Volkswagen pushes into driver-assist EVs without Nvidia, exec says

Hi, this is Evelyn, writing to you from Beijing. Welcome to the latest edition of The China Connection — a succinct snapshot of what I’m seeing and hearing from local businesses.

Today, I talk to Volkswagen China’s chief technology officer about how they are pivoting away from engines. It starts with chips, obviously, but which company’s?

Enjoy!
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Volkswagen is preparing for a future driven by chips. And, at least in China, Nvidia isn’t part of the picture.

With advanced tech from local Chinese players, “for us, there is no reason to stick [to] Nvidia,” Thomas Ulbrich, chief technology officer of Volkswagen Group China, told me last week. We chatted in his office, during one of his rare days at the German automaker’s Beijing headquarters.

Ulbrich spends most of the time in Hefei, an automotive hub just hours from Shanghai.

That’s where Volkswagen’s factories are located, as well as its biggest research and development center outside of Germany. For semiconductors, the company has a joint venture with Chinese automotive chip company Horizon Robotics, and a partnership with electric car company Xpeng, which has developed its own “Turing” car chip.

The Xpeng Turing chip is part of Volkswagen’s first all-electric SUV, the ID. UNYX 08. Production began Friday in Hefei, with deliveries in China set to begin by the end of June. The vehicle comes with L2 advanced driver–assist, which means it can help drivers navigate highways and urban streets.

That’s a driver–assist feature Xpeng has already rolled out in China, while Tesla has yet to get Beijing’s approval for its version.

Having that specific expertise in driver-assist software is also why Ulbrich said Volkswagen is working with Xpeng chips, as well as Horizon.

“Why does a customer buy a car?” Ulbrich said.

“Ten years ago, it was brand, brand, brand,” he said. “But nowadays it is intelligence of the car, mainly driven by smart EVs.”

In about two years, he expects Volkswagen cars in China to reach L3 capabilities, which will allow drivers to take their hands off the steering wheel under specific conditions. When regulators allow L3 to be used, liability for accidents is set to shift from driver to manufacturer.

Meanwhile, Volkswagen’s joint venture with Horizon, called Carizon, is developing its first advanced automotive chip, with expected delivery in three to five years.

Nvidia has also bet that automotive chips will be a billion-dollar business. But segment growth has slowed in recent quarters, while the Chinese EV partners that once partnered with Nvidia have begun developing their own chips in-house.

As for applications of artificial intelligence, Ulbrich said AI integration would happen faster in factories than in cars. He said Volkswagen is already incorporating…