Volkswagen wants to significantly reduce the costs of electric cars with the new compact car platform planned together with its Chinese partner Xpeng. The “China Electrical Architecture” (CEA), which was designed specifically for China, reduces costs by 40 percent compared to the MEB platform created in Germany, the car manufacturer explained on Wednesday in Beijing. This is achieved, among other things, by reducing the number of control devices through a central computer. Two models based on CEA will come onto the market from 2026, the first being a compact SUV. “Competition is very tough and we have to adjust our cost structure to be competitive in this environment,” said VW China boss Ralf Brandstätter. The new vehicle architecture is a crucial step in developing China-specific vehicles and advancing the “In China, for China” strategy.
VW and Xpeng forged the partnership last year when the Wolfsburg-based group bought almost five percent of the Chinese car manufacturer for $700 million. At that time, models on an Xpeng platform were announced for 2026. Volkswagen lost its position as the best-selling car brand in China to local electric car maker BYD at the end of 2022. VW’s market share fell to 14 percent last year from 18 percent in 2018 as sales of internal combustion engine cars fell.
The German carmaker wants to expand its product range in China in order to attract customers in the entry-level and mid-range segment of electric vehicles. However, the price on offer is currently higher than that of many Chinese purely electric competitors. The ID.3 became one of the best-selling electric models in China – thanks to a price reduction of around $5,100.