On December 8, CARIZON, a groundbreaking joint venture between Volkswagen Group’s software company CARIAD and Horizon, was formally announced. This collaboration will see intelligent driving solutions based on Horizon’s chips integrated into Volkswagen Group’s all-electric models in the Chinese market.
Beijing Horizon Robotics Technology Research and Development Co., Ltd., established in 2015, specializes in smart chip research, development, and self-driving algorithms. Following several rounds of financing, Horizon recently secured a strategic investment from Chery Automobile. Despite not disclosing the financing amount and valuation since its USD 900 million Series C financing in February 2021, Volkswagen’s recent investment of 2.4 billion Euros in its partnership with Horizon, securing a 60 percent stake in the joint venture, marks a significant commitment.
The electric vehicle (EV) market in China is increasingly intertwined with smart technology. Mr. Guan Mingyu, Global Managing Partner of McKinsey & Company, noted at the Conference on the Internationalization and Development of the Automotive Industry that Chinese consumers prioritize in-vehicle intelligence and autonomous driving features in EVs, whereas European and American consumers focus more on powertrain performance. This cultural difference presents unique challenges for multinational car companies operating in China.
For the first nine months of 2023, Volkswagen Group reported the delivery of 531,500 pure electric vehicles, with European sales reaching 341,000 units, a 60.9% year-on-year increase. However, Chinese sales accounted for only 117,000 units, a modest 3.9% increase, lagging behind the average growth rate of 24.9% in China’s pure electric vehicle industry.
Volkswagen stands out among multinational carmakers for its aggressive electrification strategy. Beyond its partnership with Horizon, Volkswagen China has established an intelligent cockpit joint venture with Thunder Soft. Additionally, Volkswagen collaborates with Xiaopeng Automobile to develop two all-electric mid-size SUVs featuring Xiaopeng’s intelligent driving system. Audi, Volkswagen Group’s luxury brand, continues its smart driving project with Huawei, expecting new models by 2025.
Meanwhile, in the field of electric vehicles in China, BMW and Mercedes-Benz are taking a different path. On November 30, both companies simultaneously disclosed that they had signed a cooperation agreement to establish a joint venture. This venture aims to build and operate a supercharging network in China, with each company holding a 50:50 share ratio. The network, designed to be accessible to all brands of electric vehicles, is a strategic move to compete with TESLA and Chinese EV maker NIO. According to the plan, the first batch of charging stations is expected to start operations in key new energy vehicle cities in China in 2024. By the end of 2026, the goal is to have at least 1,000 supercharging stations and approximately 7,000 supercharging piles established. This initiative is a direct response to the existing infrastructure of TESLA, which has built over 1,800 supercharging stations with more than 11,000 supercharging piles, and NIO, which boasts 2,009 stations and 9,400 piles.
Fitch Rating’s Automotive Industry Outlook 2024 report suggests that electric vehicles and smart driving could reach a critical mass in China by 2024. As the market becomes more competitive, the deployment of German carmakers’ current strategies may help them regain some of the market share lost in China’s electric vehicle sector over the past three years.
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