Volkswagen is speeding up the automation of its electric vehicles. CARIAD, a wholly owned automotive software company of the German auto giant, plans to set up a joint venture with one of China's most serious auto chip developers, according to the company.
CARIAD will hold a majority stake in the joint venture once the transaction is approved. The rules that prevented foreign companies from owning majority stakes in local auto firms were loosened in 2020.
The tie-up is happening at a time when there is a shortage of chips. Some of the automotive industry's chip production is being moved in-house to deal with supply chain uncertainties. China's electric vehicle upstarts Xpeng and Nio have both assembled sizable teams to develop auto-grade chips.
A few weeks ago, the company announced it had received a strategic investment from a Chinese company.
Volkswagen will be working on solutions for the Chinese market. The goal is to drive forward the integration of numerous functions on one chip, increase the stability of the system, save costs, and reduce energy consumption.
The vision is similar to the next-gen auto-grade chip that was announced by Nvidia. Volkswagen forming close ties with a Chinese startup, while the most cutting-edge auto chip is widely recognized as the most cutting-edge in the industry, is intriguing. It won't be surprising that supply chain diversification is on the minds of VW executives. The question is whether it can match the quality of the American product.
VW may be able to create more tailored solutions for the world's largest auto market by having an on-the-ground partner. Ralf Brandsttter is a member of the management board of Volkswagen.
The region's position in the dynamic automotive market can be further expanded with the help of local technology development. The new joint venture will develop cutting-edge technology that will allow us to tailor our products and services to the needs of our Chinese customers. Volkswagen will be able to accelerate the development of automated driving solutions as part of our new auto strategy by teaming up with Horizon Robotics.
Investors bank on China’s alternatives to Nvidia’s auto chips
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