Volkswagen has partnered with Ecarx to develop smart vehicles in Brazil and India, utilizing Ecarx’s advanced Antora 1000 digital cockpit system. The collaboration may extend to Skoda’s European offerings. While discussions for U.S. market entry are ongoing, the current focus remains on infotainment systems for internal combustion vehicles in Brazil and India. This partnership highlights Western automakers’ interest in Chinese technology amid rising competition from electric vehicle manufacturers. Ecarx plans to diversify its revenue sources and strengthen its global R&D presence.
Volkswagen and Ecarx: A Strategic Collaboration
Volkswagen has forged a significant alliance with Ecarx, a company supported by Geely’s president, Eric Li, aimed at producing smart vehicles in Brazil and India. This collaboration utilizes Ecarx’s innovative Antora 1000 digital cockpit system, which boasts its own chip and software, providing advanced features such as voice recognition and navigation capabilities.
According to Shen Ziyu, CEO of Ecarx, the partnership is exploring the possibility of extending to Skoda brand vehicles sold in Europe. This expansion was confirmed in a recent statement to Reuters, where Mr. Shen discussed the ambitious project focusing on the development of hardware and software for smart cockpit systems. The initial production will take place at Volkswagen’s facilities in Brazil and India, with plans to eventually enter the European market through Skoda vehicles. He referred to this initiative as the Global Entry Infotainment Platform, designed for entry-level infotainment solutions.
Future Prospects and Market Expansion
In response to inquiries about Ecarx products entering the United States market, Mr. Shen indicated that discussions have taken place. While the current agreement with Volkswagen does not include the U.S. market, there are ongoing conversations about potential entry, particularly since Ecarx products are already featured in Volvo and Lotus vehicles, both of which are under Geely’s umbrella.
Ecarx clarified that Mr. Shen’s comments were regarding internal assessments of the technical viability for global markets, rather than a direct partnership with Volkswagen. Meanwhile, a spokesperson from Volkswagen AG emphasized that their collaboration with Ecarx strictly pertains to providing infotainment systems for vehicles powered by internal combustion in Brazil and India, without extending into additional technical domains.
This partnership underscores the increasing trend among Western automobile manufacturers to tap into Chinese advancements in smart driving technologies, especially in light of declining sales within China in recent years. Traditional automakers are now facing fierce competition from Chinese electric vehicle manufacturers, who are revolutionizing the industry with their stylish and technology-rich offerings.
Moreover, luxury carmaker Mercedes-Benz is also venturing into smart-driving vehicles for international markets, integrating lidar sensors from the Chinese firm Hesai, marking a pivotal moment where a foreign automaker adopts Chinese technology for models outside of China. As for Volkswagen, Mr. Shen noted that the selection process for a smart technology supplier was extensive, taking over a year and involving 13 contenders, including prominent South Korean brands and the Chinese competitor Desay SV.
Shen highlighted that research and development in consumer electronics, particularly semiconductors, predominantly remain in Asia, contributing to the challenges European software development faces. Volkswagen’s internal software division, Cariad, has encountered limited success and is reportedly planning to reduce its workforce by nearly 30% by year-end, as per the business daily Handelsblatt.
Currently, Ecarx generates 70% of its revenue from Geely and its associated brands. The company aims to decrease this reliance to below 50% by 2028 and aspires for half of its revenue to originate from international markets by 2030. This strategy aligns with Ecarx’s efforts to bolster its research and development teams globally, addressing geopolitical risks associated with Chinese technology.
Mr. Shen concluded by stating that China’s intense cost competition provides an opportunity to enhance their supply chain and expand internationally, allowing product cycles that span 10 to 15 years abroad, contrasting with the typical three-year cycle in China.