Volkswagen has laid out its plans for the future of its business in China. Presenting at its China Capital Markets Day in Beijing, Volkswagen outlined its strategy for the Chinese market, identifying its aim to strengthen its tech capabilities and massively reduce its costs. The group plans to reach cost parity with local players in the compact car segment from 2026, and further stated its commitments to its “in China, for China” strategy.

Oliver Blume, CEO Volkswagen Group commented at the China Capital Markets Day “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”.

BEV cost parity

It is expected entry level compact vehicle will account for more than 50% of the market share in the future in China, hence Volkswagen is looking to achieve cost parity in this segment with local players by 2026.

It will expand its electric portfolio into the compact segment through the Volkswagen brand, using the China Main Platform (CMP). Volkswagen expects the CMP will reduce costs by 40% by 2026. Moreover, it will use a collaboration with XPENG on electrical/electronic (E/E) architecture and competitive battery technology to further expand its BEV portfolio.

Additionally, the implementation of the “China Electrical Architecture” (CEA) will standardise digital systems, enhancing cost efficiency and accelerating development speed for Volkswagen. Furthermore, Volkswagen will enhance its innovation delivery through the Volkswagen Group China Technology Company (VCTC) which consolidates development units and decision-making processes, streamlining coordination within the same time zone to focus exclusively on the local market.

Local partnerships

The group will strengthen its standing in China by…

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