Written by / Chen Yixun
Editor / Sun Chunfang
Not long ago, a transaction worth 16.8 billion yuan set a record for Volkswagen’s largest single investment in China in 40 years.
Volkswagen’s software company CARIAD plans to invest about 2.4 billion euros (about 16.88 billion yuan) to set up a joint venture with the domestic autonomous driving chip unicorn company Horizon to jointly develop advanced assisted driving systems and autonomous driving solutions. The transaction is expected to be in Completion in the first half of 2023. At the same time, Su Qing, a former Huawei executive and a figure in the field of autonomous driving, will also join the joint venture or serve as the head of a certain technology.
The intention of Volkswagen’s investment is obvious, that is, to improve the intelligence level of its new energy vehicles through Horizon’s advantages in autonomous driving software algorithms, thereby improving the performance of new energy products in the domestic market. But now as domestic new energy car companies are getting more and more involved, from the emphasis on product power in the past to the competition of computing power algorithms, can Volkswagen’s 16.8 billion yuan cure its anxiety in intelligence?
Source: Visual China
The software anxiety of giant car companies
Volkswagen’s sense of crisis in the Chinese market is getting stronger and stronger.
In the first half of this year, Volkswagen’s ID. family of pure electric products sold 59,000 units in China, less than one-third of BYD’s monthly deliveries and almost the same as Tesla’s monthly deliveries in China. In September this year, BYD delivered 200,000 vehicles and Tesla delivered 83,000 vehicles.
Volkswagen’s sales target in the Chinese market this year is 80,000-100,000 ID. series models. Previously, Diess, the former CEO of Volkswagen Group, said many times that he wanted to surpass Tesla, and wanted to make up for the lack of intelligence through high R&D investment in software, so as to catch up with Tesla.
From the sales data, there is still a big gap between Volkswagen and Tesla, and in the most important software and intelligent fields of new energy vehicles, Volkswagen is also far behind in front of Tesla. Seeing that China’s new energy vehicle track is getting more and more crowded, Volkswagen, who wants to win a round, chose to cooperate with the autonomous driving chip supplier Horizon to jointly develop intelligent software and autonomous driving technology.
Not long ago, Volkswagen announced that its software company CARIAD plans to invest about 2.4 billion euros (about 16.88 billion yuan) to set up a joint venture with Horizon to jointly develop advanced assisted driving systems and autonomous driving solutions. The project transaction is expected to be completed in 2023. Completed in half a year.
The deal is the largest single investment record in Volkswagen’s 40-year history in China. Subsequently, according to 36 Krypton reports, Su Qing, a former Huawei executive and a figure in the autonomous driving industry, will also join the joint venture or serve as a technical director.
Setting up a joint venture to hand over the “soul” of electric vehicles to another supplier is a helpless move for a traditional auto giant like Volkswagen.
Originally, Volkswagen wanted to keep the core technology of car software in its own hands. In July of this year, former Volkswagen CEO Diess said: “The software and hardware of the car must come from the same hand.”
In fact, Volkswagen has its own software and intelligent driving R&D company, which is CARIAD, which invested in Horizon.
In 2020, Diess set up a software division with the aim of creating a self-developed in-vehicle operating system, which can be applied to all car brands under the group in the future. In Diess’s vision, 60% of the software functions implemented by the software department must be independently developed by Volkswagen. Later, the software department began to operate independently, changed its name to CARIAD, the software budget was increased to 27 billion euros, and several subsidiaries were established, including a Chinese subsidiary established in April 2022.
Despite the huge investment, CARIAD research and development has been stagnant for a long time. “At present, many projects in the department are outsourced. Although the code ownership belongs to the Volkswagen Group, CARIAD does not have its own unified code warehouse. The code written by outsourcing is in the warehouse of the outsourcer.” An employee who works in CARIAD revealed.
Due to problems in CARIAD’s research and development, it directly affects the launch time of Volkswagen’s electric vehicles: models such as the Porsche Macan and Audi Q6 e-tron will be delayed until 2024, the Audi Artemis project will be postponed from 2024 to 2026, and even Bentley Electrification targets for 2030 are also affected.
People familiar with the matter said that the fuse of Diess’s dismissal also came from CARIAD. “CARIAD was established during his tenure, but well over budget and years behind on its goal of launching a new software platform.”
After Volkswagen’s new CEO Obermo took over, he changed Diess’ previous aggressive software self-development plan. “We don’t want or have the ability to conduct (software) research and development on our own. We need partners.” Obermo’s remarks indicate that in the Chinese market, where competition in new energy is brutal, the public is more inclined to choose software with a faster delivery speed. fast plan. To some extent, this also laid the foundation for working with Horizon.
