The news: While Volkswagen, the world’s second-largest carmaker, has dipped its toes in the EV space with a few electric cars, a new report reveals it could buy Huawei’s autonomous driving unit, raising the stakes in the automotive industry.

Why it’s worth watching: The shift to EV has focused largely on converting fleets into electric vehicles, as well as developing the supporting charging and service infrastructure. VW seems to be looking at incorporating autonomous technology into its various brands, per TechCrunch.

• Autonomous driving and autopilot features pioneered by carmakers like Tesla have received a lot of flak, mostly due to driver abuse as well as for their inability to sense pedestrians or cyclists.
• Huawei’s autonomous unit falls under its “smart vehicle solution” business, and while many speculated on Huawei’s entry into EVs, the company has maintained it wants to be a parts supplier, like Bosch.
• Huawei’s AV tech was showcased in a mass-produced Arcfox sedan, which used the tech giant’s chipset and in-car OS.
• If acquired, Huawei’s technology will bolster VW’s larger smart car and EV strategy. The company recently partnered with Argo AI in a joint effort with Ford.
• VW has long had autonomous vehicles on its radar. Its ID.Buzz concept car, a remake of the popular Microbus, was conceptualized as a self-driving vehicle. Production versions of the ID.Buzz are expected to debut in March.

The opportunity: VW adding AV features across its various lines at the same time it plans a transition to EVs puts pressure on the entire industry to look beyond their EV plans and accelerate wider AV feature adoption. 

• If successful, VW can develop and mass produce AV features across its various brands, including Audi, Bentley, Skoda, Seat, Porsche, and Lamborghini. 
• VW’s brands cover the gamut of pricing and vehicle types, which can go a long way in standardizing autonomous technology across the industry, making them competitive to EV buyers.

The big takeaway: Traditional automakers are clawing for every advantage in the upcoming shift to EVs. For companies like VW, adding more advanced AV technology to their upcoming EV offerings at scale would disrupt the market, provided they can manage vehicle pricing and address AV safety issues.