The intelligent transformation of joint venture automobile enterprises has emerged as a central theme at this year’s Shanghai International Automobile Exhibition, particularly among German automakers, whose market share in China often exceeds 30%. As the pace of technological innovation accelerates in China, these companies are being compelled to evolve beyond traditional joint venture models.
Volkswagen Group stands out as one of the most proactive multinational players in this shift. During the auto show, Thomas Ulbrich (Wu Borui), CTO of Volkswagen China, and Han Sanchu, CEO of CARIAD China, Volkswagen’s software subsidiary, provided detailed insights on Volkswagen’s evolving intelligent strategy in China, the division of roles between the company and its local partners, and the group’s long-term localization objectives.
Ulbrich openly acknowledged that the Volkswagen Group’s traditional joint venture structure—centered on cooperation between its German headquarters and its two Chinese ventures, FAW-Volkswagen and SAIC Volkswagen, has become increasingly misaligned with the demands of China’s fast-moving automotive sector as the previous collaboration model between Germany and the two joint ventures is no longer compatible with the realities of the Chinese market, said Ulbrich.
In response, Volkswagen has established an independent technology company, Volkswagen China Technology Company (VCTC), located in Anhui province—effectively shifting a portion of its headquarters 7,000 kilometers eastward. This strategic move grants VCTC full technical authority and autonomy, responsibilities that were previously centralized in Wolfsburg, Germany.
According to Ulbrich, VCTC now serves as the sole technical interface for joint ventures such as FAW-Volkswagen and SAIC Volkswagen. Functioning as an independent R&D entity, VCTC possesses both decision-making authority and technical validation capabilities. Positioned within the same time zone as its key partners and operating fully in Chinese, VCTC is designed to move at “China speed” and respond directly to local market demands.
This localization initiative is part of Volkswagen’s broader strategy of “In China, for China.” Amid rising geopolitical tensions and increased global trade uncertainties—particularly under the protectionist policies of the current U.S. administration—this strategy aims to safeguard Volkswagen’s position in China’s market and ensure long-term business sustainability.
Beyond establishing VCTC, Volkswagen has deepened its commitment to local innovation through strategic, capital-bound partnerships. These include collaborations with Xpeng Motors and autonomous driving solution provider Horizon Robotics.
In 2022, Volkswagen invested €2.4 billion in Horizon and formed a joint venture CARIZON, focused on intelligent assisted driving. In 2023, it invested $700 million in Xpeng, with plans to integrate their jointly developed China Electronic Architecture (CEA) platform across Volkswagen’s electric vehicle lineup in China, including two co-developed models expected to launch in 2026.
These partnerships are already bearing fruit. Volkswagen’s ADAS (Advanced Driver Assistance Systems) platform with Horizon is gradually being implemented, leveraging China’s dynamic ecosystem of autonomous driving technology providers—such as Huawei, Momenta, DJI Automotive, DEEPROUTE.AI, and QCraft. Open collaboration with these companies has become a standard strategy across the industry, even among competitors like SAIC, BYD, and SAIC Volkswagen.
The Volkswagen-Horizon partnership has attracted particular attention due to its co-development model, which departs from the traditional supplier-client relationship. Han Sanchu describes Horizon not merely as a vendor, but as an ADAS One Team competence center. While Horizon focuses on deep algorithmic and architectural development, Volkswagen engineers manage rapid integration and system interfaces. This transparent, collaborative model overcomes the limitations typical of traditional Tier 1 and Tier 2 supplier arrangements.
Furthermore, the integration of Horizon’s technology is tightly aligned with the CEA platform, enabling Volkswagen to rapidly deploy L2+ and L2++ ADAS capabilities, with an eye toward achieving L3 autonomy by 2027. The high compatibility between Horizon’s software stack and Volkswagen’s CEA framework underscores the efficiency and long-term strategic alignment of the collaboration.
However, despite Volkswagen’s resolute push toward intelligent transformation in China, its various brands are progressing at different speeds. Notably, the CEA architecture and related ADAS technologies are not currently shared with the premium brand Porsche.
Ulbrich explained that Porsche models, which are designed and manufactured in accordance with European standards, do not currently support integration with the CEA platform. Given their import-based structure and differing engineering foundations, adapting these models to the CEA system is not feasible in the short term. Future integration, he noted, would depend on broader strategic alignment within the Volkswagen Group, as well as evolving technological and product development timelines.
