Original link: https://www.latepost.com/news/dj_detail?id=1347
On October 13, the Volkswagen Group announced that through its software subsidiary CARIAD, it plans to form a joint venture with Chinese autonomous driving chip company Horizon to develop autonomous driving assistance systems and autonomous driving solutions. CARIAD will hold a 60% stake in the joint venture and will be the controlling shareholder. The CEO of the joint venture will be appointed by CARIAD and the CTO will be appointed by Horizon.
Volkswagen will invest 2.4 billion euros (about 16.79 billion yuan) in the transaction, of which about 1 billion euros will be used to invest in Horizon and about 1.3 billion euros will be injected into the new joint venture. The transaction is expected to be completed in the first half of 2023, pending the final signing of the agreement and approval by the relevant government agencies.
In 2020, Volkswagen and Argo AI, an American autonomous driving company, had a similar in-depth cooperation. Volkswagen invested $1 billion in cash in Argo AI, and at the same time merged its autonomous driving subsidiary AID into Argo AI for $1.6 billion. The combined company will develop high-level autonomous driving solutions for Volkswagen’s pure electric vehicles.
Volkswagen sold more than 8.6 million vehicles worldwide last year, nearly 40% of which were in China, making it the top-selling car brand in China. Horizon was established in 2015 by Yu Kai, the former vice president of Baidu’s Deep Learning Research Institute. Its main products are autonomous driving chips and chip-based autonomous driving solutions.
Investing 2.4 billion euros in Horizon and establishing a joint venture with it is the largest single investment by Volkswagen in the Chinese market, and it also exceeds other similar actions in the industry in recent years. In 2020, Ali and SAIC jointly established Zhiji, with a total investment of 7.2 billion yuan; last year, Geely and Baidu established a joint venture, Jidu Automobile, with a registered capital of 2 billion yuan. Horizon also established a joint venture with the German auto supplier Continental in September last year to jointly provide car companies with intelligent driving software platforms and algorithms, with a registered capital of 200 million yuan.
According to “LatePost”, before negotiating a joint venture with Horizon, Volkswagen has been in contact with Huawei since the end of 2020, and once considered merging some teams of Huawei’s intelligent driving product department, but ultimately failed to reach a deal.
Since the establishment of the first Sino-foreign joint venture car company Beijing Jeep in 1983, in the past 40 years, when Chinese companies established joint ventures with overseas car companies, their main role was production and sales, and they seldom participated in software and hardware research and development.
Now, the role of Chinese companies in the entire automobile chain has changed, from the market, workers, parts, to technology and engineers.
VW’s joint venture with Horizon is a landmark event in this shift, where Chinese technology is becoming increasingly valuable in the auto industry.
Volkswagen and Huawei fail to cooperate
According to LatePost, at the end of 2020, Volkswagen had considered in-depth cooperation with Huawei on autonomous driving.
The plan that Volkswagen and Huawei once promoted was: Volkswagen would pay, and Huawei would provide talent and technology to set up a joint venture; Volkswagen hoped that Su Jing, former director of Huawei’s Intelligent Driving Product Department, and his team could join the new joint venture.
At that time, Huawei’s Intelligent Driving Product Department was subordinate to the Intelligent Vehicle Division, which also included departments such as intelligent cockpit, intelligent vehicle cloud, intelligent electric vehicle, and intelligent network connection.
Due to the two parties’ opinions on the way of cooperation, there are disputes within Huawei on whether to cooperate or not, and the joint venture plan has not been reached.
According to “LatePost”, another German car company, Mercedes-Benz, has made a similar attempt. Around 2015, Mercedes-Benz approached Ali, hoping to form a joint venture to jointly develop an automotive operating system. Ali proposed to cooperate with Mercedes-Benz, but did not want a joint venture.
In 2015, Alibaba and SAIC Motor jointly established Banma Zhixing to develop an in-vehicle operating system. In 2020, the two parties jointly established Zhiji, and Zhiji’s first car, the Zhiji L7, was launched in March 2022.
In cooperation and joint ventures between large companies, it is difficult to determine who leads and who assists. This time, Volkswagen CARIAD holds 60% of the shares in the joint venture with Horizon, and is an undisputed controlling shareholder.
The masses and the horizon have what they need
The joint venture between Volkswagen CARIAD and Horizon will develop autonomous driving and assisted driving systems based on Horizon’s chips, which will be installed on pure electric models sold by Volkswagen in China, and will not be sold to other car companies or exported to overseas markets for the time being. Volkswagen said the joint venture will form a team of hundreds of engineers from the two companies by the end of this year.
If it is purely for the layout of the autonomous driving chip supply chain, Volkswagen does not necessarily have to set up a joint venture, and it is more common to directly establish supply cooperation.
This year, Volkswagen CARIAD has reached supply cooperation with two chip companies, Qualcomm and STMicroelectronics, and the two companies will supply CARIAD with next-generation automotive chips.
The cooperation between CARIAD and Horizon is highlighted in autonomous driving and intelligent driving software.
In smart electric vehicles, it is an industry consensus that software functions such as autonomous driving and smart cockpits are becoming more and more important. In the first half of this year, more than 7 million passenger cars were sold in China, of which 2.3 million were equipped with assisted driving functions, accounting for 32.4%.
VW’s own software development process has not been smooth.
In 2019, Volkswagen recruited software-related personnel from various brands of the group to form the Car.Software software team. A year later, Car.Software became an independent software company from a division of the group. Volkswagen’s then-CEO Diess promised to devote more resources to improving software capabilities.
