Volkswagen could roll the software it uses for its Chinese cars out to its mass-market models in Europe, a move that threatens to sideline Rivian, Reuters reported Monday, citing Manager Magazin. VW declined to comment on the report.
The system in question is VW’s China Electronic Architecture, developed with Chinese EV maker Xpeng, and it could form the basis for future cars from the core VW, Skoda and Cupra brands. Core brand chief Thomas Schaefer is expected to present the proposal to management on Tuesday, and it would cover around three quarters of next-generation models from those three brands as they ramp up their EV lineups in Europe.
So far VW has kept its software split, using the Xpeng-developed architecture in China while building a separate system for the Western world with Rivian. That $5.8 billion joint venture sits at the heart of CEO Oliver Blume’s software strategy, and Reuters reported in March that it’s meant to underpin a model revamp across VW’s core brand along with Audi and Scout.
VW has struggled to keep pace on software for years. Its wide range of brands, from mass-market cars up to Audi and Porsche, has made scaling difficult, including at its in-house software unit Cariad, which is a big part of why VW brought Rivian in to begin with.
If Schaefer’s proposal goes through, the Rivian partnership would still have Audi and Scout, but Europe’s highest-volume VW Group brands would be running on the China architecture instead, leaving Rivian with a much smaller slice of the company it partnered with to fix this exact problem.
It seems like the original article in Manager Magazin is pointing at cost as the driving factor. Rivian software is more expensive than the Chinese version. Part of me thinks this is just a negotiating tactic, but if this is true this is a problem that RJ has pointed out before. China has massive structural advantages in both cost of capital and cost of labor compared to American companies. This is a problem not just in the Auto sector but across the entire economy. Have yet to hear a real solution from anyone on this problem.
And honestly, let’s say it even is true, Rivian already got the money