VW and Geely-backed Ecarx eye smart car tie-up for western markets

Volkswagen is in talks with digital cockpit system developer Ecarx to put the Chinese company's technologies in cars it sells in developed markets, such as Europe and the US, Ecarx's CEO said on Wednesday.

Volkswagen has a partnership with the Geely-backed firm to manufacture smart cars in Brazil and India with Ecarx's digital cockpit system Antora 1000, which features its proprietary chip and software and offers services such as voice recognition and navigation maps.

The two companies are  looking to extend the partnership to include VW's Skoda-branded cars sold in Europe and are also exploring the possibility of launching vehicles equipped with Ecarx technologies in the US, Ecarx CEO Shen Ziyu told Reuters.

VW did not immediately reply to a request for comment.

The plan underscores growing efforts by Western carmakers to leverage Chinese prowess in smart driving technologies to hold on to their global market share after sales declined sharply in China in recent years.

Nearly all legacy car brands have to contend with Chinese electric vehicle makers, which have upended the car industry with sleek software-rich cars.

German luxury carmaker Mercedes-Benz plans to develop smart driving cars for global markets equipped with Chinese firm Hesai's lidar sensors, Reuters reported on Tuesday, the first time a foreign carmaker has sought to use such Chinese-made technology for models sold outside China.

Shen said it took more than a year for Volkswagen to decide on the smart technology supplier among 13 other candidates that included South Korean brands, such as LG and Samsung, and Chinese rival Desay SV.

"The R&D for the entire technologies of consumer electronics, including semiconductors, is rooted in Asia," Shen said.

"That's the main reason why the progress of developing software capabilities in Europe is not smooth."

Volkswagen has had limited success with its in-house software unit Cariad, which plans to lay off almost 30% of staff by the end of the year, the Handelsblatt business daily reported on Tuesday, citing company sources.

Ecarx generates 70% of its revenue from Geely and its affiliated brands and aims to lower its reliance on the Chinese group to below 50% by as early as 2028, Shen said.

Half its revenue would come from overseas by 2030 as Ecarx has been building its R&D teams abroad, a move Shen expects to help address concerns over geopolitical risks involving the use of Chinese technologies.

"China's brutal cost competition can hammer out a stronger supply chain for us to go global," Shen said. "The product cycle, which may only last three years in China, can be extended to 10 or even 15 years overseas."