Volkswagen is deepening its collaboration with Chinese chip and AI specialist Horizon Robotics as it pushes to catch up in the fast-moving market for smart driving in China. The automaker says it intends to begin offering vehicles equipped with Level 3 driver-assistance systems in China in the second half of 2027, with Level 2–capable models already in production and slated to appear on roads in the third quarter.
Under the expanded partnership, Volkswagen will gain access to Horizon Robotics’ AI foundation model and work with the firm to develop higher-level capabilities, including technology suited for robotaxis. The move reflects a broader industry shift in which established carmakers are partnering with Chinese tech companies to accelerate software, AI and autonomous-driving development.
Level 3 autonomy allows a car to drive itself in certain conditions while requiring the driver to remain ready to intervene; Level 4 would permit the vehicle to handle most situations without human intervention. Automakers such as Tesla and BYD already offer advanced driver-assistance features across many models, sometimes as paid options, and Chinese adoption has risen quickly — government data indicates more than 30% of new cars sold in the first half of the year had navigation-guided advanced driving assistance.
Volkswagen’s CEO described China as a key innovation hub for the group, particularly for software, AI and automated-driving work. Vehicles produced by VW China with these smart-driving systems will also be exported to selected overseas markets as the company looks to better utilise production capacity amid slowing domestic sales. Recently VW began exports from China to Kazakhstan and entered the Uzbek market in June.
The partnership comes as Volkswagen faces growing pressure in China, where it has lost market share to local manufacturers, and deals with other headwinds such as U.S. tariffs and rising competition in Europe from firms like BYD and Stellantis. Reports have said VW may cut up to 100,000 jobs and potentially close factories as part of efforts to restore competitiveness.
Volkswagen is not alone among European brands turning to Chinese tech partners for autonomy projects. Stellantis has teamed with Pony.ai to trial robotaxis in Europe, and Mercedes-Benz has launched a self-driving taxi service in Abu Dhabi in collaboration with Momenta. VW’s China work also complements other software and EV partnerships: it co-developed the ID.UNYX 08 with Xpeng for the Chinese market and maintains a U.S. joint venture with Rivian to build EV architecture and software platforms.
As global automakers race to commercialise autonomous and advanced driver-assistance systems, these cross-border tech alliances are likely to intensify. For Volkswagen, the Horizon Robotics deal is intended to speed development and help the company remain competitive in a market where rapid software innovation increasingly shapes winners and losers.