Volkswagen Group is considering using its China-developed CEA electronic architecture in European volume models, a move that could save the automaker between €4 billion and €5 billion, according to a report by Manager Magazin. The proposal has sparked debate within the company’s management over costs, software strategy and the future of its partnership with Rivian.
The Volkswagen Core brand group, which includes Volkswagen, Skoda and Cupra, needs to improve its financial performance by around €12 billion by 2030 while reducing planned investments by nearly €15 billion.
Against this backdrop, brand chief Thomas Schäfer and China board member Ralf Brandstätter have proposed deploying the CEA architecture in future European models, potentially including the ID. Golf, ID. Passat and Skoda Enyaq.
According to Manager Magazin, the proposal focuses on high-volume electric vehicles built on Volkswagen’s upcoming Scalable Systems Platform (SSP), spanning models from the size of the ID. Polo to those comparable to the Tiguan. The affected vehicles could account for around three-quarters of the group’s future electric-vehicle production.
China-Developed Architecture Offers Lower Costs
Volkswagen developed the CEA architecture through its Volkswagen China Technology Company (VCTC) in Hefei, working with Chinese automaker Xpeng. The system has already been deployed in Chinese-market models, including the ID. Aura and ID. Era, according to the report.
VCTC chief executive Thomas Ulbrich, who helped implement the Xpeng partnership and prepare the architecture for production, is among the proposal’s supporters.
The financial comparison with Volkswagen’s planned software collaboration with Rivian is central to the debate. Manager Magazin reports that development work at RVT, the Rivian joint venture, costs around €174 per hour, compared with approximately €60 in China and €120 in Germany.
According to estimates cited in the report, an electric vehicle such as the next-generation Tiguan could cost around €8,000 more to develop or produce with the Rivian software solution than with the China-developed alternative. Adopting CEA across volume models could therefore generate savings of €4 billion to €5 billion.
Volkswagen’s European software projects, including those associated with Audi and Porsche, have faced repeated delays, adding pressure to find a more cost-effective and timely approach.
Rivian Partnership Faces Potential Impact
The proposal has encountered resistance within Volkswagen’s management. Audi chief executive Gernot Döllner helped establish the Rivian alliance and supports using its software architecture for vehicles outside China.
If Volkswagen’s high-volume brands switch to CEA, the Rivian joint venture could lose a substantial share of its anticipated production volume. That could increase fixed costs per vehicle for brands that continue using its technology, including Audi and Porsche.
Schäfer’s strategists reportedly argue that the Core brand group could still achieve net savings of around €3 billion even if it continues contributing to the Rivian venture.
The decision therefore involves more than comparing development costs. Volkswagen must also consider how a change in architecture would affect the economics of its existing partnerships and the allocation of software costs across its brands.
Cybersecurity and European Jobs Add to Concerns
Adapting software developed for the Chinese market to European cybersecurity requirements and vehicle approval standards would require additional engineering work and expenditure. The architecture may also face barriers to adoption in the United States because of political and regulatory concerns surrounding Chinese technology.
A broader shift of software development to Hefei could also put further pressure on software engineering jobs in Europe, where Volkswagen has been working to reduce costs and address delays in its development operations.
These issues complicate the potential savings. While CEA may offer lower development costs, Volkswagen would need to establish that the system can meet regional regulatory requirements and support its global product strategy.
Wider Competition in Affordable EV Technology
The debate is unfolding as other European automakers explore partnerships with Chinese technology providers to reduce electric-vehicle development costs.
Opel chief executive Florian Hüttl has announced plans for a fully electric C-segment SUV in 2028 based on the electric architecture of the Leapmotor B10. Within Volkswagen, the development has raised concerns that Stellantis could gradually extend Leapmotor technology across more of its volume brands.
For Volkswagen, the comparison highlights the competitive pressure to lower the cost of electric vehicles while accelerating development. Choosing a software architecture that is less expensive to implement could become increasingly important as automakers compete in mainstream segments.
Executive Board to Make Final Decision
The final decision rests with Volkswagen AG’s Executive Board, led by Group CEO Oliver Blume. Chief financial officer Arno Antlitz is expected to play a particularly influential role because of the group’s substantial cost-reduction targets.
Volkswagen has not publicly confirmed that it will adopt CEA for European volume models. The proposal remains under consideration, with the outcome likely to depend on the balance between projected savings, the future of the Rivian partnership, regulatory requirements and the group’s longer-term software strategy.