VW's Chinese software for Europe is smart, but it needs transparency

Is it still "German engineering" if the brain of your next electric Volkswagen was written in Hefei? That is the uncomfortable question behind this week's reports, and we think the honest answer is: it depends on who holds the keys, not on where the code was typed.

Here is what we know. According to a Manager Magazin report relayed by Electric Vehicles, VW brand chief Thomas Schäfer wants about three-quarters of the next generation of Volkswagen, Skoda and Cupra models to run on software and electronics developed in China with Xpeng, rather than on technology from US partner Rivian. The proposal was reportedly headed to the management board. The architecture is called China Electronic Architecture (CEA), and models mentioned include the ID. Golf, the ID. Passat and the Skoda Enyaq. All of this is still a report, not an announced decision.

The number driving it is cost. Motor1 notes that a car like the next-gen electric Tiguan could cost around €8,000 (about $9,000) less to develop if the work were done in China.

The €8,000 gap is the whole argument

Strip away the geopolitics and this is an arithmetic problem. When one region can do the same engineering for thousands of euros less per car, and the product is a mass-market EV where margins are thin, ignoring that is not principle, it's negligence. Volkswagen already ships cars in China with this software, so it is not a PowerPoint promise. We think that matters more than the origin: proven, in-production code beats a partnership still maturing.

It also says something uncomfortable about the Rivian deal. Reports describe the move as threatening to sideline it, and one outlet puts the partnership at USD 5.8 billion. If VW does go this way, that is a lot of strategic capital relegated to a minority role. We would not call that a failure yet, since only part of the lineup is reportedly affected, but it looks like a quiet admission that speed beat loyalty.

And VW is not alone in leaning on Chinese know-how. Mercedes-Benz is deepening its work with Momenta on driver assistance, as Xinhua reported. The industry is converging on a pragmatic view: China iterates faster, so partner with it.

Pragmatism isn't a free pass on data and updates

Here is where we part ways with the cheerleaders. A modern EV is a rolling computer. Who receives its data, where it is stored, and who decides what an over-the-air update changes are not details. Xpeng itself said, when VW expanded the cooperation in August 2025, that the shared architecture could speed software iteration and over-the-air updates, according to CnEVPost. Fine, but fast updates are only good news if you know who signs them off.

The sources we have do not say where European customer data would be processed, who would hold update signing authority, or how the code would be audited. We are not claiming these are problems. We are saying the answers are missing, and buyers should not be asked to take them on faith.

What we would demand

Three things, in our view. First, a plain-language statement from VW on where vehicle data lives and which entities can access it. Second, European control of update approval, with independent security audits published, not just promised. Third, regulators should treat this as a standard cybersecurity and data question applied equally to every manufacturer, not a nationality test. Chinese and German officials are already discussing data recording and vehicle type approval, per the same Xinhua piece, so the forum exists.

Our verdict: Volkswagen is right to take the cost and speed advantage, and the Rivian-first plan looked more like a hedge than a strategy. But the brand's value is trust, and it will only keep it by publishing the rules before the cars arrive. If you are shopping for a future ID. model, ask the dealer those data questions now. The right answer should be boring, specific and in writing.