VW declares war on Chinese cars: a plan to change everything

Faced with overwhelming competition from Chinese electric vehicles, Volkswagen has launched its counteroffensive. It plans to reduce technological costs by 40% and drastically shorten development times, a move that seeks to redefine the rules of the game.

In a move that reflects the existential urgency sweeping the European automotive industry, the Volkswagen Group has unveiled a crash strategy to compete with and defeat Chinese electric vehicle (BEV) manufacturers. The plan, centered on a drastic 40% cost reduction for its new technology platform, is not just a defensive measure, but an all-out offensive that threatens to reshape the continent's entire supply chain.

The threat is clear and present. Volkswagen's electric vehicle sales have plummeted in the ultra-competitive Chinese market, while new entrants like BYD plan to launch cars with advanced self-driving for less than $20,000, a cost pressure that is unsustainable for traditional European production models.

At the heart of Volkswagen's new strategy is a historic partnership with Israeli technology giant Mobileye and French Tier 1 supplier Valeo. Together, they will develop and deploy a scalable and cost-effective Level 2+ autonomous driving platform.

• Mobileye will provide the brains of the system: its advanced EyeQ6 chip and perception and decision-making software.
• Valeo will provide the senses: the complete set of sensors (cameras, radars) and will be responsible for the system's integration into the vehicles.

This collaboration will allow Volkswagen to equip its high-volume VW, SEAT, and Skoda vehicles with the MQB platform by 2027. The goal is to offer advanced features such as hands-free highway driving and automatic lane changes at a radically lower cost.

This deep partnership model marks the end of an era for the industry. Historically, automakers (OEMs) like Volkswagen purchased individual components from a multitude of suppliers: the radar from one company, the cameras from another, the software from a third. The result was a fragmented, expensive, and difficult-to-upgrade system.

The new strategy, driven by the concept of a "software-defined vehicle" (SDV), centralizes computing power into a single, powerful controller. This not only reduces complexity and cost, but also allows Volkswagen to maintain control over the software, the most valuable part of a modern vehicle, and offer updates and new features "over the air" (OTA), just like a smartphone.

"Our goal is to achieve cost parity with local competitors for entry-level compact vehicles by 2026. […] The China Main Platform (CMP) aims to reduce costs by 40%." – Volkswagen Group statement.

For traditional Tier 1 suppliers that only manufacture hardware, the message is stark: adapt or die. Survival in the new automotive industry will require becoming software and integration powerhouses, capable of collaborating in these strategic alliances. A wave of consolidation and disruption is anticipated in the European components sector.

Perhaps the most revealing aspect of Volkswagen's strategy is its strategic humility. The German giant is openly adopting the Chinese development model to compete. It has created a "China Core Platform" (CMP) and a "China Electric Architecture" (CEA) in collaboration with local partners such as XPENG.

The goal is to reduce the time to launch new products by 30% by adopting a faster, more locally focused approach. It's an implicit recognition that the traditional, meticulous German engineering cycle, while producing high-quality vehicles, is too slow and expensive for the breakneck pace of the BEV market.

Volkswagen isn't just fighting for market share; it's fighting for its future relevance. The offensive it has launched isn't just against its competitors, but against its own way of doing things. It's a reinvention forced by necessity, one that could save the German giant or usher in a new order in the global automotive industry.