Volkswagen announced on Friday, March 13, 2026, that it has begun production of the ID, its first all-electric SUV. UNYX 08 using Xpeng’s automotive chip.
volkswagen
Hello, I’m Evelyn. I am writing to you from Beijing. Welcome to the latest edition of The China Connection. This is a concise summary of what I have seen and heard from local companies.
Today we talk to Volkswagen China’s chief technology officer about how the company aims to move away from engines. It obviously starts with a chip, but which company is it from?
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big story
volkswagen is preparing for a chip-driven future. And at least in China, Nvidia Not part of the photo.
Thanks to the advanced technology of local Chinese companies, “for us there is no reason to stick with Nvidia,” Thomas Ulbrich, chief technology officer of Volkswagen Group China, told me last week. We chatted with him in his office during a special day at the German automaker’s Beijing headquarters.
Ulbrich spends most of his time in Hefei, an automotive hub just a few hours from Shanghai.
It is home to Volkswagen’s factory and largest research and development center outside Germany. Regarding semiconductors, we have established a joint venture with a Chinese automotive chip company. horizon roboticspartnership with electric vehicle companies Spenhas developed its own “Turing” car chip.
The Xpeng Turing chip is part of Volkswagen’s first all-electric SUV, the ID. UNYX 08. Production began in Hefei on Friday, and deliveries in China are expected to begin by the end of June. The vehicle is equipped with L2 advanced driver assistance features to help drivers navigate highways and city roads.
This is a driver-assistance feature that Xpeng is already rolling out in China, but Tesla has not yet received approval from the Chinese government for that version.
Ulbrich said Volkswagen is working on the Xpeng chip as well as the Horizon because it also has special expertise in driver-assistance software.
“Why do customers buy cars?” Ulbrich said.
“Ten years ago, it was brand, brand, brand,” he said. “But now it’s mainly about the intelligence of the car, driven by smart EVs.”
He predicts that in about two years Volkswagen cars in China will reach L3 functionality, allowing drivers to take their hands off the wheel under certain conditions. If regulators allow the use of L3, responsibility for accidents will shift from the driver to the manufacturer.
Meanwhile, Carizon, a joint venture between Volkswagen and Horizon, is developing its first advanced automotive chip, expected to be delivered within three to five years.
Nvidia is also betting that automotive chips will become a billion-dollar business. But growth in the segment has slowed in recent quarters, and Nvidia’s former EV partners in China have started developing their own chips in-house.
Regarding the application of artificial intelligence, Ulbrich said that AI integration will happen faster in factories than in cars. He said Volkswagen has already incorporated some AI-powered features into its manufacturing sites.
Mr. Ulbrich is also CEO of the Hefei Research and Development Center, known as Volkswagen Group China Technology Company, a position he has held in China since April 2024. This will be his third assignment to China, following in the late 1990s and 2010s.
catch up with China’s speed
Volkswagen has become one of the most aggressive Western automakers seeking to regain sales in China lost to domestic EV rivals.
But pre-pandemic efforts were slow. At the 2019 Spring Auto Show, Europe’s largest automaker announced it would launch a new line of electric vehicles for China in two years.
China’s rivals were moving much faster. Xpeng has unveiled an electric coupe that customers can drive in about 12 months. BYD launched the Han electric sedan in July 2020 and ramped up deliveries less than a month later.
Now, following a complete overhaul of its China operations that began in 2023, Volkswagen has reduced production times and costs.
“This is a year of accomplishments,” Ulbrich said. He said that in 2026 alone, Volkswagen plans to launch 20 new models on Chinese roads with battery or hybrid solutions.
The roadmap runs through 2030, with Volkswagen aiming to launch 50 new models, including 30 fully electric models. The car will also be exported to other countries.
In fact, this year marks Volkswagen’s largest product campaign in China to date. Group management expressed ambition in last week’s results report, despite a 53% drop in profits and an 8% decline in Chinese passenger car sales.
At the end of the day, survival depends on what attracts buyers.
Ulbrich said consumers in China are highly digitally connected, citing the breadth of smartphone services. “Cars need to fit into this world,” he said, noting that’s why China’s car technology is advancing so rapidly.
In other words, China is not just a training center for companies, but also a market to demonstrate their products, Ulbrich said, suggesting a global strategic advantage.
need to know
China takes Iranian oil More than 11 million barrels of crude oil has been headed to China through the Strait of Hormuz since the Iran war began, CNBC has learned.
Open claw fashion. Lobster-themed AI agents are trending in China, and companies are rushing to take advantage of the opportunity to get locals to spend more on the technology.
Exports will increase. China’s trade surplus increased to a record high in the January-February period, and exports also far exceeded expectations.
The strength of China’s economy. Retail sales in the first two months of this year increased by 2.8% year-on-year. Industrial production rose 6.3%, beating expectations for a 5% rise.
very soon
March 18th: tencent income
March 19th: alibaba The company plans to announce its December quarter financial results. horizon robotics Plans to report full-year results for 2025
March 20: China announces standard lending rate. Spen 2025 financial results report schedule
