AI-generated image of Chinese electric cars in front of Brandenburger Tor Berlin
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Do you know the Police song “Wrapped Around Your Finger“? The cryptic lyrics end with the following lyric, among others:

“Devil and the deep blue sea behind me
Vanish in the air you’ll never find me
I will turn your face to alabaster
When you’ll find your servant is your master”.

When the news surrounding VW and Audi’s “collaborations” with Chinese OEMs was discussed on social media, German and international industry insiders and fans were quite shocked. For years, they had made fun of the lousy energy efficiency of Audi’s “Fat e-tron” 55, and the poor price/performance ratio of VW’s ID series.

In addition, the deficits in digitalization were becoming more and more obvious. In the end, even the constant exchange of those responsible and renaming the software department to CARIAD did not change anything. Important new projects were therefore postponed far into the future.

Herbert Diess’ performance

Although ex-VW CEO Dr. Herbert Diess had laid the foundation for the faster electrification of the group after the unspeakable Dieselgate, old and grown institutions such as the powerful trade union could not do anything with the sometimes rustic manner of the feisty CEO. The dismissal was only the final consequence.

The VW Group thus got rid of the only almost uncompromising fighter for the electric traffic turnaround.

Doubts about Oliver Blume’s electromobility perspective

Porsche CEO Oliver Blume took over. Blume is a true petrolhead with precious little to do with VW-level electrification. Sure, he almost single-handedly initiated the Porsche Taycan as an electric driving machine, but the car is only suitable for a tiny clientele with the money. Over-engineering is too expensive for the mass market.

The VW Group does a not inconsiderable amount of its business in China. For a long time, the Chinese were keen on the quality of German and premium brands. Well aware that they could not catch up with the Europeans’ lead in combustion technology, the Middle Kingdom focused on the electric traffic revolution.

China recognized that electric cars are the future. This was accompanied by fierce digitization of the vehicle and, not least, the development of a battery industry that is now the world market leader.

Meanwhile, European and German OEMs rested on the laurels of their combustion engine industry. VW’s entry into electromobility was positive for European consumers for reasons typical of the brand, but in the digital avant-garde country of China, the infotainment systems from Wolfsburg seemed like the Stone Age.

The disaster in China

And then the scaling of the (affordable) electric platforms didn’t work fast enough. The result: in China, Wolfsburg and Ingolstadt were completely out of the picture.
For a long time, the company refused to admit this to itself, counting on the fact that many thousands of developers could still turn the tide. But digital is not the Germans’ strong point anyway. It came as it had to come. Cooperations were envisaged to keep pace and compensate for deficits.

According to rumors, Wolfsburg first knocked on BYD’s door, then Li Auto and NIO. In the end, however, only XPeng took pity. The Chinese start-up makes fantastic electric cars, but business wasn’t exactly rosy. So the new investor was very welcome, even if only just under 5% of the shares were sold.

But that’s not all. Apparently, VW is also interested in additional cooperation with Leapmotor. For example, one could be interested in the Leapmotor Pilot and the OS. Why? Because the start-up produces both hardware and software as well as the E/E architecture (BCM – Body Control Module and ECUs) in-house.

On the other hand, Audi is staying with its previous VW partner SAIC to “buy in” modern but cheaper drive platforms.

The Chinese have cleverly chosen the right strategy and vehemently driven electromobility’s development. This is now paying off because no one can get past the Middle Kingdom anymore – not even Mercedes-Benz. Smart has been a joint venture between Geely and Mercedes for years. Whereby the platform and digitalization come from Geely and only the design from Stuttgart.

How did the Police line go?

“I will turn your face to alabaster
When you’ll find your servant is your master”

About this column:

In a weekly column, alternately written by Eveline van Zeeland, Derek Jan Fikkers, Eugène Franken, JP Kroeger, Katleen Gabriels, Bernd Maier-Leppla, Willemijn Brouwer, and Colinda de Beer, Innovation Origins tries to figure out what the future will look like. These columnists, sometimes joined by guest bloggers, all work in their own way to find solutions to the problems of our time. Here are all the previous installments.