Tesla’s Only Competitor is Volkswagen

Electric vehicle sales surpass Tesla in the second quarter… Working with Ford to capture the US market.

Volkswagen has the most similar growth strategy to Tesla among global automakers. After holding a ‘Power Day’ comparable to Tesla’s ‘Battery Day’ on March 15th, Volkswagen is evaluated as the only company that can beat Tesla in terms of the number of units sold.

In fact, in the fourth quarter of last year and the second quarter of this year, Volkswagen’s EV sales surpassed Tesla’s. However, it is considered a weakness that half of Volkswagen’s electric vehicle sales are plug-in hybrid cars (PHEV: an intermediate stage between a hybrid car and an electric vehicle that runs by using an electric motor and a petroleum engine together), and that 70-80% of Volkswagen’s electric vehicle sales are concentrated in Europe.

Sales of the ‘ID.4’, which Volkswagen released in March in China, stood at 1,200 units in April and May, accounting for only 30% of the 6,600 units sold in China in the first two months of Tesla’s ‘Model Y’. Volkswagen is expanding its dealer network exclusively for electric vehicle sales and plans to release ‘ID.6’ and ‘ID.4 X’ and ‘ID.Crozz’, which are derivatives of ID.

The Volkswagen Group’s electric vehicle body platform is divided into two types: the modular electric vehicle platform (MEB) and the premium platform electric (PPE) platform. The MEB platform will be applied to popular brands such as Volkswagen, and the PPE platform will be applied to luxury brands such as Porsche.

Based on the MEB platform, starting with ID.3 in Europe at the end of 2019, it is currently producing ID.4. This year, production of ID.4 started in China, and next year, it will be produced in the US plant as well. The PPE platform base is expected to be released next year.

The Volkswagen Group is also working on autonomous driving technology through projects called Trinity, Apollo, and Artemis. The MEB platform, PPE platform, and autonomous driving technology will be unified as a scalable system platform (SSP) after 2024.

The unification of the vehicle platform is closely related to the software platform technology development schedule. The Volkswagen Group is using 70 Electronic Control Units (ECUs) in internal combustion engine vehicles, but in electric vehicles, it is concentrating on three to five high-performance computers and is seeking to integrate the software base into the Volkswagen operating system. This software platform can respond to all body platforms and vehicle types, such as MEB, PPE, MQB (transverse engine dedicated module).

By 2024, Volkswagen plans to upgrade its software platform technology and integrate it with the vehicle platform. In March, it started applying Firmware OTA, which upgrades the vehicle’s hardware performance through wireless communication, and the Volkswagen operating system to the ID series, and announced that it would upgrade the software every three months.

The autonomous driving chip (VW.OS 1.1) applied to the ID series is Continental’s High Performance Computer (HPC), and the autonomous driving software is using the technology of Continental’s subsidiary, Elektrobit.

Volkswagen’s software technology development is being developed together with Microsoft under the leadership of the spin-off Car.Software. Parts companies such as Bosch and ZF and semiconductor companies such as Nvidia and Mobileye are also participating in this. Microsoft is jointly developing not only integrated software but also cloud for big data accumulation.

Cardot Software changed its name to Cariad in March 2021. Carriad currently has 3,000 software engineers, but it is evaluated that the technology is 5-6 years behind Tesla, so the goal is to hire 10,000 engineers by 2025. Through this, the company plans to increase its own software ratio from less than 10% today to more than 60% by 2025.
As Volkswagen can take the first place in global electric vehicle sales based on 11 brands, it is expected to narrow the software technology gap through the accumulation of big data in the future.

A characteristic of Volkswagen’s electric vehicle strategy is that it grows with Ford. Ford has signed a strategic alliance with Volkswagen and plans to start producing electric vehicles from 2023 based on the MEB platform. The current plan is to produce 600,000 electric vehicles based on MEB, and the sales volume is between 10 billion and 20 billion dollars.

Volkswagen invested $2.6 billion in Argo, Ford’s autonomous driving subsidiary, in June last year. The deal included an investment of $1 billion in cash by handing over $1.6 billion to Volkswagen’s autonomous driving business and 200 engineers to Argo. By sharing electric vehicle technology and autonomous driving technology, Volkswagen and Ford are expected to cut costs and achieve economies of scale faster.