Post by : Badri Ariffin

Volkswagen has launched an assertive effort to win back ground in China by creating its first in-house chip for smart driving. The automaker said CARIZON, the joint venture with China’s Horizon Robotics, will develop a high-performance processor capable of 500–700 tera operations per second (TOPS), enabling new Volkswagen models to process data from numerous cameras and sensors for advanced driver assistance and autonomous features.

The chip project is central to Volkswagen’s push to localize research and development in China. While the company has not confirmed whether the chip will appear in cars sold beyond China or outlined production plans, it expects the element to be ready within three to five years — a timeline that highlights its urgency to match domestic rivals’ rapid tech advances.

Volkswagen is under pressure after sales in China slid to 2.75 million units in 2024, down from more than 4 million in 2018. The firm also ceded the title of China’s best-selling brand to BYD in 2023, after the latter gained momentum with affordable electric and plug-in hybrid models that appealed to price-sensitive and eco-aware buyers.

To sharpen its competitiveness, Volkswagen has broadened partnerships with local players. Its collaboration with Xpeng to co-develop vehicle electronics architecture for multiple models is one example, aimed at better integrating connected features and improving product appeal through China-focused design.

Industry analysts say the move could help Volkswagen reclaim market share if it can pair powerful, locally developed chips with attractive pricing and contemporary vehicle design. The push for in-house silicon mirrors a wider auto industry trend toward control over core components for smart and electric vehicles.

More than a technical upgrade, Volkswagen’s chip plan signals a clear strategic pivot: the automaker is betting that China-made, high-tech solutions will be central to regaining consumers and restoring its edge in the world’s largest car market.

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