The companies will work together to develop technology that can integrate numerous functions for autonomous driving onto a single chip, the statement said.

Horizon Robotics, founded in 2015, supplies customers including Volkswagen's Audi, Continental, Li Auto and SAIC, according to its website. Investors include carmakers like BYD and Great Wall as well as Intel.

Volkswagen already carries out research and development in China but this is its first joint venture focused specifically on technology, an area where it is currently lagging behind Chinese competitors in the electric vehicle market.

The carmaker, which makes around 40% of sales and half of profits in the country, holds a 75% stake in a joint venture with JAC <600418.SS<, a 50% stake with SAIC and 40% with FAW.

($1 = 1.0290 euros)

(Reporting by Victoria Waldersee; Editing by Madeline Chambers)