German automaker Volkswagen Group is planning to build all of its Chinese vehicles on the software architecture co-developed with XPeng by 2030, the company told Reuters amid a China factory tour on Thursday.
Over the last few years, the group led by Oliver Blume has partnered with two EV startups to help develop vehicle technology, with its ‘former’ software subsidiary Cariad overseeing the process.
In 2023, Volkswagen partnered with XPeng to jointly develop vehicles for the Chinese market — while acquiring nearly 5% of the Guangzhou-based brand.
The collaboration initially focused on electric vehicles and later included hybrid and internal combustion engine (ICE) vehicles as well.
A year ago, the partnership was also expanded to allow each brand’s customers to use the other’s fast-charging networks, giving owners access to over 20,000 charging stations across 420 cities in China.
Volkswagen and XPeng have co-developed the China Electronic Architecture (CEA), VW Group’s first zonal electronic architecture.
It enables its vehicles to be produced 30% faster and 40% cheaper than when using the German-developed Modular Electric-Drive (MED) platform.
“With 18 months from concept to production, the project marks the fastest timeline Volkswagen Group has ever achieved for an all-new electronic architecture,” VW stated last week.
The first model from the joint venture, the ID.Unyx 07 hatchback, was unveiled in October. Production began at the company’s Anhui plant last week.
VW plans to add about 10 more models using this architecture next year, including combustion-engine vehicles.
Architecture Implementation
Employees of the Hefei plant told Reuters they were given autonomy to make decisions as part of a shift in approach to the software development.
“We have completely optimised our system to accelerate and deliver according to Chinese speed and also according to Chinese customer wishes,” said Finn Cemmasson, who leads a team working on validating how the architecture integrates with in-vehicle hardware.
The company’s collaboration with XPeng on developing the architecture ended last year, with Volkswagen now handling the development internally, Cemmasson added.
It is still unclear whether the CEA platform will support Volkswagen’s hybrid and ICE vehicles, which were added to the partnership later on, or if a separate platform will be developed for them.
VW Group x Rivian
This approach differs from VW’s collaboration with US EV maker Rivian, with which it is also developing a software stack to power its European and US models.
Volkswagen Group announced in late 2024 that both companies planned to create a joint venture, with the German giant investing up to $5.8 billion.
However, the software stack developed with Rivian through the ‘RV Tech’ joint venture is planned not only for deployment across VW vehicles but also for future licensing to other automakers.
As global EV policies evolve, questions have emerged about whether software developed with the EV maker Rivian can also support VW‘s hybrid or ICE vehicles, according to a report by Manager Magazine last year.
The outlet reported last month that, since VW is expected to produce gasoline-powered vehicles for longer than initially expected and Rivian’s software is designed only for pure EVs, the German automaker has kept Cariad operating at an extra cost of billions of euros.
Weak Sales in China
Volkswagen, once the top-selling automaker in China, lost first place to BYD in 2024 and fell to third behind Geely Auto last year.
The company’s registrations in China fell 8% in 2025 across all powertrains, with fully electric vehicles experiencing a plunge of 44% — far from the 32% EV sales uptick experienced globally.
This decline was partly due to the company’s slow adaptation to China’s rapidly electrifying market — a downward trend it is hoping to counter by partnering with local companies such as XPeng or FAW Group.
At XPeng‘s ‘AI Day’ event late last year, the Chinese automaker’s founder and CEO He Xiaopeng announced that the company was planning to open-source its autonomous driving stack to commercial partners — with Volkswagen being the first client.
