Volkswagen is investing heavily in Chinese chip manufacturers

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Volkswagen has announced it will invest a total of $2 billion in Horizon Robotics, a Chinese computer chip and robotics company.

Volkswagen has tried to significantly improve its computer and software chops over the past year. The automaker in particular had a significant leadership change to better focus on software improvement. But Volkswagen has also formed partnerships with American chipmaker Qualcomm and European chipmaker STMicroelectronics. Well acc Reutersthe company continued on its partnership course and acquired 60% of Horizon Robotics.

Corresponding Reuters‘ reported, the deal between Volkswagen and Horizon Robotics will focus on software and hardware for autonomous driving. Hopefully, the German company’s support in competing in self-driving technology will now be dominated by competitors. Tesla in particular has become an influential player in the technology, but older automakers like Daimler-Mercedes, Hyundai-Kia and even General Motors are also formidable competitors.

Through the deal with Horizon Robotics, Volkswagen now has a partnership with all major economies; North America, Europe and Asia. This partnership could prove helpful in limiting transportation costs and keeping supply chains more independent for different regions. However, the special focus on the deal with Horizon Robotics in China is expedient. Volkswagen products had trouble competing with domestic Chinese (BYD and SAIC) and American (Tesla and General Motors) alternatives.

It is important to note that this agreement comes at a time of upheaval in Sino-German diplomacy. The German Ministry of Commerce recently issued a directive that would have forced all German corporate investments in China to be monitored by the German government. And while Reuters reports that this policy has been temporarily put on the table, it also suggests that relations between the two countries are strained.

It remains unclear when VW customers will start to see the company’s changes in terms of software improvements, especially since so many are waiting for major updates to their Volkswagen ID.4. Hopefully this points in a positive direction for the company and can lead to a better software experience for future customers.

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