Volkswagen’s software unit Cariad and Horizon Robotic officially announced the establishment of their joint venture (JV) project called Carizon, which is dedicated to developing autonomous driving and ADAS (Advanced Driver Assistance Systems) development. The registered capital of the new company is 6.757 billion yuan (950 million USD).
Horizon Robotics is a Beijing-based technology company providing software and hardware solutions for self-driving and ADAS. On the hardware side, they compete with Nvidia with their in-house developed Journey sef-diving chips. Its latest sixth generation, Journey 6, will be unveiled in 2024, and Horizon said the new product will be revolutionary. Horizon also cooperates with BYD, supplying them with their Journey 5 autonomous driving chips, Changan Automobile, and others.
On the other hand, Horizon also has a strong software team dedicated to intelligent driving. It announced it would move about 300 people from its software department to the JV with Volkswagen in September.
Volkswagen invested 2.4 billion EUR for a 60% stake in Carizon. Cariad will appoint Carizon’s CEO, and Horizon Robotics will appoint a chief technology officer (CTO). Horizon also announced it is sending a heavy weight to the newly established JV – its cofounder and CTO Huang Chang to lead the level-2 (L2) assisted driving, highway assisted driving, and automated parking teams.
VW and Horizon announced the intention to team up in October last year. Volkswagen agreed to invest 1 billion Euros (1.08 billion USD) in Horizon Robotics directly and 1.3 billion Euros in the new JV. Volkswagen will play an active role in developing the chip technology, and the know-how will be shared across the Volkswagen Group, China chief Ralf Brandstaetter commented.
Volkswagen is far behind in ADAS, connectivity, and digital experience of their EVs in China, and the sales of their EVs are struggling in the Middle Kingdom. Volkswagen is offering ridiculous discounts to push their ID. series to the market, resulting in ID.3 being available for about 16,500 USD at one point.
Which is a pity because the Chinese have historically loved VW. It is a synonym of German quality for them, and it was one of the first foreign automakers to enter the Chinese market. And for VW, China is its biggest market – in 2022, they sold 2.2 million vehicles there. However, mostly ICE.
The reason Chinse doesn’t buy ID. is simple. The HW quality is outstanding, but it is like competing with analog toys on the digital market. In times when even a few-year-old Chinese startups post videos of their cars driving and parking automatically; some Volkswagen EVs can’t even do OTA and need to visit a dealer to update the software manually.
I talked to some VW ID. buyers in China, and things changed a lot. Historically, if you had no money, you went for a Chinese car, but with full pockets, you bought a German one, a status symbol. Now, if you have the money, you buy a Chinese EV, and if you want to save some bucks, you go for ID. car, whose prices have recently been really good in China.
But VW seems to be aware of this, and by acquiring a 5% stake in Xpeng and now establishing Carizon, things can change fast, and hopefully, VW will finally deal with its technical debt, making their cars competitive in China.