Electric vehicles have been chugging along for some time now, but automakers have just really started to get serious about putting them on the street over the last decade. It feels like we're just getting over some of the "first edition" growing pains as more automakers prepare next-gen tech for future models.
The Volkswagen Group is the original "pivot to electric cars" automaker, but over the past decade, making good on that promise has proven much more difficult than expected. Now, however, it is finalizing the blueprints that will guide its electric future—starting with one of its most iconic models.
Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. Today, VW is getting to the finish line on its next-gen EV; Volvo says it will cut 3,000 jobs while also warning customers will need to pay for tariffs; and BYD's deep price cuts have some Chinese automakers sounding the alarm. Let's jump in.
30%: VW Finalizes Blueprints For Its First Next-Gen EV
Volkswagen is getting ready to rebrand the way it does EVs. And it's about time—the brand needs a win in North America right now, which means putting all of the puzzle pieces in place to make the next generation of EVs something that folks really want.
According to German news outlet Automobilwoche, VW has reached a big milestone recently and has done the thing that car companies do when they stop fiddling with blueprints and start phoning up suppliers to actually build something: it has finalized the design for its new electric architecture.
Volkswagen's next-gen Scalable Systems Platform (SSP) has reportedly reached that stage and is readying its debut for sometime near the end of the decade. What's getting built on it first? Well, VW hasn't officially said, but all signs are pointing to the MK9 Volkswagen Golf slated to hit the streets sometime in 2028—previewed by the new ID. Every1 concept.
This is a huge deal for VW. The automaker has been dealing with years of internal drama, software problems, and spending billions of dollars to figure out just what it needs to get its next-gen platform completely ironed out.
Oliver Blume, the CEO of both the Volkswagen Group and Porsche, has reportedly said that VW can't make these mistakes with its future cars. And since both the Modular Electric Drive Matrix (MEB) and Premium Platform Electric (PPE) platforms are on their way out, it's critically important that the new underpinnings are a success—SSP is the company's golden goose.
Like the platforms before it, SSP is designed for modularity. From the cheapest vehicles to the most premium offerings, the portfolio of cars under the umbrella of VW's brands will ride on the platform. It's designed for faster charging, better software, and higher levels of autonomy.
The "architecture freeze" means that VW feels comfortable moving forward with the platform to standardize parts and suppliers across its brands. And with tariffs hitting hard in the U.S., VW (like most automakers) desperately needs to cut costs while also avoiding another MEB-style software debacle.
It's crucial to remember that VW isn't going into this alone. The next-gen Golf will also be one of the automaker's first cars with software and hardware powered by the nearly $6 billion joint venture with Rivian. Now, VW will still have to solve its other issues, but it's clear that the brand is working on that—heck, even ditching the ID naming convention is meant to show a departure from its current approach to EVs.
So while this may just sound like a bunch of engineers have mutually agreed not to change anything, it's more than that. The freeze marks VW's commitment to change and earmarks a new chapter for the automaker. The blueprints are locked and the presumable next Golf is waiting.
Now the Germans just have to build it.
60%: The Axe Comes For Volvo
Job cuts are coming at Volvo—3,000 of them, to be precise. And while the official word is that this cost-cutting measure is part of a larger restructuring, the reality is that tariffs are torching the roadmap for just about all of Volvo's EVs (including its crucial affordable ones).
The Swedish automaker announced the impending layoffs on Monday as part of a $1.9 billion restructuring plan, citing high costs, demand slowdown, and "challenging conditions." Those might seem like some valid reasons, but if you fill in the blanks, it's extremely clear that U.S. tariffs have become nightmare fuel for Volvo's future in North America.
Reuters breaks down exactly what's going on:
With most of its production based in Europe and China, Volvo Cars is more exposed to new U.S. tariffs than many of its European rivals, and has said it could become impossible to export its most affordable cars to the United States.
The group, which is majority-owned by China's Geely Holding (GEELY.UL), on April 29 unveiled a programme to slash costs by 18 billion Swedish crowns ($1.9 billion) and hit the brakes on investments, warning that redundancies were inevitable.
In the first quarter, the auto maker had 43,500 full-time employees and 3,000 staffing agency personnel, according to its earnings report. White-collar staff make up more than 40% of its workforce.
"The automotive industry is in the middle of a challenging period. To address this, we must improve our cash flow generation and structurally lower our costs," CEO Hakan Samuelsson said.
Volvo was hoping that by releasing an affordable car, it could tap into parts of the U.S. EV market that it felt left out of. Basically, take a stronghold in the affordable segment that so many OEMs are striving to hit. This is where the problem with tariffs start to boil over.
That plan hinged on the Volvo EX30. When it was announced, Volvo aimed to bring it to the U.S. at around $35,000—the same figure that Tesla originally promised for the Model 3. Sure, it wouldn't get the EV tax credit due to its assembly location, but that could be worked around. Then the 100% tariff on Chinese-assembled EVs reared its head and the China-built EX30 was out.
Never fear, though, because Volvo brushed itself off by moving production of the EX30 to Belgium, but now the starting price has increased to more than $45,000 to offset increased production costs. Surely that would be enough, right?