However, even if Volkswagen finally chooses to cooperate in research and development, from the perspective of the share ratio of the joint venture company established by both parties, Volkswagen still has the dominant power.
Barrett, chairman of Volkswagen China, explained that on the one hand, Volkswagen will invest US$1 billion in Horizon, which will make Volkswagen a key partner of Horizon and deeply participate in their long-term technological innovation and business development. On the other hand, CARIAD will invest 1.3 billion euros to set up a joint venture with Horizon, in which CARIAD holds a majority stake and holds 60% of the shares.
Source: Visual China
The fact that Volkswagen finally held hands with the Horizon is still somewhat unexpected. Previously, a version that had been circulating in the industry for a long time, “Volkswagen will cooperate with Huawei’s autonomous driving department, and the two sides will jointly form a joint venture company.”
However, according to Volkswagen itself, the two sides actually had contact on cooperation matters at the beginning of this year. “Horizon is our first choice.” Chang Qing, CEO of CARIAD’s China subsidiary, said bluntly in an interview.
As a unicorn in the field of autonomous driving chips in China, Horizon’s journey chip shipments have exceeded 1.5 million, and it has signed pre-installation mass production projects for more than 70 models with more than 20 car companies, which has become the choice of the public. important reasons. The industry believes that with a certain scale of shipments, it means that Horizon’s chips have been verified by the market, and the quality and reliability are guaranteed to a certain extent. For a car company of the size of Volkswagen, chip manufacturers that can ensure controllable quality and large-scale production and supply will be preferred.
Yu Kai, the founder and CEO of Horizon, predicts that by 2030, Horizon will have one of the thirds of the world of in-vehicle chips. In this cooperation with Volkswagen, Horizon has not only added a major customer, but also has stable shipments, and has prepared sufficient funds for subsequent high-cost chip research and development.
“Horizon’s services are very complete, they will help OEMs provide a complete development tool chain, and even some visual perception algorithms have been provided, and they will tell OEMs how to use the development tools, reducing the OEM’s technical standards. Entry threshold.” Li Kaiyu, a senior intelligent driving analyst in the industry, revealed to “Financial World” Weekly.
Compared with overseas chip manufacturers, “cost performance” is another important advantage of Horizon. Yu Kai once revealed that although the computing power of Journey 5 is not as good as that of Nvidia Orin, the price is less than half of that of the other party, and the price-performance ratio is relatively high. Taking Journey 5 and NVIDIA’s Orin as examples, from the product point of view, the computing power of Journey 5 is 128 TOPS, and Orin is 254 TOPS, but in terms of mass production time, Orin will start delivering to car companies in early 2022. Journey 5 requires It will be mass-produced in the second half of 2022, and it will be officially launched in 2023.
Although the scenery is the same today, in the past few years, Horizon has been in the dilemma of commercial realization, and even exposed large layoffs in 2019, and it did not welcome its own major customers until 2020.
In 2019, Horizon launched the first automotive-grade AI chip, Journey 2. The following year, Horizon reached a cooperation with Changan and began to provide the chip for Changan’s main models for use in the field of smart cockpits. This cooperation has enabled the annual shipment of Journey 2 chips to exceed 100,000.
“At that time, Horizon brought a team of about 100 people to work on Chang’an’s project, and worked there for nearly half a year.” Zhang Xin, a smart car software practitioner, told Caijing World Weekly, unlike other overseas mature chip suppliers, who have just At the beginning, Horizon still needs to spend a lot of time debugging with car companies. “Horizon has invested a lot of energy in the project in cooperation with Changan, but in fact, this project is still loss-making. After all, the initial R&D investment was large.”
After Chang’an, the “circle of friends” of Horizon’s auto companies has become more and more extensive, and SAIC, BYD, FAW and GAC have all become Horizon’s customers. “In the past few years, Horizon has had a good relationship with domestic leading car companies. Changan is their important customer, BYD is also their shareholder, and SAIC is also expanding its relationship with them.” Li Kaiyu said.
However, Zhang Xin said that at this stage, the largest shipments of Horizon are mainly smart cockpits and L2-level assisted driving chips. The computing power used by these two types of chips is not high, the cost is low, and the amount of purchase by car companies is large. “At present, it is difficult for Horizon to mass-produce high-end chips above L3 level. Black Sesame, a chip maker several years earlier than Horizon’s establishment, also has very low shipments of high-end chips.”
