On May 17, media reported that Volkswagen had held talks with Huawei to include Huawei software in Chinese models and gain a higher market share in China's electric car market. In addition, Volkswagen has held similar talks with other Chinese companies, according to a person familiar with the matter.
In response to the news, the person in charge of Volkswagen China said: "there is no official news."
In fact, as early as October 2021, there was news in the market that Huawei planned to form a joint venture with Volkswagen Group to develop self-driving technology, in which Volkswagen Group became a controlling shareholder in the joint venture company, while Huawei provided technology IP (intellectual property rights), including software technologies such as self-driving and Huawei chip IP. Feng Sihan, CEO of Volkswagen China, said at the time that the two sides were indeed in discussions, but there was no confirmation at this stage, including the establishment of a joint venture between the two sides. In February 2022, there was another news that Volkswagen was trying to buy Huawei's self-driving division for 3 billion euros. Volkswagen China responded: "No comment." Huawei's autopilot department also said: "No comment."
Since then, there has been no relevant progress in the cooperation between the two sides. on the contrary, CARIAD, a software subsidiary of Volkswagen, has successively set up joint ventures in China and is in the process of being carried out in an orderly manner. up to now, in nearly a year, CARIAD has successively set up joint ventures with Horizon and China Kechuangda.
In sharp contrast, CARIAD's overseas business is not progressing smoothly. According to Automotive Industry concern, the software department CARIAD (Car I Am Digital) is a business of Volkswagen Group, founded by Herbert Deiss, former CEO of Volkswagen Group, and formerly known as Car.Software Organisation, the Volkswagen Software Division established in 2020. At present, CARIAD has about 5000 engineers and developers around the world, who are mainly responsible for creating a new and unified automotive operating system for Volkswagen's future electric vehicles.
For Volkswagen Group, CARIAD and automotive software development have a self-evident role, Volkswagen has repeatedly stressed that they are an "indispensable" part, but since the establishment of CARIAD, there have been many twists and turns.
Earlier this month, Volkswagen China said that the supervisory board of CARIAD, a software subsidiary of Volkswagen Group, had approved the company's overall restructuring plan and had undergone a "major change" at the personnel level. All executive directors except personnel director Rainer Zugeh ö r may remain fired, while Peter Bosch will become the chief executive of CARIAD and will be in charge of finance, procurement and IT. Subsequently, Porsche announced a strategic partnership with Intel-owned Mobileye to achieve mass production of advanced ADAS solutions, and at the same time it was reported that Audi was seeking to work with other software solution providers. In response to this series of actions, industry insiders believe that this may mean that the status of CARIAD within the Volkswagen Group may further decline.
As part of the important strategy of Volkswagen Group, CARIAD and automotive software development have always been highly expected by Volkswagen. However, CARIAD has been plagued by various problems, including the postponement of production of two important new models, Porsche e-Macan and Audi Q6 e-tron, due to part of the business that exceeded budget and failed to meet development goals. Software development delays and cost overruns were also one of the reasons that led to Dice's departure in September last year. The division was then taken over by Oliver Blume, the new chief executive of Volkswagen.
The lag in research and development of CARIAD has led to repeated delays in mass production plans for new cars launched by several brands of Volkswagen Group, including Audi, Porsche, Volkswagen and Bentley. Volkswagen had planned to develop a new software platform capable of "L4" self-driving in 2026, but the release of the platform was later delayed until 2030. In addition, Volkswagen ID.3, the first model equipped with the company's independently developed on-board operating system VW.OS, has also been frequently complained by car owners for software failures.
In addition, the large loss of CARIAD is also one of the reasons for accelerating the change of blood at the top of CARIAD. Volkswagen Group's 2022 results show that CARIAD's revenue in 2022 was 800 million euros and operating loss was 2.1 billion euros. According to the latest data, Volkswagen Group's revenue in the first quarter of 2023 increased 22% year-on-year to 76 billion euros; pre-tax profit fell 27.6% to 6.453 billion euros; operating profit dropped to 5.7 billion euros from 8.3 billion euros in the same period last year; operating profit was 7.1 billion euros, up 35% from the same period last year The profit margin is 9.3%. But the loss of CARIAD, Volkswagen's software division, increased slightly from 416 million euros to 429 million euros compared with the same period last year.
Obom, chairman of the management board of Volkswagen Group and chairman of the supervisory board of CARIAD, has said that the adjustment and restructuring of CARIAD is one of its important contents, and Volkswagen Group has also said that it will continue to increase its investment in China, hoping to occupy a place in China's electric car market.
As for the cooperation between Huawei and Volkswagen, judging from the latest official response, the possibility of successful cooperation is still difficult to predict. Whether the two sides will cooperate in the end, we'd better wait for the official announcement.
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