Volkswagen wants to become faster and cheaper in China. “In a dynamic market environment, a high pace of development is crucial for competitiveness,” said China boss Ralf Brandstätter (55) during a visit to the eastern Chinese city of Hefei. That’s why the car manufacturer will… China develop its own electric car platform and increasingly rely on Chinese suppliers. “The vehicles based on this platform will come onto the market from 2026 and will be in the price range of 140,000 to 170,000 yuan,” Brandstätter announced. That would be the equivalent of 18,000 to 22,000 euros. The development time is therefore a third faster than usual, he said. And it should also be significantly cheaper.
The announcement of the new cheap cars for China is part of Volkswagen’s attempted comeback in the world’s largest car market. Brandstätter was in favor of it recently announced the “in China for China” strategy.
At the end of last year – after decades at the top – the German car manufacturer had to hand over market leadership in the People’s Republic to its Chinese rival BYD. And while the corporate brands are still holding on in the classic combustion engine business, the Germans have lost touch in the booming electric car market. The gap, especially to domestic manufacturers, is enormous: the VW bestseller ID.3 only comes in 22nd place in the ranking of the best-selling electric cars in China – and that only after massive price reductions, which only helped sales gain momentum from the summer quarter onwards brought.
Now Brandstätter starts the offensive. He wants to bring 30 new electric models onto the market in China by 2030. One key to this is the Volkswagen China Technology Company (VCTC) in Hefei, which is intended to relocate the development of models for the Chinese market from Wolfsburg to China and thus shorten the time until vehicles and components are ready for the market. To this end, VW is investing around one billion euros in the Hefei location, which is almost 500 kilometers west of Shanghai. By the end of 2024, around 3,000 people are expected to work there and develop models for the three planned joint ventures.
Away from Wolfsburg
So far, every platform, the vehicle substructure, so to speak, is in Germany was developed for China and then transferred, explained the VW manager for research and development, Marcus Hafkemeyer, in Hefei. “We learned that you can’t do this from 8,000 kilometers away with only a six-hour time overlap,” said Hafkemeyer. Now more is to be developed locally in Hefei. In addition, Chinese suppliers are now large enough and can deliver the quality that VW needs, it was said. Volkswagen China expects a significant cost reduction by focusing on Chinese suppliers. The development costs should fall by a third compared to Germany.
Addressing Chinese customers should also be more successful in the future. E-car buyers in China have different requirements than in Germany, also because, according to VW, they are significantly younger at an average of 34 years old and their driving habits are different. In major Chinese cities, drivers spend a lot of time stuck in traffic jams. Entertainment is therefore more important than particularly powerful engines.
But it won’t be that easy: Brandstätter, in his own words, expects “a very aggressive price level”. In addition to the large manufacturers, China’s electric car market is home to many small brands that are largely unknown in Germany. Xpeng is one of them. VW entered into a cooperation with the southern Chinese, to secure new customers. Industry observers expect that smaller competitors in particular will not be able to withstand the price war and that many brands will disappear.