VW’s electric cars have software problems, and Chinese customers are angry

Business & Technology

VW is rapidly expanding its electric vehicle business in China with a new joint venture that is about to start production. But Chinese customers are complaining about their faulty battery-powered cars and a problem that has plagued the whole company: buggy software.

Illustration for The China Project by Alex Santafé

On December 7, German auto group Volkswagen (VW) finished the first pre-production model of a plant dedicated to electric vehicles (EVs) in Hefei, the capital city of Anhui Province. VW has invested 23.1 billion yuan ($3.30 billion) in the factory, which is a joint venture, called VW Anhui, with Jianghuai Automobile Group (JAC) 江淮汽车集团. 

The plant will produce EVs with the so-called Modular Electric Drive matrix, VW’s modular car production platform, which is confusingly abbreviated to MEB (from the German “Modularen E-Antriebs-Baukasten).

VW Anhui is the German company’s third joint venture in China: The first, with SAIC Motor 上汽集团, opened in 1984 and the second with FAW Group 第一汽车集团 in 1991. The new joint venture with JAC, dedicated solely to EVs, was established in 2017 (in 2020, VW increased its stake to 75%), although all three VW joint ventures produce EVs. 

VW constructed the 140,000-square-meter (1.50 million-square-foot) facility in Hefei in just 18 months. When the plant enters full production in 2023, it will produce a range of EVs branded “ID.” (with a period), including the hatchback ID.3, and the SUVs ID.4 and ID.6. (In characteristically voluble fashion, ID stands for “intelligent design, identity, and visionary technologies.”) 

In 2020, VW also made a substantial investment in battery manufacturer Gotion High-tech 国轩高科, eventually becoming its largest shareholder, holding 26.47% by December 2021.

So VW is ready to flood the Chinese market with its EVs. But not everyone will be cheering the arrival of more VW electric cars. 

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The black screen and the open letter

The ID.4 was released in China in 2020, and the ID.3 and ID.6 followed in 2021. They have not sold very well: In October, for example, the ID.4 sold only 2,610 units, the ID.3 only 1,667 units, and the ID.6 had fewer still. And worse, from June 2021, ID. customers started uploading videos on Chinese social media showing highly stressful experiences while driving: the vehicle’s control screens and instrument panels blacking out, and the gear knobs and accelerator pedals becoming unresponsive. 

Then, last week on December 1, an open letter entitled simply “Letter to SAIC-VW” appeared online in China.  

The letter complains that one or all of these problems can occur when ID. cars “go crazy”: 

  • The navigation and entertainment systems become inoperable, the car disconnects from the internet, and various errors appear randomly. 
  • The large and small control screens black out, all driving information disappears, the intelligent assisted driving function fails, and various sound prompts stop working. 
  • At startup, the display is filled with errors, and the vehicle cannot be started.

The letter excoriates VW for dishonoring the faith placed in it by Chinese customers as a trustworthy brand with a history of a century, and demands that SAIC-VW cease selling the faulty vehicles, completely repair vehicles already sold, and compensate the customers. Last, the letter demands that VW issue a written apology, and ends with a thinly veiled threat: Some customers have already established a “VW ID. owner rights protection group.”

On December 5, both SAIC-VW and FAW-VW issued boilerplate responses, saying they are aware of the problem, are investigating, and have a solution in the works. But on December 6, the official brand account on Weibo of SAIC-VW likely only added more fuel to the fire when it advised ID customers that the black screen could simply be resolved by long-pressing the power button in the lower-left corner or by restarting the car.    

The context: Software is hard

It was somewhat of an understatement when the VW joint ventures responded that they are “aware” of the software problem. In fact, while the MEB matrix production system follows VW’s long tradition of quality control and excellence in hardware, the company has long struggled with software.

In theory, a company with VW’s enormous layout of manufacturing, supply chains, and capital resources would be well placed to produce EVs. But perhaps exactly because it’s one of the leading traditional fuel vehicle companies, VW has found it difficult to transition to EVs, as have most traditional auto companies. With their conservative mentality, companies like VW are weighed down by vested interests that are firmly tied to the company’s heritage of combustion engines. VW and the other traditional car companies not only started late, but have also been inflexible in going electric. 

Indeed, some of the EVs produced by traditional fuel companies are actually just modified fuel vehicles, the so-called oil-to-electric models, like the BMW i3. This method of placing new wine in old bottles is easy and low-cost, but such models have many problems, not least of which relates to the software. In general, EVs produced by traditional car companies like VW are conservative in terms of computing power. By contrast, vehicles produced by new and dedicated EV manufacturers that are not tied to a heritage of combustion engines have much greater functionality. And Chinese customers clearly know this: According to the China Passenger Car Association, in September 2022, directly owned Chinese brands (including EV brands) accounted for 80% of all EV sales in China.

The hardest problem of all is the software, and VW has walked a tortuous journey. On July 1, 2015, VW appointed Herbert Diess as CEO. Diess had a reputation as being very pro-EV, and made the decision for VW to use only self-developed software in all its EVs. Under Diess’s leadership, in 2019, VW established Cariad, a subsidiary solely focused on developing software. 

As a result, VW’s EVs run the self-developed Modularer Infotainment Baukasten (MIB) software system. But it’s very buggy: In July this year, VW had to postpone the launch of several new models due to problems with the software. Indeed, the persistence of software problems was a decisive factor in the firing of Diess as CEO in July. Diess had reportedly upset the Porsche and Piech families by blaming Porsche and Audi for jeopardizing the Cariad project. 

On September 1, Oliver Blume took over as the new CEO, and pointedly remarked on his first day that VW will escalate the development of EVs. Yet Blume made the crucial decision to terminate Diess’s policy of using only self-developed software. In October, Cariad announced an investment of 2.4 billion euros ($2.47 billion) in a new joint venture with Horizon Robotics 北京地平线 (with VW holding 60%), a Chinese software developer focusing on advanced driver assistance systems (ADAS) and autonomous driving.

Perhaps there is hope for VW’s beleaguered EV customers in China yet.