When the team was established, the main project was to provide the software system for the ID.3, the first model of the Volkswagen pure electric platform MEB, but when the first batch of more than 10,000 ID.3s were delivered in 2020, these cars were not yet equipped with complete Remote software upgrade function, when the car owner needs to upgrade the car system, he can only drive the car back to the dealer for wired upgrade. When Tesla launched the Model S in 2012, it was equipped with remote software upgrades for the entire vehicle.
CARIAD is also supplying software for Porsche, which is owned by the Volkswagen Group. In October, Porsche announced that deliveries of the electric version of the Macan, originally scheduled for 2023, would be delayed until 2024 due to slow software progress. Since the formation of Car.Software in 2019, the team leader has changed 3 times.
Volkswagen is also introducing external forces to improve software capabilities, including contact with Huawei and the merger of its self-driving subsidiary and American self-driving company Argo AI. According to the German media “Manager Magazine”, earlier in 2018, Volkswagen also tried to acquire a 10% stake in Google’s self-driving company Waymo or the overall acquisition of another American self-driving startup Aurora, all unsuccessful.
Outside the United States, China is the fastest-growing and most competitive country in autonomous driving and vehicle intelligence. In addition to medium and large technology companies such as Huawei, Baidu, and DJI, which are investing in autonomous driving; since 2016, a number of system, sensor and chip startups in the field of autonomous driving/assisted driving have also emerged in China.
Horizon is one of the leading companies in this wave of startups. It not only develops the autonomous driving chip itself, but also develops supporting software such as the supporting tool chain based on the chip. An investor commented that Horizon sells hardware, but its advantage lies in software.
Unlike Mobileye, an autonomous driving chip and solution company owned by Intel, Horizon can provide some source code when delivering solutions to car companies. “LatePost” once reported that when working with Ideal, Horizon provided the Journey 3 chip, and at the same time sent a team of dozens of people to support the underlying software technology; Ideal developed on the source code of Horizon’s early Demo before mass production. Replaced with your own code.
When Horizon served the SAIC Roewe RX5, which was released in August this year, in addition to providing the autonomous driving chip of Journey 3 for the intelligent driving version, it also supported Roewe to develop the functions of adaptive cruise, lane keeping and automatic parking of the RX5.
Yu Kai, the founder of Horizon, has stated many times that Horizon needs to combine software and hardware to provide a complete reference design of intelligent driving hardware and algorithms. He once said that if you only do hardware and not software, you will deliver a stone to the customer.
Before founding Horizon, Yu Kai participated in the formation of the Baidu Deep Learning Research Institute and the autonomous driving team, served as the vice president of the Baidu Deep Learning Research Institute, and Baidu founder Li Yanhong served as the president. Yu Kai is not a chip professional. He is better at software technologies such as artificial intelligence algorithms. When he invested in autonomous driving chips, he was considered to lack experience in mass production of chips and automotive-grade components.
“Layman” Yu Kai and Di Pingxin led by him are temporarily leading. Horizon is the first Chinese start-up company to put its own chips on mass-produced models. It recently claimed that since 2020, Journey Autopilot chips have shipped a total of 1.5 million chips, which have been installed in more than 70 models of 20 car companies. Among them, including the Lili ONE facelift (Journey 3 chip) launched last year, the Lili L8 just released last month (the L8 Pro version uses the Horizon Journey 5 chip, the Max version uses the NVIDIA Orin chip), Chery Little Ant (Journey 2) chip) and Changan UNIT (Journey 2 chip).
Horizon has received a total of over 3.4 billion US dollars in financing, and investors include SAIC, Chery, Great Wall, GAC, BYD and many other auto companies. According to public information, Horizon will participate in the research and development of the next-generation electrification platforms of SAIC and Chery.
The reason why Volkswagen needs a Chinese partner is that China is the market where Volkswagen sells the most cars, more than its stronghold in Europe. Cooperating with Chinese companies in the form of joint ventures, firstly, it can avoid compliance risks in the field of autonomous driving involving sensitive data such as high-precision maps, and secondly, it can develop some customized products according to the special needs of this important market in China.
Globally, the 7-year-old Horizon’s comprehensive capabilities in autonomous driving chip hardware development and software ecology are still unmatched by giants like Nvidia. But it is a suitable partner that Volkswagen can find in China: it has experience in mass production, has gathered a group of software and hardware talents, is in the growth stage, and has the drive to serve the giants well to promote its own development.
In setting up a joint venture with Volkswagen, the most direct benefit of Horizon is to obtain a large amount of capital and a customer with huge sales volume and a global benchmark, which is conducive to Horizon’s promotion of its own solutions and brands.
Yu Kai said in the official announcement of the establishment of the joint venture: “We believe that with leading software and hardware solutions, Horizon will become the preferred partner of international auto companies in China.”
Today, when the high level of global collaboration in the automotive industry is being challenged, more cooperation between overseas companies such as China and Europe is encouraging news for the entire industry.
Leading car companies or Tier 1 suppliers in Germany and Japan have successively invested in a number of Chinese autonomous driving companies. For example, Toyota invested in Pony.ai in 2020; Toyota, Daimler and Bosch invested in Momenta last year; Bosch invested in WeRide this year, and the two will jointly develop intelligent driving solutions.
On October 11, German Chancellor Scholz said that decoupling from China in the field of trade is the wrong path. Scholz is scheduled to visit China on November 3-4.
Yajuan Dou also contributed to this article.
This article is reprinted from: https://www.latepost.com/news/dj_detail?id=1347
This site is for inclusion only, and the copyright belongs to the original author.