Volkswagen reviews Chinese software... “Savings up to 7 trillion won”

German automaker Volkswagen is considering installing Chinese software on vehicles sold in Europe to cut costs, economic media outlet Manager Magachin reported on the 26th (local time).

According to reports, Volkswagen brand CEO Thomas Schaefer plans to soon present to the board of directors a plan to introduce 'Chinese Electronic Architecture', a software jointly developed with Chinese electric vehicle company Xpeng, to next-generation models such as ID Golf, ID Passat, and Skoda Enyark.

This software is only installed on vehicles sold in the Chinese market, and if expanded to European entry-level vehicles, it could save 4 billion to 5 billion euros (about 5.9 trillion to 7.4 trillion won), Manager Magachin said.

In the process of converting to electric vehicles, Volkswagen has been torn apart by creating a software subsidiary, Cariad, to pursue its own technology, but then changing direction to cooperate with American electric vehicle startup Rivian in 2024.

The software being developed together with Rivian is planned to be installed for the first time in the compact car ID Every1 to be released next year. However, the cost of developing software at Rivian and RVT, a joint venture, is four times more expensive than developing it locally in China, automotive media outlet ElektroAuto reported.

At the group level, Volkswagen has begun a major restructuring with the goal of reducing costs by 20 billion euros (approximately 29.6 trillion won) by 2030 and raising the operating profit ratio, which fell to 2.8% last year, to 9%.

Last month, management prepared an additional restructuring plan that was approved by the board of directors, including laying off up to 100,000 of the approximately 660,000 employees worldwide and reviewing other ways to utilize the four plants in Germany. It was also reported that most workplaces have set guidelines to freeze wages until 2030.