 billion euros ($86 billion) for EV and software development over the next half decade and is also investing $2.6 billion in Ford Motor-backed driverless tech startup Argo AI.

In contrast to the partnership with Qualcomm, Volkswagen’s software unit Cariad will play an active role in developing the chip technology with Horizon Robotics, and the know-how will be shared across the Volkswagen Group, the carmaker’s China chief Ralf Brandstaetter said. “That’s why this cooperation with Horizon Robotics is deeper,” he added.