With SAIC-Volkswagen and other joint ventures already established in intelligent systems and electrification, what is the current and future relationship between VCTC and the two joint ventures (FAW-Volkswagen and SAIC Volkswagen)? How will technology roles and responsibilities be divided going forward?
Reflecting on past practices, the previous cooperation model limited to direct collaboration between the German headquarters and the two joint ventures proved increasingly inadequate to meet the dynamic and specific demands of the Chinese market.
In response, with the establishment of VCTC, all technical authority and responsibilities previously centralized in Wolfsburg have been transferred to China. Moving forward, the joint ventures will interface exclusively with VCTC for technical cooperation, making VCTC their sole technical collaboration partner.
In essence, VCTC functions as an independent R&D entity separate from the Wolfsburg headquarters, empowered with full technical decision-making and validation capabilities.
Strategically located within the same time zone as the Chinese teams, VCTC aligns closely with local work rhythms and operates at what we call “China speed.” Moreover, VCTC adopts a fully localized approach—from mindset and communication style to working language—enabling more effective service to the Chinese market.
Importantly, VCTC holds a critical responsibility: ensuring that every Volkswagen Group model continues to embody the core reliability and safety standards that define the Volkswagen brand. Through this collaborative model, VCTC effectively integrates the “Volkswagen DNA” with technical solutions tailored for China, striking a balance between preserving tradition and driving innovation. This synthesis represents the fundamental role of VCTC within Volkswagen’s business ecosystem in China.
As a senior executive of Volkswagen Group, how do you assess the impact of rising global tariff barriers on the automotive industry? Do you foresee the industry moving away from global cooperation toward more regionalized production models?
The Volkswagen Group consistently upholds a core philosophy advocating for a consensus-driven, stable, and open trade system that encourages free dialogue and fosters the healthy growth of global trade.
From this standpoint, our “In China, For China” strategy is highly forward-looking. It functions as a protective umbrella, shielding our operations in the Chinese market from the uncertainties arising from current trade disputes, thereby ensuring the stability and sustainability of our business activities.
CARIAD and Horizon have established the joint venture CARIZON. Could you describe the current level of involvement from the Volkswagen Group and CARIAD? Regarding the ADAS program, how quickly can issues be identified and resolved when they arise?
First, the Volkswagen Group has long identified ADAS as a core strategic technology, particularly in the Chinese market where penetration rates are exceptionally high. This demand is driven not only by market factors but also by the need for continuous technological innovation. To accelerate capability development and address the complexities inherent in Volkswagen’s traditional processes, we established a joint venture with Horizon—a crucial step in advancing our ADAS capabilities in China.
Second, we have achieved a strong internal consensus on our collaborative approach. The relationship between Volkswagen and Horizon transcends the traditional supplier-client model; Horizon is not merely a vendor but an integral part of an ADAS One Team competence center we have jointly built. Horizon’s core engineers focus on deep software development, architectural design, and algorithms, while Volkswagen engineers lead rapid integration of peripheral architectures and interfaces. This co-development model effectively overcomes the “black box” limitations often seen in conventional Tier 1 and Tier 2 collaborations, enabling more efficient and transparent development.
Third, the ADAS development process is deeply integrated with Volkswagen China’s CEA (China Electrical Architecture) platform. This tight integration enables us to rapidly deploy L2+ and L2++ advanced driver assistance functions, laying the foundation to achieve L3 autonomy by the end of 2027. The development roadmap is fully aligned with the CEA architecture.
Together, these strategic efforts and collaborative innovations allow us to deliver safe, reliable, and rapidly evolving ADAS solutions tailored to the needs of Chinese consumers.
Will Porsche leverage CARIAD China’s R&D advancements for its future intelligent vehicle designs? Additionally, can we expect further optimization of its intelligent driving functions?
The current CEA architecture is an electrical and electronic platform specifically tailored for the Chinese market. In contrast, Porsche models—imported from Europe—are designed and manufactured according to European architectural standards. Consequently, technical integration of the CEA platform with Porsche vehicles cannot be achieved in the short term. Any decision to adopt the CEA system for Porsche will require careful consideration of the Group’s overarching strategy, technological advancements, and product development timelines.
Source: 36kr, cnevpost, volkswagen group
