The intellectualization process of German carmakers needs help from Chinese startup companies

By Jeff Lee / Mike Song 2022-11-10

The development of new technologies and products of the automotive industry in the future will absolutely not be solely controlled by traditional carmakers. The technology level of ICT, high-end chips, and batteries industries is too high to catch up within a few years by the self-development of carmakers. Furthermore, 2035 will obviously be the critical timing for the global intelligent BEV sales going skyrocketing; If carmakers can’t complete the development of all-new BEV platforms and introduce new car models within the next 3 years, it will be harder to catch up in later years. After trying various development directions of new technologies with little advancement, VAG finally recognized the urgency of the progress and decided to seek help from a Chinese IT startup company.

While talking about the EV technology and intellectualization, the distance between German traditional major carmakers and Chinese ICT industry / self-owned car brands is getting further in recent years. Regarding the poor performance in the booming BEV market in China these two years, German car brands are totally way beyond their long-lasting top-notch sales in the territory of ICE cars. Certainly, to view from the leading VAG, apart from the ICE cars manufacturing plants with the two joint ventures for years - FAW-VW and SAIC-VW, they are currently building the BEV manufacturing plant in Anhui, which they own 75% of share. In addition, in the development of intellectualization, VAG announced to establish a new joint venture company by its software development subsidiary CARIAD and the Chinese autonomous driving startup company Horizon Robotics in October. VAG holds 60% of share and will go all out at the falling progress of ADAS and fully-autonomous driving technology. What is the reason behind that VAG, who had always been proud of its expertise and technology in car-making, swallow their pride to go for close cooperation with a Chinese AI chip edge computing startup company which had been established for just 7 years (VAG invested €2.4 billion)?

CARIAD, which was established the year before, is the most important strategic planning of the ex-CEO of VAG – Herbert Diess, to aim at leading the whole group to transform into a “software-defined company”. Diess even became the concurrent CEO of CARIAD to show the determination of transformation; Furthermore, it became fully internationalized from recruiting stage to transform the conservative and traditional company culture into open and innovative ICT industry-like culture. However, their management issues affected the progress of R&D works, so that the SSP all-new EEA platform originally scheduled to be completed in 2025 will be delayed by one year according to the most updated progress review. CARIAD established the first-ever overseas subsidiary in China in April, and later Diess was replaced in July, and Oliver Blume took the position in September then immediately held concurrently the CEO position of CARIAD. The joint venture this time not only proves the strong R&D capability of Chinese AI startup companies being recognized by global major carmakers, but also shows the awkward situation that CARIAD can’t catch up with the pace of intellectualization of China by themselves. On the other hand, who is Horizon Robotics that can be well received by the automotive giant VAG?

 

  • The expertise of Horizon Robotics is the design of automotive high-end chip, and they had vast cooperation experience with carmakers of China in fields including autonomous driving, voice recognition, smart cockpit, etc., As for now, Horizon Robotics had conducted the development of mass production with more than 20 carmakers.
  • Last year, Horizon Robotics introduced the new-generation chip that has 128 TOPS of computing power. Although it still has some gap between the global leader of technology – Nvidia, but it has the advantage of cost efficiency, and its computing power is more than enough for L2 driver assistance system.
  • Providing open development platform for carmakers, and not to be limited to complete every technological solution on their own. This business model provides more flexibility to carmakers, which is more appealing for them to cooperate. The cooperation projects include top carmakers and IT companies such as BYD, FAW, Intel, CATL, etc.,

 VAG’s Tier 1 supplier Bosch has always been their provider of key technologies and resources of electronic systems and ADAS; VAG and Ford also jointly invested the American autonomous driving technology startup company Argo.ai a few years ago. Apparently, these two companies brought limited progress to VAG’s pace in the technology competition of autonomous driving field so far. Now, VAG cooperates with Horizon Robotics with huge investment to set out again, which looks like just another one of the many examples of the cooperation between carmakers and IT industry in recent years. However, the meaning behind can be regarded as the trend of the strength change of automotive industry among countries in the future.