Volkswagen has held talks to use Huawei software in its Chinese cars, hoping to further a flagging effort to capture a bigger share of the world’s largest electric vehicle market.
The automaker has held talks with Huawei about using its technology in Volkswagen vehicles, according to three people familiar with the matter, while another person said the German company has held similar talks with other Chinese groups.
VW’s own software operation, Cariad, has been plagued by problems since it was created in 2020, including budget blunders and delays that have hampered the launch of new electric cars such as the Audi Q6 e-tron and Porsche Macan.
The turmoil led VW Chief Executive Oliver Bloom to oust almost all of Cariad’s top executives this month.
The VW Group, which includes brands such as Audi and Porsche, sells more cars in China than any other manufacturer, but in the fast-growing and potentially lucrative electric car market, the VW brand ranks just ninth, behind Tesla. BYD, which is backed by rivals such as Warren and Warren Buffett, has a market share of 2%.
Seeking to gain a foothold in the country’s electric vehicle market, the German group recently laid out its “in China, for China” strategy and has announced billions of euros in investments in areas including autonomous vehicles in recent years.
It has also been working hard to upgrade its existing operating platform to provide Chinese consumers with advanced entertainment and driver assistance features to meet Chinese consumers’ expectations for new vehicles.
Despite U.S. and European efforts to reduce engagement with China, VW will move to forge deeper ties with Chinese tech groups such as Huawei.
The tech giant has become a symbol of U.S.-China tensions since Washington raised concerns that its telecommunications infrastructure posed a national security risk.
The U.S. has banned Huawei from accessing semiconductor technology and required the U.S. group to obtain a special license to sell to the Chinese company.
Arno Antlitz, VW’s chief financial officer, told the FT’s Future of the Car event last week that the next software platform for premium brands such as Audi and Porsche will launch next year, while the planned The autonomous driving platform is delayed until 2027 or 2028.
A person familiar with VW’s talks with Chinese companies said the discussions reflected “how big the problem is for a group like VW, its (unique selling proposition) being their size and platform”.
VW is also aware that Chinese software partners could attract Chinese customers who “support local suppliers and are obsessed with the story of technological self-reliance,” another person said.
Huawei did not respond to a request for comment.
Volkswagen said its “existing software is under continuous development”, but added that its Chinese unit was not in talks with any company about licensing the full operating system.
Tu Le, founder of Beijing-based consultancy Sino Auto Insights, said foreign automakers’ struggle “to put anything competitive on Chinese roads” ultimately created an opportunity for Huawei.
“Huawei can only work with local Chinese brands, many of which have lower sales, but if they can form a partnership with a major foreign (automaker) it can legitimize the technology and the brand,” he said.
Nonetheless, a software outsourcing engineer on the Cariad team said VW needs complex customization services to develop its operating system, which will be a test of the capabilities of Chinese tech companies.
“Whether Volkswagen has planned what kind of software they want, whether Chinese technology companies can understand and meet the strict needs of German car companies. . . These are hard to say,” the engineer said.