It is reported that Volkswagen Group will set up a software joint venture in China, at a cost of nearly 7 billion yuan.

Oct. 9, according to foreign media reports, people familiar with the matter said that Volkswagen Group is planning to invest in a software production joint venture in China, with an investment of more than 1 billion euros (about 6.96 billion yuan). An official statement on the plan is expected to be released next week.

Volkswagen has been cleaning up its vast business to free up money to develop battery and software capabilities. In December, the company said it would invest 89 billion euros ($101 billion) over the next five years in future technologies such as electric cars and digital to improve its competitiveness.

It is reported that the company plans to build the largest fleet of electric vehicles in the industry. The company aims to replace Tesla as the leader of the electric vehicle industry by 2025.

Software is likely to play an important role as carmakers such as Volkswagen join the ranks of car companies that hope to overtake Tesla in the future. Focusing on research and development, with a major emphasis on software, could help global carmakers make a successful transition to electric vehicles.