The German public is obviously more and more "eye-to-eye" with Huawei as a technology company. In less than a year, the two companies have gone through cooperation, joint ventures, and now Volkswagen is determined to buy Hua's autonomous driving division.
According to The Manager Magazine reported on February 17, Germany's Volkswagen (VOWG_p.DE) is in talks with China's Huawei to acquire the autonomous driving division. Huawei's negotiations with Volkswagen have been going on for months, and the deal could be worth billions of euros, if so, its final deal could easily exceed 10 billion yuan, the sources said. Volkswagen previously unveiled plans to invest nearly $100 billion in autonomous driving, aiming to lead what many believe to be the future of mobility at an early date.
Smart driving is considered to be at the heart of future competition in the automotive industry. Volkswagen CEO Herbert Diess said during a Q&A session on Reddit, a U.S. social media platform, on Feb. 16 that he expects the auto industry to see the spread of self-driving technology within 25 years. He also said Volkswagen is looking for further collaboration to improve its self-sufficiency in software and add features such as specific brands of voice assistants to its cars.
This "further cooperation" was immediately revealed to be that Huawei was discussing the possibility of a deeper transaction.
According to previous plans, the Volkswagen Group aims to increase the proportion of self-developed software produced in the group's cars from 60% by 2025 (this figure is less than 10% in 2020). Software has always been one of volkswagen's weaknesses. Especially when ID.3 was launched, this problem was vividly displayed. Not only has the release of the car been postponed many times due to software problems, but the ID.3 that first came off the production line is even a "bare metal" car without a system.
On June 13, 2020, Peter Mertens, former head of research and development at Audi, revealed in an interview titled "Eventually Blood Flows – We're All Asleep" that none of the 10 million lines of code in ID.3 came from Volkswagen engineers. He also ridiculed Volkswagen's software lag, "By 2020, the world's most powerful car companies will produce only the same cars that Tesla produced in 2012." ”
But Volkswagen is also rapidly strengthening its capabilities in software. Subsequently, Volkswagen formed a large software team. At the end of 2020, Volkswagen said in a new statement that investment in electric vehicles, autonomous driving and related future technologies will increase to about 73 billion euros (about $86 billion), half of the company's 150 billion euro budget by 2025. At the same time, Volkswagen Will double its future digital investment budget to 27 billion euros (about $32 billion) for the development of core software such as automotive operating systems.
Spurred by a large number of investments, the Volkswagen Group has grown to become the second largest software provider in Europe by 2021. At the same time, the new generation of in-vehicle systems is independently developed by the Volkswagen Group, and its integration and intelligence have also been raised to a new height. In terms of functions, in addition to providing excellent in-vehicle interaction and entertainment functions, a new generation of autonomous driving technology will be integrated. It is reported that the new in-vehicle system will be released in 2024. In 2022, Volkswagen electric vehicles can already begin OTA upgrades. However, strengthening software capabilities, especially in the Chinese market, requires advanced intelligent capabilities to achieve software self-sufficiency.
The Manager Magazine quoted insiders as saying that Volkswagen group leaders have been negotiating the deal for months, which also involves a technical system that Volkswagen is not yet proficient in. A Volkswagen spokesman declined to comment. Huawei has not responded to this at this time.
So far, Chinese giant Huawei Technologies' activities in the automotive market have been limited to cooperation with partners. For example, Huawei is working with Seres to develop hybrid cars with a proprietary operating system, HarmonyOS. Meanwhile, by the middle of this century, Huawei is expected to develop top-of-the-line autonomous driving systems. Huawei has always been a representative of top technology in Volkswagen's most important Chinese market, and if Volkswagen acquires Huawei, it will help reshape its leading brand image in the Chinese market.
According to foreign media analysis, Volkswagen, a German auto giant, is very interested in establishing partnerships with professional companies – for example, in cooperation with auto parts supplier Bosch, the two companies intend to cooperate in the development of software for automatic transport control systems. In the context of the development of specialized processors, the potential of the German automaker's Huawei profile division is likely to be of interest. The automaker's structure already has a Cariad division, which should focus on the development of control software. Volkswagen can strengthen this with Huawei's experienced component developers. In addition, Volkswagen is working with Samsung Electronics in this field synchronously.
For Huawei, this may also be a favorable option. Faced with tightened U.S. sanctions, the Chinese company has struggled to reach its full potential because it does not have access to advanced lithography technology, which is justified in the production of complex processors for robotic systems. From this perspective, the transaction with Volkswagen is also in the interest of Huawei Technologies. Notably, Huawei has formed a partnership with Audi, a high-end brand owned by volkswagen group, to provide autonomous driving solutions, which will form the basis for the Chinese company's cooperation with Volkswagen Group.
In Der Spiegel's view, if the core self-driving assets are sold, it means that Huawei will get rid of the embarrassment of how to acquire customers. Huawei is currently trying to sell its self-driving package solutions to car companies, but autonomous driving has always been regarded as the "soul" of car companies and prefers to develop it itself, so Huawei is also facing the problem of new customer development. After the sale of this asset, Huawei can focus more on its parts and components, or directly enter the "car-making" stage. Thus no longer swaying in road selection.