Volkswagen plans to to invest up to 2 billion euros ($1.94 billion) in a joint venture with China's Horizon Robotics, Handelsblatt and Manager Magazin reported on Wednesday.
Reuters reported earlier that VW planned a significant investment in a joint venture in the country for software production.
Volkswagen said it could not comment on the specifics of the report, saying only that it was making large investments in software in China and was continuously assessing options for partnerships with local businesses.
The carmaker, which makes about 40% of sales and half of its profits in China, already carries out research and development for vehicle technology in the country, seen as a more advanced market on digital innovation than Europe or the United States.
It operates numerous joint ventures in China, holding a 75% stake in its venture with JAC, a 50% stake with SAIC and 40% with FAW.