Recently, Chinese media reported that Volkswagen Group is negotiating with Huawei and plans to acquire Huawei’s autonomous driving unit for billions of euros. More specific information on the cooperation is likely to be released at the end of March. 

According to a source acquainted with the situation, the two parties are still negotiating over the contract details, and the initial form of cooperation is to set up a joint venture company, which is funded and controlled by Volkswagen. Huawei, which provides autonomous driving technology, will become a first-tier supplier to Volkswagen. 

“It is equivalent to Huawei selling its autonomous driving business to Volkswagen for around 10 billion yuan,” said a source familiar with the matter. The price is still being discussed, and the two parties are reported to have significantly disparate expectations for it. However, neither Volkswagen Group nor Huawei responded officially to this issue. 

Despite the fact that Volkswagen has released a number of smart electric vehicles, these vehicles have never been considered smart enough to compete with leading electric vehicle manufacturers such as Tesla. 

Whether via acquisition or collaboration, the most essential thing for Volkswagen is to incorporate Huawei’s technology into its autonomous driving capabilities as soon as possible. After the improvement of core competitiveness, Volkswagen will rely on its advantages in branding, manufacturing and channels to greatly increase the market share in China.