Volkswagen is to take a 60 percent stake in a $2 billion technology JV with China’s Horizon Robotics.

BERLIN, Oct 13 (Reuters) – Volkswagen’s software unit Carid ( VOWG_p.DE ) said on Thursday it would spend more than $2 billion and take a 60% stake in Chinese technology company Horizon Robotics. Software and the Chinese market.

The automaker will invest $1 billion in Horizon Robotics and an additional 1.3 billion euros ($1.26 billion) in the joint venture, with the transaction set to close in the first half of 2023.

Together, the companies will develop technology to drive multiple functions autonomously on a single chip available only in China.

The venture means Volkswagen has a supplier in each of its major regions — North America, Europe and China — in terms of supply ties with U.S. chipmaker Qualcomm and Franco-Italian STMicrolectronics ( STM.BN ).

In contrast to the partnership with Qualcomm, Volkswagen’s software division Carid will play an active role in developing chip technology with Horizon Robotics, and knowledge will be shared within the Volkswagen Group, the Chinese carmaker’s Ralf Brandstatter said.

“That’s why this collaboration with Horizon Robotics is so profound,” he added.

It’s part of a broader push by Volkswagen to strengthen its software offering and make a dent in China’s electric vehicle market, which has been undercut by domestic rivals – notably BYD ( 002594.SZ ) and Tesla ( TSLA.O ).

In the year Founded in Beijing in 2015, Horizon Robotics has supplied customers including BYD, Volkswagen’s Audi, Continental ( CONG.DE ), Li Auto and SAIC.

Investors include automakers such as BYD and Great Wall Motors, as well as Intel.

($1 = 1.0283 EUR)

Reporting by Madeline Chambers, Miranda Murray and Barbara Lewis Editing by Victoria Waldersee

Our standards: The Thomson Reuters Trust Principles.