Volkswagen may put Chinese car software in European models, leaving its R96bn Rivian deal stranded

Volkswagen is considering whether the software it already runs in its Chinese cars should go into its mainstream European models, a move that would leave its American partner Rivian on the sidelines, Sowetan reported on Tuesday.

The system is the China Electronic Architecture, built for Chinese models together with the Chinese electric carmaker Xpeng. According to the report, which cites sources and was carried by the wire agency Reuters, it could underpin the next wave of vehicles sold under the group’s volume names, Volkswagen itself, Skoda and Cupra.

Thomas Schäfer, who leads the core brand, is due to lay the plan before management on Tuesday, the report says. On its account, the architecture would be used in about three quarters of the next generation of those three marques, which are pushing out more electric models across Europe.

Volkswagen would not be drawn on the report. The company declined to comment.

The decision, if it goes ahead, would cut across a bet the group has already made in public. Volkswagen has until now run two software tracks. The Xpeng-developed architecture serves China. For the Western world it has been building a separate system with Rivian, in an investment of $5.8bn, or R96.51bn at the rate used in the report, which sits at the heart of chief executive Oliver Blume’s software strategy.

That split was meant to keep the two markets apart. The report suggests the wall may be coming down on the European side, where the volume brands compete hardest on price.

There is a reason the question is being asked at all. Volkswagen has found it hard to keep up on software. The group sells everything from budget hatchbacks to Audi and Porsche, and that spread has made it difficult to scale a single system across the range. The strain has shown inside Cariad, its in-house software unit.

For South African drivers, the near-term effect is not a change on the forecourt. The models in question are the European next generation, and the report does not say what any decision would mean for production or for the line-up sold here. What it does signal is where the group thinks its engineering money is best spent, and that is a question with consequences for every market Volkswagen serves, including this one.

Volkswagen’s position in South Africa rests on the volume brands named in the report. Skoda sells here, and the Volkswagen brand itself is among the country’s largest car sellers, with a dealer network and a parts supply chain that reach well beyond the metros. A group that settles its software direction in Europe is a group that settles it for the cars it ships to South Africa later.

The Rivian money is the part that will draw attention in Wolfsburg and in Detroit. A partnership worth R96.51bn is not quietly set aside. If the Chinese architecture takes the volume brands, the Rivian system would be left with the higher-margin end of the range and with the American market, a narrower brief than the one announced.

None of this is settled. The report rests on sources it does not name, Volkswagen has said nothing, and the management meeting on Tuesday is the first real test. A proposal put to management is not a decision taken, and the company has given no indication of how it will respond.

What is clear is the direction of travel the report describes. Volkswagen built a system for China because it had to compete there. It is now weighing whether that system is good enough for Europe. If the answer is yes, the group’s software strategy changes shape, and the R96.51bn Rivian investment becomes a question rather than an answer.

Source: Sowetan, Volkswagen considers using Chinese software for Europe, report says