Well, wrong. New tariffs threatened against Europe would mean that the Belgium-built EX30 could have a 50% tariff on it as well. Samuelsson, almost defeated, said that the EX30 has been "very severely hit" by auto import duty fees at pretty much every single turn.
The CEO admitted that customers are going to be the ones hit hardest here and that they would have to pay a large part of the cost increases brought on by tariff-related levies. This, of course, means that the idea of an affordable (read: $35,000) electric Volvo is effectively dead in the water.
So we've now got Volvo slashing 3,000 jobs, Americans paying at least 29% more for Volvo's lowest-priced EV, and a company that worked hard to appease U.S. consumers by picking up production and moving it (quite literally) more than halfway around the world just to meet certain government requirements only to be once again at the mercy of impulsive policies.
If this keeps happening, the U.S. could see automakers begin to second-guess whether or not it's worth selling certain vehicles in the States at all. Oh, wait.
90%: BYD Just Slashed EV Prices By Up To 30% And The Competition Is Freaking
BYD just dropped the mic—and prices—on the Chinese EV market. Again. Over the weekend, the Chinese automaker announced new aggressive pricing and incentives for buyers. Not just on one model, either, but on 20 different vehicles across its lineup.
When BYD does aggressive, it means it. The price cuts went as high as 30%, bringing some of its hottest cars to prices that the rest of the world could only dream about. For example, that uber-affordable BYD Seagull EV? Imagine being able to pick it up for the low, low price of $7,700—because that's what BYD just did for its home market.
Here's where the gotcha comes in. BYD didn't just do this out of the kindness of its heart. In reality, the Chinese auto market is hurting right now. It might not look that way given the uptick in EV demand, but the broader numbers show that the world's largest car market is having some trouble and BYD is trying to do something to strengthen its sales.
Here's what Automotive News has to say:
To kickstart sluggish consumer demand — made worse by China’s broader economic malaise — automakers in the world’s biggest car market have slashed sticker prices. Even so, stock levels at dealerships last month reached 3.5 million cars, or 57 inventory days, the highest since December 2023, according to data shared last week by the China Passenger Car Association.
On May 26, the Hong Kong-listed shares of BYD Co. closed 8.6 percent lower, while Geely Auto fell 9.5 percent. Others, such as Nio and Leapmotor, closed between 3 percent and 8.5 percent lower.
But wait—there's more.
The rest of China's EV market says that BYD's price slashing is a symptom of an even bigger problem. More importantly, one of the industry's top executives warns that BYD's move should probably be seen more of a cautionary tale than a commendable one.
Automotive News continues by citing Wei Jianjun, chairman of Great Wall Motor:
Wei, one of the Chinese auto industry’s most outspoken company chiefs, said that the Chinese electric vehicle industry was in an unhealthy state given its heavy losses and how a prolonged price war was weighing on the supply chain.
Suppliers are struggling to survive, he added, due to a ongoing pressure to lower prices and delayed payments, and accused carmakers of cutting corners on safety and reliability.
“Some products have been reduced from [$35,000 USD] to [$16,500 USD] in the past few years. What kind of industrial products can be reduced by [$14,000 USD] and still have quality assurance? Well this is absolutely impossible,” he said, again not naming any companies.
Wei argues that some automakers (being careful not to name names) have prioritized stock prices over sustainability. That means grabbing as much market share as possible while sacrificing profit margins. Some might call it the drug dealer approach, others will call it unendurable.
Still, it's working. And with BYD's healthy margin of 20%, it has room to do exactly that.
Dealership traffic at BYD increased by between 30% and 40% week-over-week, according to estimates by Citi Research. Meanwhile, other Chinese automakers are clamoring to cut their own prices (and margins). This will ultimately mean that the price squeeze gets passed down to suppliers when the manufacturers decide they can't take any further cuts to their margins.
Keep in mind that China already has an oversaturation problem with automakers. For example, at last count, the country has more than 100 different companies building EVs—and as competition is slowly phased out due to the fierce dog-eat-dog market, even the country's "smartest" EVs are turning into zombies.
So, yes, BYD is making EVs super affordable. But this strategy might just be to price others out of the way, then reap the rewards when it's one of the last companies standing.
100%: Will A Race To The Bottom Undercut Quality?
One thing that Great Wall Motors' chairman brought up that really caught my attention was his comment on quality. "What kind of industrial products can be reduced by [$14,000 USD] and still have quality assurance?" he asked, before saying, "Well, this is absolutely impossible."
My mind instantly went back to cars from the late '90s, when automakers like Hyundai earned the bargain basement reputation in the U.S. that it worked so hard to dig itself out of. At the time, cheap meant poor quality. And the chairman's point is that slashing prices means that quality has to go down somewhere, whether that be the parts that go into the cars, or the labor needed to ensure that a car is built within spec. Eventually, something has to give.
Now, China's cars are still paywalled out of the U.S. But the fear is that when (not if) Chinese brands manage to break into the market, they could be subject to some serious quality issues just to get the price down. But that might not be different than anywhere else in the world.
Is a race to the bottom a natural progression of an over-crowded market? Or is it a bigger issue that will eventually become a problem for quality, like some executives expect? Let me know your thoughts in the comments.
