The German carmaker wants to start delivering models equipped with Level 3 driver assistance systems from the second half of 2027, it said in a statement, which will coincide with China’s moves to introduce higher levels of autonomy in its mass market passenger cars next year. Cars with Level 2 systems are in production and are set to be on Chinese roads in the third quarter.
The deepening collaboration will also see VW gain access to Horizon Robotics’ AI foundation model and build capabilities such as robotaxis.
Autonomous driving capabilities are categorised into tiers based on how much intervention and supervision is required. Level 3 means a vehicle can drive itself, but needs drivers to be alert and ready to take over the system. Under Level 4 designation, vehicles can intervene if things go wrong and humans don’t need to take action in most cases.
Carmakers like Tesla Inc. and BYD Co. already offer smart-driving technology capable of navigating urban roads in most of their models, sometimes at an extra cost for buyers. In China, more than 30% of new cars sold in the country in the first half were equipped with advanced navigation-guided driving assistance capabilities, according to data from the Ministry of Information and Industry Technology.
The technology is shaping up as the next major battleground for the global auto sector as manufacturers race to commercialise the rapidly developing technology, spurring major legacy automakers to turn to Chinese companies to boost their capabilities.
“China has become one of Volkswagen Group’s key innovation and technology hubs, particularly in software, artificial intelligence and automated driving,” Chief Executive Officer Oliver Blume said in a statement about the partnership.
The smart vehicles produced by VW China will also be made available for export to some markets. The carmaker is looking to direct some of its excess capacity in China to other regions as sales momentum stalls. Last week, VW said it would start exports from China to Kazakhstan, after entering the Uzbek market in June.
The company’s struggles in China, where it’s lost market share to local manufacturers, have added to challenges including US tariffs and growing competition in Europe from the likes of BYD and Stellantis NV. VW is looking to cut as many as 100,000 jobs and may close factories to engineer a turnaround, Manager Magazin has reported.
VW is at least the third European carmaker to have turned to a Chinese technology provider to explore autonomous driving technology such as robotaxis. Stellantis partnered with Pony AI Inc. to trial robotaxis in Europe, while Mercedes-Benz Group AG has deployed a self-driving cab service in Abu Dhabi together with Momenta Global Ltd.
Other than Horizon Robotics, VW is also working with EV makers that offer strong software capabilities. The ID.UNYX 08, co-developed with Xpeng Inc. was launched in China this year. In the US, VW has a joint venture with Rivian Automotive Inc. to develop EV architecture and software platforms.
