Volkswagen is doubling down on autonomous driving in China, announcing on Wednesday that its Chinese automated driving subsidiary CARIZON will deepen its collaboration with Horizon Robotics. The move is designed to accelerate the development of sophisticated self-driving systems by leveraging Horizon Robotics' artificial intelligence models, as competition in the sector intensifies globally.
The German carmaker plans to introduce Level 3 autonomous driving technology—where drivers can legally take their eyes off the road under specific conditions, such as on motorways—to the Chinese market by 2027. Deliveries of these vehicles are expected to begin in the second half of 2026. Volkswagen also intends to roll out Level 2++ technology this year, enabling urban assisted driving that can handle traffic lights, stop signs, roundabouts, and automated turns. Level 4 driverless robotaxis are also on the roadmap.
Strategic Alliances and Export Ambitions
Volkswagen's CEO Oliver Blume stated that this push will strengthen the company's competitiveness in China and open up new opportunities in certain foreign markets. The German auto giant has also partnered with Chinese electric vehicle manufacturer Xpeng to develop a new electronics platform for its Chinese models. This platform will integrate closely with the AI-assisted self-driving technology and allow Volkswagen to export vehicles equipped with these systems to markets across Central and Southeast Asia and the Middle East.
The company's intensified focus on China comes as European automakers face mounting pressure from Chinese rivals, particularly in the electric vehicle segment. Several Chinese cities already operate fully driverless robotaxi services, while companies like BYD have gained significant market share with affordable, feature-rich EVs. Hungary Investigates BYD Subsidies After Ex-Minister Joins Chinese Carmaker highlights the growing scrutiny around Chinese EV subsidies in Europe.
Volkswagen's struggles are emblematic of broader challenges for German carmakers. Falling sales, changing European regulations, and the aftermath of the COVID-19 pandemic have all taken a toll. EU-China trade tensions have further complicated matters, with Beijing scaling back benefits—such as cheaper land and lower tax rates—that had long been extended to European manufacturers like Volkswagen, Mercedes, Audi, and BMW.
Meanwhile, European consumers are increasingly turning to Chinese EV brands for their competitive pricing and modern features. Mercedes-Benz and BMW have even suspended their Level 3 offerings in some flagship models after brief market introductions. Volkswagen itself is grappling with a historic restructuring plan that could see up to 100,000 jobs cut and four plants closed across Germany, as Volkswagen Union Warns of 'Major Conflict' Over 100,000 Job Cuts and Plant Closures details.
Despite these headwinds, Volkswagen's commitment to self-driving technology in China signals a strategic bet on the world's largest auto market as a testing ground and production hub for next-generation mobility. The company's ability to navigate trade tensions and technological competition will be critical to its future relevance both in Europe and globally.
