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Volkswagen Skips Nvidia, Uses Chinese Chips for New Driver-Assist EV in China

Volkswagen has commenced production of its ID. UNYX 08 electric SUV in China, utilizing Xpeng's Turing chip for L2 driver-assist systems instead of Nvidia's technology. The automaker is collaborating with Chinese firms Xpeng and Horizon Robotics to develop in-house chips, targeting L3 autonomous capabilities within two years. This move is part of Volkswagen's intensified strategy to compete in China's fast-evolving EV market, with plans to launch 20 new models in 2026. Despite a drop in China sales and profits, the company is leveraging local partnerships to enhance car intelligence and appeal to digitally savvy consumers. These efforts underscore the growing importance of China as a hub for automotive innovation and global market testing.

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Volkswagen Skips Nvidia, Uses Chinese Chips for New Driver-Assist EV in China

Volkswagen is accelerating its electric vehicle strategy in China by adopting driver-assist technology from local firms Xpeng and Horizon Robotics, moving away from Nvidia's chips for its upcoming ID. UNYX 08 SUV.

Volkswagen's Chip Partnerships

  • The ID. UNYX 08 will use Xpeng's "Turing" chip, featuring L2 advanced driver-assist systems for highway and urban navigation.
  • Volkswagen has a joint venture with Horizon Robotics, called Carizon, to develop advanced automotive chips for future models, with delivery expected in three to five years.
  • Thomas Ulbrich, CTO of Volkswagen Group China, emphasized that car intelligence is now a primary buyer motivator, shifting from brand loyalty to smart EV features.

Production and Launch Timeline

  • Production of the ID. UNYX 08 started in March 2026 at the Hefei factory in China, with deliveries set to begin by the end of June 2026.
  • The L2 driver-assist feature is already deployed by Xpeng in China, while Tesla's similar system awaits Beijing's approval.
  • Volkswagen aims to achieve L3 autonomous capabilities (allowing hands-off driving under specific conditions) within approximately two years, pending regulatory approval, which would shift accident liability to manufacturers.

Competitive Strategy in China

  • Volkswagen plans to launch 20 new battery or hybrid models in China in 2026, part of a roadmap to 2030 with 50 new models, including 30 fully electric vehicles.
  • This aggressive push follows a 2023 business overhaul to slash development time and costs, responding to fast-moving domestic EV rivals like BYD and Xpeng.
  • Ulbrich noted that China's digitally connected consumers demand integrated smart features, making the market a proving ground for global automotive technology.

Broader China Economic Context

  • China's trade surplus reached a record high in the January-February period, with exports significantly exceeding expectations.
  • Retail sales rose 2.8% year-on-year, and industrial output climbed 6.3% in the first two months of 2026.
  • Over 11 million barrels of Iranian crude oil have been shipped to China since the Iran war began, per CNBC findings.
  • The "OpenClaw" AI agent is trending in China, reflecting rapid tech adoption and consumer spending on AI applications.
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