Volkswagen Is Developing Affordable EVs, But Only For China

After Chinese automaker BYD dethroned Volkswagen as the best selling automaker in China late last year, VW said last week that it will develop a new, cheaper electric car platform using more Chinese-made components to reestablish dominance in the world’s biggest car market.

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It’s no secret that the Chinese car market caters to very different tastes and needs than the US market in particular, so Volkswagen’s decision to develop a fresh EV platform that directly targets Chinese consumers is a logical one. Reuters reports:

Chinese new car buyers are younger, tech savvy and like an immersive digital experience from their cars, China chief Ralf Brandstaetter added.

Derived from the so-called modular electric drive matrix (MEB), Volkswagen’s existing electric-only platform in use since 2019, it will primarily use Chinese suppliers and should be ready for market in 2026, a third faster than previous platform development times, he added.

The company has said it plans to introduce 10 more EV models globally by 2026 and speed up its time to market for new models from four years to closer to the 2.5-year average for its Chinese counterparts.

The $20,000-ish car segment in China is currently dominated by ICE vehicles, but Volkswagen is aiming to change that with its new specialized EVs. VW is teaming up with various Chinese manufacturers and suppliers to achieve this low retail price target, and VW aims to decrease its time to market to stay competitive.

Volkswagen aims to introduce 10 more EV models globally by 2026, which is the year that these new affordable China-only EVs are slated to start launchin. From Reuters:

Volkswagen is pushing to expand its product range in China to attract customers in the entry- and mid-level segment of EVs in particular, with its current offering priced above that of many Chinese electric-only rivals.

It plans to develop four models priced between 140,000 yuan ($19,400) and 170,000 yuan on the new platform to compete with rivals in a segment dominated by gasoline cars currently, Brandstaetter said.

The cars would be produced by Volkswagen’s joint ventures with SAIC (600104.SS) and FAW, he added.

Volkswagen invested around 1 billion euros ($1.1 billion) to build VCTC, which it says is crucial to its ‘China for China strategy’ and will eventually employ over 2,000 people.

Volkswagen Group China Technology Company (VCTC) is VW’s Chinese subsidiary, and it has already been able to drop costs significantly from the new platform by using Chinese-produced components.

In addition to its own new platform, Volkswagen has already partnered with a Chinese startup called Xpeng Inc to develop two new models using Xpeng’s architecture combined it with Volkswagen technology, according to Volkswagen Chief Executive Oliver Blume.