Volkswagen Invests $2.3B to Deploy Autonomous Vehicles in China

The Volkswagen Group has announced an investment of around $2.33 billion in Beijing robotics company Horizon as it seeks to accelerate its deployment of autonomous vehicle tech in China.

As part of the partnership, the group’s software unit Cariad is setting up a joint venture with Horizon in which it will hold a 60% majority stake. 

According to Volkswagen, the transaction is expected to be completed in 2023 and is subject to regulatory approval.

Central to the plan is the companies’ intent to develop technology that can integrate an array of different functions for autonomous driving and advanced driver assistance systems (ADAS) onto a single chip, which will be available on electric vehicles in the Chinese market only. It’s claimed this will increase the stability of the systems, reducing costs and cutting energy consumption.

Ralf Brandstätter, member of the management board of Volkswagen AG for China, hailed the significance of the deal, saying: “The partnership with Horizon Robotics is a central cornerstone of our strategy to realign and further strengthen our activities in our most important market worldwide.

“Cutting-edge technology comprising the full software and hardware stack, which the new joint venture will develop, will enable us to tailor our products and services even faster and more consistently to the needs of our Chinese customers. Teaming up with Horizon Robotics will allow Volkswagen to accelerate the development of automated driving solutions … and drive the repositioning of our China business.”

VW’s desire to ramp up its presence in China’s growing electric car market is understandable. It currently trails domestic companies such as BYD and Wuling by some margin in the sales charts, and also lags behind Tesla, which is the most successful non-Chinese brand.

The decision to attempt to develop such a powerful chip with a local company is also interesting. Nvidia recently announced its plans for a new superchip, Drive Thor, that will set new benchmarks for the industry when it arrives in 2025 and is also aimed at providing greater efficiency at a lower overall system cost.

But by partnering with Horizon for China, VW can protect itself from restrictions on chips that may evolve as trade tensions simmer between Beijing and Washington. 

“Localized technology development grants the region more autonomy to further expand its position in the dynamic automotive market,” Brandstätter said.

Horizon’s influence is increasing rapidly, as it already has partnerships with BYD and Continental, and recently secured funding from Chinese-state-owned automaker Chery.