Volkswagen is quickening its efforts to automate its electric cars for the Chinese market. The company plans to start a joint venture with Horizon Robotics, which makes some of the most important auto chips in China, according to a statement released by the company on Thursday. The German auto giant owns all of CARIAD, an automotive software company. CARIAD is a part of the German auto behemoth.
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Volkswagen’s Partnership With Horizon Robotics
In partnership with Horizon Robotics, the German car company plans to invest about €2.4 billion. This deal should be done by 2023, but that depends on getting permission from regulatory authorities. As a result of the deal, CARIAD will own 60% of the JV, which is more than half. It wasn't until 2020 that China took steps to relax the laws that had previously prevented international corporations from having majority shares in domestic automobile manufacturers.
The partnership happens because there aren't enough chips in the world, and the prices of semiconductors are rising. A few car firms have already begun making some of their chips to protect themselves from the unpredictability of the supply chain. A Chinese technology business magazine says that Chinese electric vehicle startups Xpeng and Nio have put together large teams intending to make processors that can be used in cars.
The purchase news came just a few weeks after Horizon said that Chery Automobile, a Chinese car company owned by the government, had given it a strategic investment.
Volkswagen wants to work with Horizon Robotics to make full-stack advanced driver assistance systems and solutions for autonomous driving for the Chinese market. The goal is to "push forward the integration of different functions on a single chip," which will make the system more reliable, save money, and use less energy.
Inspiration & Competition
The idea is similar to Nvidia's new next-generation auto-grade processor, which is meant to bring together autonomous driving and in-car technology. The chip was just disclosed. Even though Nvidia's state-of-the-art automotive processor is generally agreed to be the most cutting-edge solution on the market today, it is surprising that Volkswagen is building close ties with a Chinese company. Given that the United States is putting more restrictions on China's semiconductor industry, it shouldn't be surprising that supply chain diversification is on the minds of VW executives. The issue that must be answered is whether Horizon can deliver something on par with its equivalent in the United States.
In any event, having a partner on the ground will probably assist Volkswagen in developing more tailored solutions for the biggest car market in the world. The following is a statement made by Ralf Brandstatter, who is a member of the management board of Volkswagen AG for China:
"The area gains greater autonomy via the development of locally-based technologies, which allows it further to grow its position in the dynamic automotive industry. By forming a partnership with Horizon Robotics, Volkswagen will be able to speed up the development of solutions for autonomous driving as part of our NEW AUTO strategy and drive the repositioning of our China company. With the joint venture's cutting-edge technology, which will include the full software and hardware stack, we will better meet the needs of our Chinese customers and provide our products and services more quickly and consistently.
Featured image: Volkswagen
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