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Volkswagen expands footprint in China with artificial intelligence venture

Jochem Heizmann, (2nd R) Volkswagen China CEO, talks with Zhifei Li (2nd L), Mobvoi CEO and co-founder Yuanyuan Li (L), before a news conference announcing the strategic partnership between the two companies in Beijing, April 6, 2017.
Barry Huang | CNBC
Jochem Heizmann, (2nd R) Volkswagen China CEO, talks with Zhifei Li (2nd L), Mobvoi CEO and co-founder Yuanyuan Li (L), before a news conference announcing the strategic partnership between the two companies in Beijing, April 6, 2017.

Volkswagen is betting big on China, expanding its footprint in the world's second-largest economy — despite a slowdown in growth.

The German automaker announced a $180 million investment into Chinese firm Mobvoi on Thursday. The tie-up will focus on implementing Mobvoi's artificial intelligence technology, such as its voice recognition feature and a smart rearview mirror, to help improve drivers' experiences.

"We are impressed by Mobvoi's innovative approach of AI technologies, and we are pleased to form this joint venture to explore the next generation of smart mobility," Jochem Heizmann, CEO of Volkswagen China said in the joint statement.

Despite slower growth in China, Volkswagen has continued to invest heavily in the world's second-largest economy. It's a hugely important market for the firm — 40 percent of its passenger car deliveries worldwide went to China last year. And it's key for Volkswagen as the company continues to battle fallout after it was found to be cheating on U.S. diesel emissions tests.

Volkswagen has said China is of "considerable importance" to its business, and has opened a number of plants in China, producing and assembling hundreds of thousands of vehicles. The company is also committed curating offerings for local markets — the Mobvoi partnership is one such example.

Mobvoi, founded by former Google research scientist Zhifei Li, gained prominence after launching its flagship smartwatch, "Ticwatch," in June 2015. The watch's success led to a direct investment Google a few months later.

The company is only five years old and has already made a big push to develop AI-integrated automobile products after it identified a growing demand for voice recognition applications.

A staff member walks past a slogan which read "AI Meets Auto" at a news conference held by Volkswagen China and Chinese AI company Mobvoi, in Beijing, April 6, 2017.
Barry Huang | CNBC
A staff member walks past a slogan which read "AI Meets Auto" at a news conference held by Volkswagen China and Chinese AI company Mobvoi, in Beijing, April 6, 2017.

Mobvoi has also introduced its Ticmirror to the China market. It's a smart rearview mirror that provides navigation, a search function for points of interest, instant messaging, and on-board infotainment through voice command.

Ticmirror is one of the initial products that the new joint venture will modify and bring to Volkswagen vehicles.

"We are very honored to form this strategic partnership with Volkswagen," Li said. "Mobvoi will continue to develop the cutting edge AI technologies and look forward to bringing car owners the unparalleled user experience via this partnership."

—CNBC's Barry Huang contributed to this report.