Transformation Volkswagen presents strategy update for China

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VW Group is aiming for a 40-percent cost reduction with its China Main Platform (CMP). Local partnerships are expected to form the basis for new products.

Volkswagen is launching the next phase of its transformation in China. At today's (24.4) Capital Market Day in Beijing, the Group presented its strategy update for the Chinese market. The focus is on the goal of strengthening technology expertise and reducing costs. The Group plans to achieve cost parity with local competition in the compact segment by 2026. A new E/E architecture developed together with Xpeng, for example, is expected to make a decisive contribution. The measures would be flanked by a newly aligned strategy and an efficiency program that has already been launched. In addition, the OEM underlined its commitment to the "in China, for China" strategy.

To meet the expectations of Chinese customers, it is necessary to accelerate model development and market launches and significantly reduce costs. In addition, more own development capacities and strong, local partnerships should better utilize the market's innovative strength and increase local value creation.

In this way, the company wants to further strengthen its position as number 1 among international OEMs on the Chinese market. By 2030, Volkswagen has set itself ambitious goals: around 4 million vehicles sold and growth in the proportional operating result to about 3.0 billion euros including the Anhui joint venture.

"China is a very important market for us and it will continue to be. Around 50 million of our vehicles are on the road in China, we sell every third of our vehicles worldwide in China," said Oliver Blume, CEO of Volkswagen Group.

On par with local BEV competitors in terms of costs

Through the Volkswagen brand and based on the China Main Platform (CMP), the Group aims to expand its fully electric portfolio into the compact class. The CMP aims to reduce costs by 40 percent by 2026, particularly through the zonal electric/electronic (E/E) architecture developed in cooperation with Xpeng and competitive battery technology. In addition, it aims to achieve further standardization of the digital architecture and thus higher cost efficiency through the use of the "China Electrical Architecture" (CEA).

In addition, Volkswagen aims to bring innovations to customers more quickly. Thanks to the new local structure of the Volkswagen Group China Technology Company (VCTC), the group's own research and development center in Hefei, they can reportedly shorten the market launch time of new, local products by 30 percent.

In order to increase efficiency and lay the foundation for future growth in China, they are reportedly strengthening their technology and software portfolio as well as focusing on local development capabilities and partnerships with local technology companies and manufacturers such as Horizon Robotics, Thundersoft and Xpeng.

Volkswagen expects that Level 3 and higher autonomous driving will achieve a penetration rate of 56 percent in China by 2030.

Internal combustion engines to finance the transformation.

Volkswagen plans to offer modern vehicles in all key sectors: internal combustion engine (ICE), PHEV and BEV - and in the future also for intelligent, networked vehicles (ICV). This growth course is supported by the dynamism in electrically driven vehicles (NEV). Over the next three years, the Group and its brands intend to launch 40 new models in China, half of which will be electrified. This includes at least eight of the planned China-specific BEV models from partnerships with Xpeng and SAIC, and Volkswagen-branded vehicles on the new CMP.

By 2030, more than 30 BEV models are expected to hit the market. The aim is to lead and maintain leadership among international OEMs and position the company among the top three vehicle manufacturers in the Chinese market.

By 2030, the total car market in China is expected to grow to over 28 million vehicles per year - about six to seven million vehicles more than currently. In addition, Volkswagen expects that the NEV market will reach a share of about 75 percent by the end of the decade - almost three times the share in 2023.

The Group wants to benefit from this market potential through a mix of technologically leading ICE vehicles and a steadily growing NEV portfolio. This way, they can finance the investments in the next technology leap towards intelligent, connected vehicles (ICV) via the margin-strong ICE fleet that is gradually being hybridized.