GEELY vs. VW: Who’s playing the long game? – Monthly Billet

This is a tale of two automakers — Zhejiang Geely Holding Group (Geely) in China and German giant Volkswagen AG (VW).

In response to China’s remarkable recent advances, Volkswagen is pivoting to “China for China” strategy. In Shanghai, where it unveiled the first of five VW and Audi models, the banner above the stage read “China Speed.”

Beyond “speed,” VW must rethink the “framing” of its business.

While VW was busy defending its turf, Geely reimagined itself as a tech company with building blocks tailored to the automotive sector.

Now a leader in EV batteries, Geely is exploring solid-state battery technology. It is designing its own semiconductors and has launched low-Earth orbit (LEO) satellites a la Tesla’s Starlink.

Moreover, Geely controls a stake in China’s home-grown smartphone company, Meizu Technology. Emulating smartphone giant Xiaomi’s automotive initiative, Geely is fearlessly juggling auto and mobile phone businesses. “The intrinsic unification of connectivity between mobiles and cars creates longer term loyalty,” observed Yu Yang, Principal Technology & Market Analyst, Automotive Semiconductors​ at Yole Group.

The biggest question is this: Who’s playing the long game?

Is it VW, envisioning a single battery electric vehicle (BEV) platform across all brands? Or is it Geely, accumulating hardware building blocks— regardless of source — to fast-track its automotive ambitions?

The answer isn’t clear-cut.

We spotlight these two globally situated companies because they have multiple brands reaching broader auto market segments, from entry level to premium vehicles.

VW’s ten brands cover five European countries: Volkswagen, Volkswagen Commercial Vehicles, ŠKODA, SEAT, CUPRA, Audi, Lamborghini, Bentley, Porsche and Ducati.

Geely’s vehicle brands include Geely Auto, Geely Galaxy, Lynk & Co, Zeekr, Maple, Polestar, Lotus, and Farizon.

Global presence separates Geely from Chinese rivals. Geely’s investment in Proton strengthens its foothold in Southeast Asia. Geely even owns London Taxi, the iconic black cab.

VW’s many brands forged a global powerhouse until that breadth backfired. Concerned with escalating costs for new vehicle development across multiple brands, VW saw the need for a common, scalable platform.

Yole Group’s Yang credits VW foresight, seeking a platform approach even in the internal combustion engine (ICE) era. VW applied a modular ICE strategy to EVs, developing its MEB platform for entry level EVs, and PPE (Premium Platform Electric) for higher-end EVs.

VW hoped to merge MEB and PPE into SSP (Scalable Systems Platform), as part of its “New Auto” strategy — a single-battery EV platform across all brands.

“New Auto,” however, lingered as mere “vision” until it wasn’t “new” anymore. PPE implementation delays forced postponement of the SSP launch — the linchpin of VW’s EV strategy.

Even worse was the collapse of a software project by Cariad, VW’s newborn software spinoff. Cariad failed to develop a common operating system for all the group’s vehicles. Tu Le, founder of Sino Auto Insights, observed, “What we’ve seen with Cariad over the last 30 months is a number of reorgs that say, ‘I don’t know what I’m doing.’”

The German giant’s cumulative failures are “heartbreaking,” said Yang. But the China effect didn’t hit just VW. Despite committing to a long-game strategy, most Western legacy OEMs have struggled because their rush to vehicle implementation was “hugely dwarfed by the speed of Chinese players,” said Yu.

Meanwhile, Geely has taken a flexible path. It gave room for its multiple brands to diverge their platforms.

Volvo, for example, had SPA (Scalable Product Architecture) and SPA 2 (exclusively for EVs), which debuted on Volvo EX90 and Polestar 3 in 2023. In parallel, Geely introduced its SEA (Sustainable Experience Architecture) platform, developed by Zeeker Technology. Some SEA elements are now in Volvo’s lower-end cars, like the popular EX30, according to Yang. “By using SEA for its BEV, Geely has been able to reach the scale of economy.”

Geely developed in-house chips for smart cockpit, while selectively integrating externally sourced mature solutions for brands in different markets.

VW’s big year to launch its China strategy was 2022. It sank 2.4 billion euros into Horizon Robotics, a Beijing-based developer of AI chips for highly automated vehicles. That moment, said Le, made it “plainly obvious … that VW wasn’t going to be able to compete in China with EVs developed in Germany.”

Further, by late 2023, VW created Carizon, a JV joining Horizon Robotics to VW’s Cariad, to develop in China a full-stack solution for highly automated vehicles. Speedy software development enabled Ralf Brandstätter, Volkswagen AG Group executive, to proclaim at Shanghai Auto, “The rapid progress in developing our new ADAS system highlights Carizon’s technical capabilities and the implementation strength of our ‘In China, for China’ strategy.”  Further, VW last year partnered with Xpeng for fast joint development of two EVs for China, expected in 2026.

VW, proponent of a unified EV strategy, finds itself juggling diverging software and hardware platforms over different geographies. While partnering with many local players in China, VW has also picked Rivian to develop E/E architecture and software for the rest of the world.

Geely, which initially appeared making a slew of ad hoc decisions, is now consolidating its multiple platforms. Pursuing a global strategy, Geely is “partnering with other OEMs out of China, including Renault (Horse Powertrain, a JV between Geely and Renault; Korean market) and Mercedes (sharing SEA platform with Smart),” Yu explained.  He described the two group’s diverging paths as “In China for China (VW) vs. In China for the world (Geely).”

Geopolitics has indeed forced VW into a game of checkers played locally. Geely, in contrast, is playing chess for the global market.

Source: www.yolegroup.com