Report: Volkswagen weighs electronics developed with XPeng for Europe, over Rivian's

Volkswagen brand chief Thomas Schäfer wants to use the electronics Volkswagen developed with XPeng for China in its cars for Europe, Manager Magazin reported on 26 October. The proposal would cover about three quarters of next-generation Volkswagen, Škoda and Cupra models, and Schäfer is expected to present it to management on 27 October, Reuters reported, citing the magazine. The magazine says the Chinese electronics cost billions of euros less than the software of Rivian, Volkswagen's US partner. Volkswagen declined to comment.

Two lines kept apart until now

Until now Volkswagen has kept two lines of software apart, Reuters notes. Its cars for China use the electronics developed with XPeng; for the rest of the world it is developing a separate system with Rivian, a $5.8 billion investment at the heart of chief executive Oliver Blume’s software strategy. Rivian’s filings show Volkswagen has put $5.3 billion of it in so far, the last $1.0 billion as a loan on 7 October; up to $460 million more depends on a milestone. The three brands the proposal covers, Volkswagen, Škoda and Cupra, are widening their electric ranges in Europe. At the Paris motor show this month, Schäfer also said Volkswagen is preparing for possible imports of China-developed cars into Europe.

Built in China on XPeng’s licence

The electronics in question are CEA, Volkswagen’s China Electronic Architecture, which Volkswagen says cuts the number of electronic control units in a car by around 30%. Volkswagen’s China technology company and CARIAD China developed it with XPeng, on XPeng’s licence. The first car built with it, the ID. UNYX 07, went into production in December 2025, and the ID. AURA T6 followed on sale in September 2026. From 2027 it is to reach the petrol and hybrid cars Volkswagen makes in China too.

What it could mean for XPeng

XPeng earns from Volkswagen in steps: engineering fees during development, licence fees once cars are in production and, under some contracts, royalties tied to cars sold. Its annual report says it relies mainly on Volkswagen for this revenue, reported within services and others. The reports concern the electronics; XPeng’s VLA 2.0 driving model and Turing chips run in two other Volkswagen models, the ID. UNYX 08 and 09, and Autocar named the UNYX 09 this month as a possible import to Europe. XPulse’s reading: if management backs Schäfer, a design built on XPeng’s licence would sit under most of the next cars from Volkswagen’s core brands in Europe, in place of Rivian’s software. XPeng’s work for Volkswagen, so far all in China, would become part of Volkswagen’s plan for Europe, its home market. What that would pay XPeng is not disclosed yet. Tuesday’s meeting is the first test; XPeng’s own word on the licence would be the second.