🚙🔋Volkswagen follows Tesla's lead - China's CEA electric architecture will make future electric cars another 40% cheaper

Volkswagen, in collaboration with the Chinese company Xpeng, has developed a new architecture for CEA electric vehicles, which will further reduce the cost of future fully electric models powered by batteries.

CEA - Volkswagen's new electric vehicle platform for China

The CEA architecture will serve as the basis for future Volkswagen electric vehicles specifically designed for the Chinese market. The German automotive giant plans to transition to this platform starting from 2026. The CEA platform will help reduce costs by a target of 40%, compared to the well-known MEB developed in Germany, by reducing the number of control units. The architecture utilizes a central computer and modular structure to manage all electronics and provide various innovative features, such as autonomous driving.

Tesla is currently the market leader in this type of architecture, gradually reducing the amount of wiring and components in cars to improve efficiency and cut production costs.

Last year, Volkswagen acquired a 4.99% stake in Xpeng for approximately $700 million and announced the joint development of two new models that will be released under the Volkswagen brand by 2026. It was reported that both models would utilize the Xpeng (Edward) G9 platform. In February, Volkswagen, which is currently catching up like a frog to a goose to regain its position in China amid pressure from local manufacturers, announced that an SUV would be the debut model on the Xpeng platform. By combining efforts and achieving economies of scale, the partners aimed to reduce development time by 30%.

By the end of 2022, Volkswagen lost its leadership in China to the local electric car manufacturer BYD - last year, its market share dropped to 14% from 18% in 2018, amidst continuous decline in sales of ICE vehicles. Now Volkswagen is actively catching up, primarily by expanding its offerings in the medium and entry-level segments of the electric vehicle market. Last week, Volkswagen announced investments of 2.5 billion euros to expand its production and innovation center in Hefei, Anhui Province, China. The Chinese Volkswagen ID.3 became the best-selling model after a temporary price reduction of $5,100 - reaching a new minimum of $17,500.

Chinese-made electric vehicles, including the Chinese Volkswagen ID.4 (primarily due to its price), remain the undisputed leaders in the Ukrainian electric vehicle market. It is unlikely that this trend will change in the near future.