Summary of Key Points
Volkswagen and Horizon have deepened their collaboration through their joint venture, CoreMotion (with Volkswagen holding 60% of the shares). They are introducing Horizon’s large-scale AI models using a “white-box licensing” approach to independently develop L3/L4 autonomous driving solutions tailored for the Chinese market. The first L3-level vehicles are expected to be delivered in the second half of 2027. This seemingly incremental cooperation actually marks a significant shift in Volkswagen’s strategy for smart driving systems in China: Zhuoyu Technology (formerly Dajiang Automotive), a key partner from the era of fuel-powered cars, is being gradually replaced by CoreMotion, which will form the core of Volkswagen’s future autonomous driving architecture (CEA).
I. Upgraded Cooperation: A Surface-Level Extension, but a Fundamental Change in Core Partners
This collaboration is not just about increasing the scale of their efforts; it represents a strategic “turn” in Volkswagen’s approach to smart driving:
- Surface-level: An upgrade in cooperation: Volkswagen and Horizon established CoreMotion in 2023. This time, they are providing Horizon with access to their AI models through a white-box licensing agreement. Instead of purchasing a ready-made smart driving system, Horizon is allowed to customize solutions suitable for the Chinese market, taking into account local road conditions (such as the complex urban infrastructure).
- Fundamental change in supplier landscape: During the fuel-powered car era, Zhuoyu Technology was Volkswagen’s primary partner for smart driving systems. However, with Volkswagen’s full transition to electric vehicles, the new CEA architecture will exclusively use CoreMotion’s solutions. As a result, Zhuoyu’s role will be limited to older platforms (like the MEB platform used in models like the ID series), leading to a decrease in its orders.
II. Zhuoyu Technology: A Hero of the Fuel-Eowered Era, but an Outsider in the New Energy Era
Zhuoyu Technology (formerly Dajiang Automotive) was once a vital partner for Volkswagen’s smart driving initiatives:
- Deep integration during the fuel-powered era: The collaboration began in 2018, and their first joint product, the Tiguan L Pro, was launched in 2024. Subsequently, their technology was used in major fuel-powered models on the MQB platform, such as the Lavida and Magotan. Volkswagen became Zhuoyu’s largest customer, helping them validate and scale their technology.
- Challenges in the new energy era: With Volkswagen’s shift to electric vehicles, the new CEA architecture no longer relies on Zhuoyu’s systems. Although Zhuoyu has expanded its services to companies like BYD, Chery, and Great Wall, the reduction in Volkswagen’s orders has a significant impact on their business, as Volkswagen was once their main source of revenue.
III. The CEA Architecture: The Driving Force Behind Volkswagen’s Smart Driving Transformation
The CEA architecture is designed specifically for the Chinese market and determines which companies can become future suppliers of smart driving systems:
- What is the CEA architecture?: In simple terms, it acts as the “central brain” of the vehicle, consolidating previously scattered control units and allowing the use of more internally produced components. This approach reduces development time by 30% and costs by 40%, enabling Volkswagen to launch new vehicles more quickly while saving money.
- Reasons for choosing CoreMotion: The CEA architecture is a core component of Volkswagen’s strategy for electric vehicles, with most Chinese-produced models expected to use it by 2030. As CoreMotion is a jointly owned company, using their solutions allows Volkswagen to retain control over its core technologies and reduce dependence on external suppliers.
- Expansion of the CEA: The architecture will not only be used in electric and hybrid vehicles but also in older MQB fuel-powered models. Any smart driving system based on CEA will have to use CoreMotion’s technology, which means Zhuoyu’s market share is likely to decline.
IV. CoreMotion: Rising to Become the Main Player in Volkswagen’s Smart Driving Future
CoreMotion has moved from a supporting role to a central one:
- Current progress: Starting from the third quarter of this year, seven new electric models developed by Volkswagen’s joint ventures in China will gradually feature CoreMotion’s smart driving solutions, including urban navigation assistance. L3-level autonomous driving capabilities are expected to be available by the second half of 2027, allowing the vehicles to drive autonomously in specific scenarios without constant human supervision.
- Advantages: With Volkswagen holding a 60% stake in CoreMotion, they have direct access to Volkswagen’s requirements and can leverage Horizon’s advanced AI technology. By integrating CoreMotion’s solutions into the CEA architecture, Volkswagen ensures a steady supply of smart driving systems.
V. reshaping the Landscape: How Are All Parties Responding?
- Volkswagen: By using CoreMotion, Volkswagen is taking control of its smart driving systems, reducing reliance on external suppliers and adapting more flexibly to market changes (such as the high demand for advanced autonomous features from Chinese consumers).
- Zhuoyu Technology: They need to quickly find new customers, having already expanded into markets like BYD and Chery, as well as heavy-duty truck manufacturers like XCMG. However, they still face challenges in replacing the lost orders from Volkswagen.
- Horizon: By forming a strong partnership with Volkswagen, Horizon not only secures stable orders but also gains access to Volkswagen’s scale, allowing them to further develop and deploy their AI technology across a wider range of vehicles and strengthen their position in the smart driving industry.
Conclusion
This collaboration essentially signifies that Volkswagen is taking back control of its smart driving systems during its electrification transition by moving these capabilities to a jointly owned company. Zhuoyu Technology’s decline is not due to technical shortcomings but is a natural outcome of Volkswagen’s strategic shift. In the future, companies that can integrate their technologies into the core automotive architecture will dominate the smart driving market. For consumers, this means that Volkswagen’s new vehicles will likely offer better autonomous driving features tailored to Chinese road conditions, potentially at more affordable prices due to increased localization.