Introduction
According to the report from Manager Magazin in Germany, Volkswagen Group plans to invest 2 billion euros in China and establish a software joint venture with Horizon Robotics. Volkswagen will invest 2 billion euros in cash in the domestic market, while Horizon Robotics is likely to invest in technology/patent stocks.
Porsche, a subsidiary of Volkswagen, has just been listed and raised €19.2 billion from the sale of Porsche shares, providing substantial cash support for Volkswagen’s four transformations. Therefore, despite Volkswagen’s mediocre performance in the electric vehicle field, it still has enough funds to invest in future research and commercial plans.
Joint hands with Horizon Robotics, Volkswagen is not afraid of potential US sanctions risk
Horizon Robotics is a well-known chip design company in China, which has received strategic investments from many automakers such as SAIC Motor, GAC Capital, Great Wall Motors, Dongfeng Capital, and BYD. It is a famous “unicorn” in the field of chip design in China and even in the world.
Currently, the US government is continuously suppressing China’s chip industry. Not long ago, chips used to support cloud computing and other IT infrastructure, such as the software tools EDA required for chip design, have been listed on the US sanction list for NVIDIA and Intel. As China’s automobile exports, especially new energy vehicles, are increasing, it is not ruled out that the United States will continue to upgrade the degree of chip sanctions against China in the future to suppress China’s automobile industry.
Maybe someday in the future, many advanced process chips will not be able to enter the domestic market. For domestic automakers who regard China as their second hometown, as well as Volkswagen, they must ensure the absolute safety of their business in the domestic automobile market, just like many independent brands.
Volkswagen urgently needs a high cost-performance chip solution
In addition to ensuring the safety of their supply chain, Horizon Robotics chips are gradually expanding their market share with their various advantages. With continuous technological advances, Horizon Robotics’ solutions not only have significant cost advantages but also have a relatively fast response speed in the response of major automakers, and are continuously favored by mainstream domestic automakers.By deepening ties and cooperation with car makers, Horizon Robotics has won more and more mass production orders. With the increasing number of orders, the familiarity of Horizon Robotics with the business processes of car makers and the reliability and stability of its products have been fully verified. In this situation, cooperation between Volkswagen and Horizon Robotics involves relatively low technical and business model risks. It is worth noting that with the cost performance advantages of Horizon Robotics chips, it will be crucial for Volkswagen to equip its models, especially entry-level ones. After all, as market competition continues to intensify, even entry-level models require increasingly intelligentization. Therefore, the importance of the cost of chips is becoming more pronounced.
In April of this year, Volkswagen’s software company CARIAD established a subsidiary in China to support the digital transformation of Volkswagen’s various joint venture vehicle models in China, and also participate in Volkswagen’s global software project development. This includes advanced driver assistance systems and autonomous driving, next-generation intelligent interconnectivity functions, intelligent cockpits and vehicle design, big data and software operating systems, and other fields that are within the scope of CARIAD. With the help of Horizon Robotics’ joint venture, not only can Volkswagen fill its gap in chips, but it can also promote the integration of software and hardware in the early stages, achieving the best performance of intelligent network connectivity configurations.
Joining Volkswagen is also a major breakthrough for Horizon Robotics. Previously, after several rounds of investment, Horizon Robotics was also in need of listing through IPO. With a client of the size of Volkswagen, the supply volume in the domestic market will also be very considerable in the future. Through larger economies of scale, Horizon Robotics is getting closer to full profitability.
In addition, Horizon Robotics has more local automobile makers as clients. In the long run, if Horizon Robotics wants to achieve greater development, it certainly needs to win more orders from foreign automobile makers and enter the global automobile market. Growing into an international chip enterprise can make Horizon Robotics the “Nvidia” or “Intel” of China. Cooperation with Volkswagen will be a very good opportunity.Except for setting up three domestic car companies, Volkswagen also previously invested in Guoxuan High-tech to become its major shareholder. Now, with the establishment of a joint venture with Horizon Robotics, Volkswagen’s commitment to the domestic market can be seen from the investment of 2 billion euros alone. In the era of intelligent electric vehicles, Volkswagen can only replicate its brilliance in the era of fuel vehicles by better establishing itself in the Chinese and European markets. With the establishment of a joint venture with Horizon Robotics and the previous establishment of a Chinese subsidiary of CARIAD in China, Volkswagen is integrating in the field of intelligent networking.
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This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.