Volkswagen Invests $180 Million in a Chinese AI Startup

Volkswagen is doubling down on China and AI in one fell swoop after the automaker announced a $180 million investment in Chinese startup Mobvoi to bring smart technology into its cars.

Unlike a regular capital raise, VW’s money is going into a joint-venture that will “develop and apply AI technologies to automotive industry” rather than Mobvoi itself, the companies said in a statement. VW and Mobvoi will retain 50-50 ownership of the venture.

Beijing-based Mobvoi is a five-year-old startup specializing artificial intelligence, and in particular voice recognition and natural language processing tech. Prior to today, Mobvoi had raised $75 million from investors, including an undisclosed Series C round from Google in 2015. The company was founded by former Googler Zhifei Li.

Mobvoi is best known for its Ticwatch smartwatch, which raised over $2 million on Kickstarter, and Chinese voice-based assistant Chumenwenwen. The company ventured into automotive last year with a smart rear-view mirror that integrates messaging app WeChat, navigation and more, and it seems like that product piqued VW’s interest suitably.

The first fruits of the VC will be the smart mirror, which will be developed and optimized for Volkswagen cars.

“We are impressed by Mobvoi’s innovative approach of AI technology, and we are pleased to form this joint venture to explore the next generation of smart mobility,” Dr. Jochem Heizmann, president and CEO of Volkswagen China said in a statement.

The German carmaker sold 10.3 million vehicles last year to make it the world’s biggest automobile seller. China was a critical component of that success, and its deliveries in the country rose 12.2 percent. That’s largely because it doesn’t sell diesel vehicles in the country, that shielded its China business from issues around its global emission scandal.

Today’s alliance with Mobvoi comes four months after Volkswagen announced mobility solution platform Moia. The separate company exists under the VW umbrella and is dedicated to disruptive transportation, including fleet-based commuter shuttles and, eventually, autonomous on-demand solutions.

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