Volkswagen ramps up EV strategy in China

Volkswagen Group is intensifying its strategy in China with a comprehensive plan to boost technological capabilities and slash costs in the competitive automotive market. At its China Capital Markets Day in Beijing, the company outlined its ambitious plan to assert dominance in the rapidly growing Chinese automotive sector.

The strategy, described as “In China, for China,” involves a significant increase in in-house development, software capacities, and local partnerships. This initiative aims to produce state-of-the-art products tailored to the Chinese market. Volkswagen Group is working towards achieving a 40% cost reduction on its China Main Platform (CMP) by 2026, targeting cost parity with local manufacturers in the compact battery electric vehicle (BEV) segment.

The group’s CEO, Oliver Blume, emphasised the strategic focus, stating, “China is a very important market for us and will remain so. There are approximately 50 million of our vehicles on Chinese roads today, and we sell one in three cars worldwide in China. We are therefore proud to call China our second home market.”

“Looking to the future, we are systematically driving forward our ‘In China for China’ strategy. The course is set, and we want to benefit more from the market’s growth momentum from 2026. The focus will be on the consistent implementation of the strategy, further strengthening our customer orientation and an accelerated model development. Together with our partners, we are also increasing our technological competitiveness and significantly reducing costs.”

This move is part of Volkswagen’s broader effort to enhance its global competitiveness by focusing on cost-efficient and technologically advanced solutions. The group plans to bolster its position in the Chinese market by increasing its proportionate operating result to around EUR3.0 billion (USD3.2 billion) by 2030, including contributions from the fully consolidated Anhui joint venture.

Volkswagen’s approach includes expanding its full-electric portfolio into the compact segment through the CMP. The platform’s new zonal electrical/electronic (E/E) architecture, developed with partners like XPENG, aims to significantly reduce costs and standardise digital infrastructure across models, leading to greater cost efficiency and quicker development cycles.

Moreover, the establishment of the Volkswagen Group China Technology Company (VCTC) in Hefei is set to enhance local R&D efforts, reducing the time-to-market for new products by 30%. This local focus ensures that development and decision-making processes are streamlined and fully oriented towards the Chinese market.

By focusing on local partnerships and innovation, particularly through collaborations with Chinese tech companies and manufacturers like Horizon Robotics, Thundersoft, and XPENG, Volkswagen is dedicated to adapting its digital and technological offerings to align more closely with market trends and customer preferences in China.

The aggressive push towards local development and cost reduction underscores Volkswagen’s commitment to maintaining a strong presence in China, leveraging its longstanding market experience to optimise growth and sustainability in the face of evolving global automotive trends.