Volkswagen Group launched its first fully autonomous driving mass - produced model, the ID.Buzz AD, globally in Hamburg on Tuesday evening, marking the group's official entry into the core battlefield of future mobility. According to the plan, this autonomous driving taxi will be put into commercial operation in the European and US markets starting from 2026.

As a strategic transformation move of the Wolfsburg - based automotive giant, Volkswagen is investing billions of euros to lay out a new business model. Oliver Blume, the Chief Executive Officer, declared at the launch event: "This move will push Volkswagen to rank among the leaders in the global hundred - billion - euro growth market."

The strategic timing of this launch is quite meaningful: Just a few days before Tesla CEO Elon Musk announced that he would release an autonomous driving taxi at the end of this week, Volkswagen took the lead in launching a solution with mass - production maturity.

The prototype successfully dealt with complex scenarios such as being blocked by freight trucks, construction sections, and narrow - road intersections during a 20 - minute urban road test. Although the safety driver made two preparatory interventions (mainly for lane - changing operations), there was no need for manual takeover throughout the process.

The core of Volkswagen's autonomous driving technology comes from Mobileye, which provides Volkswagen with the sensor system, artificial intelligence software, and the safety architecture of the software. The whole vehicle is equipped with a total of 27 sensors (including radar, lidar, and cameras), and multi - frequency band devices jointly build the vehicle's environmental perception system. It is expected that after obtaining mass - production certifications in the EU and the US by the end of 2026, the model will start production at the Hanover factory in Germany - with a limited initial production capacity.

According to the company's statement, the ID.Buzz AD has reached the "Level 4 Autonomous Driving (L4)" standard. That is, within a restricted driving range, the control software can manage the entire driving process, and in principle, there is no need for the driver to actively control the steering wheel. Although the vehicle retains the steering wheel and pedals, theoretically, there is no need to use them.

Unlike Tesla or Waymo, Volkswagen mainly focuses on the business - to - business (B2B) model for enterprise customers. In the future, Volkswagen will directly deliver vehicles with complete solutions to fleet operators. The possible service package will cover the entire process of unmanned fleet operations, including route reservation, fleet management, and maintenance.

The initial agreement reached between Volkswagen and Uber involves more than 10,000 driverless cars, mainly focusing on the North American market. In Europe, Volkswagen is seeking to establish similar cooperation with transportation alliances.

Uber is also pursuing a similar strategy. It announced a week ago that the company has partnered with the British startup Wayve and plans to launch an autonomous driving service in the UK in 2026. Andrew MacDonald, Uber's Chief Operating Officer, said: "Autonomous driving should become a safe and reliable travel option for passengers worldwide." At present, the company is conducting tests with a number of technology partners.

Alex Koster, Managing Director at Boston Consulting Group (BCG) in Zurich, analyzed and pointed out: “After an initial boom and a subsequent cooling - off period, the autonomous driving taxi sector is entering a track of steady growth.” According to BCG's forecast, by 2035, there will be 30 to 80 cities worldwide operating large - scale autonomous driving taxi fleets, most of which will be in the United States and China.

The European market has its own special challenges: Issues such as regulatory differences, diverse transportation systems, and dense public transportation networks form barriers to the promotion of autonomous driving. Koster emphasized: “Therefore, it is necessary to strengthen the thinking of an integrated model.”

Christian Senger, Head of Volkswagen's Autonomous Driving Business, put forward the goal of “exponential growth” — to achieve an annual production of tens of thousands of vehicles in the medium term and build a fleet of “six - digit scale” in the long term. Senger has not yet revealed the specific price of this autonomous driving electric bus.

If the strategy works, the growth of autonomous driving buses may save the rather lackluster ID.Buzz model. In 2024, the European sales volume of this model was about 28,000 units, basically the same as the previous year.

The heavy investment in entering the autonomous taxi sector poses significant financial challenges for Volkswagen. According to internal group sources, the company has so far invested billions of euros in R&D of autonomous driving systems and manufacturing of related components. This does not include the $2.6 billion investment made in 2019 to Argo AI, the now-defunct Ford subsidiary.

Comparing horizontally across the industry, Waymo, the autonomous driving unit under Google, has raised approximately $11 billion in cumulative financing over the years and is recognized as the global industry leader. Tesla, which is about to launch its autonomous taxi, will adopt a pure visual system and direct sales model.

Volkswagen, however, pinpoints the B2B model to achieve stronger economies of scale and higher returns. Senger expects this business to deliver "significant double-digit" profit margins — in contrast, the traditional automotive business currently targets a profit margin of only 6% to 8%.

Volkswagen's core value proposition to customers like Uber is that autonomous vehicles can significantly reduce the operational costs of large fleets—higher vehicle utilization, charging schedules unconstrained by driver rest periods, and flexible dispatching based on electricity prices and market demand.

What Volkswagen leaves unsaid is that for platforms like Uber, the Wolfsburg-based automaker's new business model could eliminate their single largest expense: driver salaries, which account for nearly half of the platform's total expenditure.

Volkswagen is well aware of the operational and financial challenges in autonomous driving. Previously, the company tested its Moia autonomous fleet in Hamburg and Hanover, with around 100 vehicles accumulatively driving over 600,000 kilometers. According to insiders, the project incurred annual losses of tens of millions of euros, "which is the main reason Moia didn't expand to more cities." Volkswagen is willing to absorb these losses, viewing the Moia project as a stepping stone to selling comprehensive service packages to fleet operators in the future.

 

Koster identified the root cause behind Moia's stagnation: "These vehicles have to be recorded on the balance sheet." As a result, Moia has transformed into a testing platform for technology and operations rather than an independent service provider. Through this approach, Volkswagen aims to lay the foundation for expanding its autonomous fleet business in Europe.

Consulting firms generally recognize the immense potential of this market: According to McKinsey, the current market size of autonomous driving services in Europe and the United States is less than 100 million euros, but it is expected to exceed 450 billion euros by 2035, indicating significant medium-term growth potential.