Picture: Volkswagen

Automaker giant Volkswagen has announced plans to invest €2.4bn in a partnership with one of China’s leading designers of artificial intelligence chips. The joint venture with Horizon Robotics is the perfect way to retain shares in its biggest market.  

This will accelerate the pace for VW to automate its electric vehicles for its Chinese customers. Almost half of its net profits are made in China; therefore, the aim of this deal is to drive the repositioning of its China business, said the company.  

“As the global automotive software and technology company of Volkswagen Group, CARIAD is an important force in the Group’s transformation into a software-driven mobility provider. Through the joint venture with Horizon Robotics in China and further investment in autonomous driving technology, we are underlining our position in innovation and modernization in China’s automotive industry. Our goal is to create long- term value in China for the Group and our shareholders in line with expected market development”, said CARIAD CEO Dirk Hilgenberg.

The German carmaker has invested €2.4bn into its collaboration with Horizon Robotics, which is expected to be completed at the beginning of 2023. VW’s software company CARIAD will take a 60% stake in this transaction. 

It was not until 2020 that China had eased its rules that had previously not allowed foreign companies from owning majority stakes in local auto firms. tensions are still rising between Beijing and the west, however, with the Biden administration announcing last week that it would tighten restrictions on exporting semiconductors made with US technology to China. 

Many automakers are already moving towards in-house production of chips due to supply chain uncertainties.  

This partnership come shortly after Horizon announced that it had received a strategic investment from Chinas state-owned automaker Chery Automobile. 

Ralf Brandstätter, head of VW’s Chinese business, commented on the partnership calling it “a central cornerstone of our strategy to realign and further strengthen our activities in our most important market worldwide”. 

VW, alongside Horizon Robotics, will be working on full-stack advanced driver assistance systems and autonomous driving solutions for the Chinese market. The company has said the goal is to drive forward the integration of numerous functions on one chip, increasing the stability of the system, saving costs, and reducing energy consumption”. 

Horizon is run by Kai Yu in 2015 and has headquarters in Beijing with offices in Silicon Valley, Shanghai and Shenzhen. Over the course of seven years, it has raised a total of $2.2bn in funding, according to Crunchbase.  

Given the rise of U.S chips limits on China, having a partner on-the-ground will help VW create customises solutions for the biggest auto-market.