VW China CEO Ralf Brandstätter: "The Play-Off Season Starts Now"

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In 2022, BYD overtook market leader Volkswagen in China. That same year, Ralf Brandstätter took over VW's China business. He changed course. In the "irrational market," he must now maintain the new direction.

It won't be a walk in the park. Volkswagen's China chief, Ralf Brandstätter, aims to have "secured a strong market position" by the end of the decade. "To achieve this, you have to run a smart, sustainable race," he wrote on LinkedIn in 2024. He is planning "for two challenging years" during which VW China will prepare for "a major technological leap and a wave of product launches starting in 2026." "By 2027, our group will have launched a total of 40 new models in China, 20 of which will be New Energy Vehicles," said the 59-year-old top executive with over 30 years of experience at VW.

Brandstätter has also set a monetary goal: 2.1 billion US dollars in operating profit by 2027. For 2025, the Wolfsburg-based company has currently planned a China result of 530 million to 1.1 billion US dollars. By comparison, in 2018 and 2019, VW earned well over four billion euros in China each year. Volkswagen sold 1.3 million cars in China in the first six months of this year—2.4 percent less than in the same period in 2024.

Customized Solutions for Chinese Customers

The VW brand is just getting ready for its product offensive starting in 2026. "We are shifting into delivery mode," says Brandstätter. Sales of the fully electric E5 Sportback will begin in 2025. It is the first production model of the newly created "AUDI" brand for China, developed jointly with SAIC. At this year's Auto Show in Shanghai, VW presented three production-ready concept vehicles of the "new generation of intelligent, fully connected electric vehicles, entirely tailored to the wishes of Chinese customers," Volkswagen wrote.

New Models

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The VW ID Aura (manufactured by FAW-VW) is the first car built on the new, China-developed "Compact Main Platform (CMP) with the also locally developed E/E architecture" (CEA) for the A-segment. The sedan model aims to capture market share in the highly competitive compact segment, and therefore: it is expected to cost only around 18,000 US dollars. The full-size SUV ID Era (with SAIC) is the brand's first electric vehicle with a range extender, achieving a range of 620 miles according to VW. The third hopeful is the "sporty-progressive" designed SUV ID. Evo, targeting, as VW states, "lifestyle-oriented and tech-savvy" buyer groups.

"China Speed" in Development

Ralf Brandstätter has revamped many things at VW China. He has shortened and accelerated decision-making processes. The China team has already achieved 24 to 34 months "time-to-market" for the new models. In a presentation to Chinese investors in April 2024, Brandstätter quantified the cost advantages of the new CMP compared to the MEB platform at 40 percent.

He has strengthened local software and development expertise in China, also through collaborations with Chinese tech companies, including Horizon Robotics (AI chips and solutions for intelligent vehicles), Thundersoft (software for connectivity and infotainment), and Gotion (solid-state battery technology). Together with Xpeng, the OTA-capable "China Electronic Architecture" (CEA) was developed. "25 percent fewer ECUs, more functionalities, and scalable," Brandstätter says enthusiastically.

Xpeng for the East, Rivian for the West

And he has aligned the development team to consistently implement customer desires—with China-specific products. "While customers in Europe and the US still like to use physical buttons, in China, everything in the car, from the window controls to the air conditioning, is operated entirely via voice control. This has fundamental implications for how you design the electronic architecture and software for the car. We have a clear answer to this: for the West, we solve it with our joint venture with Rivian; for the East and China, with Xpeng," he explained in an interview with FAZ in April 2025. Together with Xpeng, VW China also plans to build a "Super Fast Charging" network with 20,000 charging points in 420 Chinese cities.

Ralf Brandstätter has ...

... many answers ready. He firmly believes in a successful future for Volkswagen in China. At the same time, he is aware of the increasingly challenging conditions that the automotive industry is currently facing in China.

"In China, for China"—the mission: "For us, 'In China, for China' is not just a slogan but our way of working. We always say that this is a marathon, not a sprint, and the playoff season is starting now. We know we need to be faster, more efficient, and more cost-effective, but also better tailored to the needs of Chinese customers."¹

—implementation and opportunities: "As a leading market for electric vehicles, digitalization, and autonomous driving, China offers unique opportunities. While many international companies are withdrawing, we are integrating [...] even more deeply into the local ecosystem. If we are not present here, we would miss out on opportunities. The knowledge we build there benefits the entire group."²

Profitability: "After two years of consistent implementation of the cost strategy 'In China, for China' and the gradual execution of programs to reduce fixed costs, a renewed acceleration in profitability is in sight."³

Strategies in competitive markets: "In this unhealthy environment, we are not striving for growth at any cost. Our measure of success is profitability, not just market share."² "Those who can only sell their cars through discounts are damaging their brand."⁴ "Some market participants can catch up, but not all will survive."⁵

New competitors from the tech scene: "That doesn't make life easier for us."⁵ "Almost all 'new forces' rely solely on the electric car market and often sell at significant losses or not at all. We can offset our revenue."²

Partnerships with Chinese companies: "The partnerships were a necessity to gain more speed in the short term. The collaboration has helped us adapt to the market faster and better."⁶

Scaling "made in China" technologies: "Volkswagen's strength has always been in the efficient scaling of its own technologies. [...] With the CEA—the China Electronic Architecture—we have developed a zonal architecture with central computers, the first in the group. [...] We have now decided to roll it out to combustion engine vehicles as well. This creates enormous additional scale. Starting in 2027, we will launch the second generation of the CEA."⁶

Trade conflict between the USA and China: "Around 95 percent of our components for the China business are manufactured locally. This strengthens our competitiveness and at the same time makes us more resilient to geopolitical risks. Therefore, the escalating tariffs currently have no direct impact on our business in the region."⁷

New opportunities in the crisis: "The Chinese are pragmatic. Their own economic growth has slowed significantly. That’s why the government is once again focusing more heavily on foreign investments. [...] And of course, crises create opportunities. Many countries in Asia, as well as in South America and the Middle East, have built strong economic relations with China. We can benefit from this by utilizing our production capacities in China and exporting from there to such countries." [...] "When a German company is behind it, opportunities arise to establish ourselves in markets that we have not been able to tap into before."⁷ "We do not deliver to Europe or North America. For these markets, we have our own production capacities."⁶