Volkswagen has held talks to use Huawei software in its cars in China, hoping to boost flagging efforts to claim a bigger share of the world’s biggest electric-vehicle market.
According to three people familiar with the situation, the carmaker has engaged in conversations with Huawei over the use of its technology in VW vehicles, while another person said the German company had held similar talks with other Chinese groups.
VW’s own software operation, Cariad, has been beset by problems since its creation in 2020, including budget misses and delays that led to hold-ups in the launch of new electric vehicles such as Audi’s Q6 e-tron and Porsche’s Macan.
The turmoil led Oliver Blume, VW’s chief executive, to remove nearly all of Cariad’s top executives this month.
The VW group, which includes brands such as Audi and Porsche, sells more cars overall than any other manufacturer in China, but in the fast-growing and potentially lucrative EV market, the VW brand trails in ninth place behind rivals such as Tesla and Warren Buffett-backed BYD, with a market share of 2 per cent.
In a bid to gain ground in the country’s EV market, the German group recently set out an “in China, for China” strategy and has in recent years announced billions of euros’ worth of investment in areas including autonomous vehicles.
It has also been working to upgrade its existing operating platform with the sophisticated entertainment and driving assistance features that Chinese consumers expect from newer vehicles.
A move by VW to forge deeper ties with Chinese tech groups such as Huawei would come despite efforts by the US and Europe to reduce their exposure to China.
The tech giant has become a symbol of US-China tensions since Washington raised concerns that its telecommunications infrastructure posed a national security risk.
The US has banned Huawei’s access to semiconductor technology and required special licences for American groups to sell to the Chinese company.
Arno Antlitz, VW’s chief financial officer, said last week at the Financial Times Future of the Car event that the next software platform for its premium brands such as Audi and Porsche would be rolled out next year, while a planned autonomous driving platform was delayed to 2027 or 2028.
One person familiar with the talks between VW and Chinese companies said the discussions reflected “how big the problem is for a group like VW, whose [unique selling proposition] is their scale and platforms”.
Another person said VW was also aware that a Chinese software partner might appeal to Chinese customers who are “in favour of local suppliers and obsessed with [the] tech self-reliance tale”.
Huawei did not respond to a request for comment.
VW said its “existing software [was] continuously being developed” but added that its Chinese division was not in talks with any companies about licensing a full operating system.
Tu Le, founder of Sino Auto Insights, a Beijing consultancy, said the foreign carmakers’ struggle “to put anything competitive on Chinese roads” has ultimately created an opportunity for Huawei.
“Huawei has only been able to partner with local Chinese brands, many of them with fewer sales, but if they can secure a partnership with a major foreign [carmaker], it legitimises the tech and brand,” he said.
Still, a software outsourcing engineer of the Cariad team said VW needed sophisticated customisation services to develop its operating system, which would be a test for the capabilities of Chinese technology companies.
“Whether VW has planned what kind of software they wanted, and whether Chinese technology companies can understand and fulfil the rigorous needs of a German car company . . . these are hard to say,” the engineer said.