Volkswagen pushes for 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 brief snapshot of what I’m seeing and hearing from local businesses.

Today, I talk to Volkswagen China’s Chief Technology Officer about how they’re moving away from engines. It starts, of course, with chips, But which company??

Enjoy!
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Volkswagen Preparing for a future powered by chips. And, at least in China, Nvidia Not part of the film.

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

Ulbricht spends most of his time in Hefei, an automotive hub just a few hours from Shanghai.

It is home to Volkswagen’s factories and its largest research and development center outside of Germany. For semiconductors, the company has a joint venture with a Chinese automotive chip company Horizon Roboticsand a partnership with an electric car company XpengIt 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 on Friday in Hefei, with deliveries to begin in China by the end of June. The vehicle comes with L2 advanced driver–Assist, meaning it helps drivers navigate highways and city streets.

It’s the driver–The assist feature Xpeng is already out in China, but Tesla has yet to get Beijing’s approval for its version.

Volkswagen is working with Xpeng chips and Horizon because it has particular expertise in driver-assist software, Ulbricht said.

“Why do consumers buy cars?” Ulbricht said.

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

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

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

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

As for the applications of artificial intelligence, Ulbricht said AI integration will happen faster in factories than in cars. Volkswagen is already implementing some AI-powered functions in production, he said.

Ulbricht is the CEO of the Hefei R&D center known as the Volkswagen Group China Technology Company, a role he has held in China since April 2024. This is his third assignment to China after previous postings in the late 1990s and 2010.

Volkswagen has been one of the most aggressive Western automakers trying to recapture China sales lost to domestic EV rivals.

But pre-pandemic efforts were slow. At the Spring Auto Show in 2019, Europe’s largest carmaker announced new electric vehicles for China, which will begin two years later.

Chinese competitors were moving more quickly. Xpeng revealed an electric coupe that customers could drive in about 12 months. BYD launched its Han electric sedan in July 2020 and ramped up deliveries a month later.

Now, after an overhaul of its China business starting in 2023, Volkswagen has cut its production times and costs.

“This is a year of delivery,” Ulbricht said. In 2026 alone, Volkswagen plans to release 20 new models powered by battery or hybrid solutions on China’s roads.

The roadmap extends to 2030, where Volkswagen aims to have 50 new models, including 30 fully electric ones. The cars will also be exported to other countries.

In fact, this year marks Volkswagen’s biggest product promotion in China so far. Group management signaled their ambitions in last week’s earnings report despite a 53% drop in profits and an 8% drop in China passenger car sales.

Ultimately, survival comes down to what attracts buyers.

In China, consumers are more digitally connected, Ulbricht said, citing a range of smartphone services. “A car has to adapt to this world,” he said, which is why automotive tech is growing so fast in China.

That means, for companies, China is not just a training center but a product-proving market, Ulbricht said, hinting at the benefits of a global strategy.

China gets Iranian oil. Since the Iran war began, more than 11 million barrels of crude oil have passed through the Strait of Hormuz bound for China, CNBC has learned.

The OpenClaw craze. Lobster-themed AI agents are trending in China as companies rush to seize the opportunity to outspend locals on technology.

Exports will increase. China’s trade surplus rose to a record high in the combined January-February period, but exports massively beat expectations.

China’s economic momentum. Retail sales in the first two months of the year were up 2.8% from a year earlier. Industrial production rose 6.3%, beating expectations for a 5% jump.

March 18: Tencent earnings

March 19: Alibaba To release December quarter earnings. Horizon Robotics 2025 to report full-year results

March 20: China releases benchmark lending rates. Xpeng To report results for fiscal year 2025