Car companies go to sea to develop their own chips
The intelligent technology iteration of domestic new energy vehicles has finally ushered in the “spring” of autonomous driving chip manufacturers including Horizon. However, the chips that occupy most of them are still relatively low-end chips such as computing equipment and smart cockpits.
Taking Mobileye, the leading company in the autonomous driving chip industry, as an example, its products mainly solve functions such as vehicle collision warning, AEB emergency braking, and ACC adaptive cruise, which belong to the low-level assisted driving L2 level. Data shows that Mobileye accounts for more than 80% of the global L2 chip supply.
“The computing power of the chips used at the L2 level is about dozens of TOPS. Once the intelligent driving level is upgraded to the L3 level or above, the computing power needs to reach more than 200 TOPS.” Zhang Xin explained that taking Horizon as an example, its current chip journey 2 Compared with Journey 3, the computing power is relatively low, and it is mainly applied to L2-level vehicles, which have a large shipment volume. “Even the higher-end Journey 5, although the official announcement is aimed at high-level autonomous driving, most of the models it cooperates with are low-end models, and the price of the vehicles is generally below 150,000 yuan.”
BYD, the “first brother” of domestic new energy sources, selected NVIDIA chips for part of its autonomous driving solutions, mainly for intelligent driving and intelligent parking, and the other part chose the Horizon Journey 5. The industry believes that BYD’s choice is still based on cost considerations. The price of NVIDIA chips is high, and the price is difficult to drop below 250,000 yuan. Journey 5 is just suitable for BYD’s lower-level models.
On the side of car companies, in order to improve the competitiveness of their products and avoid being stuck by chip manufacturers, many domestic car companies have begun to develop their own chips, trying to hold the “soul” firmly in their hands. Tesla has proven to the industry that its self-developed chips can be mounted on its models, and low-cost large-scale applications have further accelerated the commercialization of autonomous driving.
Among the traditional car companies, BYD, Geely and SAIC are all developing their own chips, and even some new car companies have also ended up developing their own chips. However, at present, most of the research and development in the industry are low-end chips. Geely mainly develops chips in the field of smart cockpits, while BYD and Ideal are deploying power semiconductors. They also produce MCUs (microcontrollers) for vehicles. It is a chip with lower computing power and control of small functions, which is used in car lights and wipers.
“Many car companies say that they develop their own chips, not from scratch. Everyone develops based on the Arm core and adds their own special needs.” Zhang Xin explained to “Financial World” Weekly that others have already done it. 80% of the work, car companies basically complete the remaining 20%, even if they are “self-developed”.
The high-end chips have a large amount of capital invested in the early stage, which is not affordable for ordinary enterprises. “Later LatePost” reported that developing an autonomous driving chip now requires 3 billion yuan, and it may not be a one-time success. Counting the cost of foundry, packaging and testing, the manufacturing cost of a single Orin exceeds $100.
In addition to funding, another difficulty in self-developed chips is reflected in the manufacturing process of the chips. In the three stages of chip manufacturing, design, manufacturing, packaging and testing, most car companies do not have great difficulties in the early design stage, but are stuck in the manufacturing process. “In the end, domestic car companies are looking for TSMC to manufacture chips.” Zhang Xin said.
Another related practitioner, Zhao Yu, holds the same view. He believes that if you only do chip research and development of network management and cockpit, the threshold is not high. “There are many suppliers of chip design in this direction on the market, and 16nm is enough for the process.” Once it involves high-end chip research and development, it is bound to require a lot of investment, “Horizon is a typical example, and I don’t know how much it has burned since its establishment. billion.” Zhao Yu said.
In Zhao Yu’s view, high-end chips are not simply stacking up the computing power as high as possible. “For example, SoC (system-on-chip), which will integrate various processors such as CPU and GPU. The upper and lower limits of each processor architecture are very different. There are many things to consider. The heaviest indicator on a product will be much worse.”
Yu Kai has said many times before that, in fact, the computing power of a chip cannot be used as the only measure. “A chip with high computing power is not as good as a chip with fast computing power.
Self-developed chips are time-consuming and labor-intensive, but car companies are reluctant to give up the differentiated competitiveness brought by future chips. With the rapid increase in the penetration rate of new energy vehicles, car companies are selling more and more cars, and the intelligent experience brought by high-end chips is one of the key competitiveness of car companies.
However, it cannot be ignored that the technical research and development, capital investment and talent demand behind self-developed chips will also bring a heavy burden to car companies that are already struggling to make profits.
(At the request of the interviewee, Li Kaiyu, Zhang Xin and Zhao Yu are all pseudonyms in the text)