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BEIJING, October 14 (TMTPOST)— Volkswagen Group"s software unit CARIAD will set up a joint venture with China"s domestic chip company Horizon, in which CARIAD will hold a 60% stake, the Group announced on Thursday.

Volkswagen Group plans to invest about 2.4 billion euros ($2.3 Billion) in the partnership, with the transaction to be completed in the first half of 2023. The partnership will accelerate the development of the group"s advanced driver assistance systems and autonomous driving systems for the Chinese market, according to Volkswagen.

CARIAD will work with Horizon to develop leading-edge, highly optimized full-stack advanced driver assistance systems and autonomous driving solutions that integrate numerous functions for autonomous driving onto a single chip to improve system stability, save costs and reduce energy consumption, which will be available only in China.This technology will be applied to the Group"s all-electric models in China.

The Volkswagen brand"s CEO Ralf Brandstatter said: "China is a dynamic market and the most important business area for the Group worldwide. The cooperation with Horizon is a cornerstone for the Group to advance its strategic transformation and enhance its business in China. The future joint venture will develop cutting-edge technologies, including complete hardware and software stack technologies, enabling us to deliver customized products and services to Chinese consumers at a faster pace and on a consistent basis."

Smart driving, empowered by advanced driver assistance systems and autonomous driving systems, is a key technology with huge market growth potential for the future travelling. The development of technologies related to smart driving is critical to the intelligent transformation of the mobile industry. Both parties are committed to accelerating the development and commercialization of autonomous driving software and hardware technologies in the Chinese automotive market.

Founded in Beijing in 2015, Horizon Robotics has supplied customers including BYD, Volkswagen’s Audi, Continental, Li Auto and SAIC, according to its website. Investors include carmakers like BYD and Great Wall Motors as well as Intel.