Volkswagen software unit CARIAD steps up digital footprint in China

Volkswagen Group's software arm CARIAD is stepping up efforts in China to ensure vehicles of the German car giant will be competitive in the digital era of connectivity and automated driving.

"CARIAD is the digital backbone of the Volkswagen Group, and our strategy is to make mobility easy for everyone publicly. We are aiming at creating one scalable technology platform to empower our prestigious brands to serve our customers in China and globally very well," said Dirk Hilgenberg, CARIAD CEO.

The car is becoming an experience space, said Hilgenberg, explaining that owners expect seamless connectivity, personalized features, immersive entertainment as well as autonomous driving functions.

This trend is obvious in China and that is why the software arm decided to build its first subsidiary outside of Europe in the country, which is also Volkswagen Group's largest market.

"As we all know, the China market is very progressive in automated driving and digital experience. We wanted to make sure we can serve the local customers very well, establishing a company subsidiary that is able to grasp the speed, development and innovation in China for China," said Hilgenberg.

Rather than starting from scratch all by itself, CARIAD will establish a joint venture with Chinese startup Horizon Robotics, one of the country's leading providers of computing solutions for smart vehicles, specializing in software, algorithms and chip design, with an investment of 1.3 billion euros ($1.35 billion) from the Volkswagen Group.

CARIAD will hold a 60 percent share in the joint venture that will develop driving-assisted and autonomous driving solutions for its electric models in China.

"The China market is so progressive and customer expectations are high. We need to accelerate our pace of innovation," said Hilgenberg.

He said finding relevant partners in China to enhance its ecosystem and serve its brands would be a wise step in getting engaged in the transformation of the Chinese automotive industry.

Hilgenberg called the move "a great step forward" to strengthen CARIAD's regional development capabilities and competence in automated driving and accelerate its innovation speed in an increasingly competitive environment.

"Horizon Robotics is a good fit. They have a strong research and development team with proven experiences providing integrated software and hardware solutions for automated driving in China," he said.

He lauded the innovative spirit of Horizon Robotics, saying that they are dedicated to bringing innovations that could change safety and security in automated driving and inspire the future of that industry.

Hilgenberg said: "We can leverage and use that partnership for mutual benefit to really serve our customers in China and build automated driving functionality in the short-and — midterm. We are working very closely with Horizon Robotics to develop such an automated driving system as well as autonomous driving solutions in China for China."

Chang Qing, CEO of CARIAD's subsidiary in China, said he has confidence in the partnership as Volkswagen has economies of scale and high integration capabilities while Horizon has advantages in software, algorithms and chips.

"Both companies will contribute best-in-class talents to the joint venture. As soon as the joint venture is formed, there's going to be joint development by joining the best capabilities of both," said Chang.

Chang said CARIAD China is seeing "China speed" in its product development.

"From 2023, there will be more and more products rolled out into Volkswagen's cars from us and also from our joint venture with Horizon Robotics. Also starting next year, vehicles based on Premium Platform Electric or PPE, including those from Audi and Porsche, will be equipped with Level 2 plus autonomous driving functions and infotainment which has been developed by CARIAD's China subsidiary from scratch," he said.

Unveiled in April, CARIAD China has more than 800 software engineers in China and the figure is expected to reach more than 1,200 by the end of 2023, of which more than 90 percent will be Chinese nationals.

A nationwide research and development network is also being built up, with Beijing, Shanghai, Chengdu in Southwest China's Sichuan province and Hefei in East China's Anhui province earmarked as initial hub locations.

Hilgenberg said he is very pleased to see how quickly the CARIAD China team has built its presence and established a profound network in China.

"It is amazing to see what can be accomplished in a very short time frame. I can only compliment him (CARIAD China CEO Chang) and his team for the accomplishments and milestones he has met," he said.

CARIAD was established in 2020 to consolidate and further expand Volkswagen Group's software competencies in the age of electric smart and autonomous vehicles.

Around 5,000 developers, engineers and designers are working to turn the Volkswagen Group into a software-driven car company, to transform the car into an automotive experience that is seamlessly integrated into the digital life, said CARIAD.

"As a software startup, the learning curve for CARIAD and CARIAD's China subsidiary is of course very steep," said Hilgenberg.

"If you want to gain a leading role in the industry among competitors, you team up with strong partners with proven track records. You also have to ensure you are conquering key control points in the technology stack to make sure you can deploy software anytime, anywhere and at any content to surprise and enlighten your customers."

lifusheng@chinadaily.com.cn