The auto industry in China is undergoing a major transformation, with electric vehicles becoming increasingly popular and domestic manufacturers gaining ground on Western carmakers. 

Volkswagen, one of the biggest players in the Chinese market, has recently announced plans to expand its electric vehicle line-up and invest in autonomous driving technology. 

As it adapts to this new reality, VW must carefully consider how best to leverage local trends while maintaining its commitment to quality standards and reliability. 

VW and Trends in China

VW’s sales fell 3.6% last year due to COVID-related shutdowns of showrooms across the country. To make up for lost ground, Volkswagen plans to launch two new EV models over the next two years – the Audi Q4 e-tron and VW ID7 Sedan – as well as a smaller EV model such as a sedan or SUV below the ID4 (though not an entry-level ID2 planned for Europe). The automaker also might offer electric Skoda models as Skoda currently has a small presence in China. 

VW delivery china
Image Source: Electrek

Benefits of EV

Electric vehicles are attractive because they are cheaper than combustion engine cars thanks largely to low electricity prices; charging an ID4 costs nearly five times more in Germany than in China.  

Additionally, EVs are more environmentally friendly than their fossil-fuel counterparts. As Chinese consumers become increasingly aware of the environmental benefits of electric cars, VW is well positioned to tap into this growing trend. 

Image Source: Fleely

Autonomous Driving Technology

Beyond traditional combustion engine vehicles, Volkswagen’s strategy will also include investments in autonomous driving technology

VW is investing $2.3 billion into an autonomous driving joint venture with Chinese company Horizon Robotics and recognizing that technology in China will become less compatible with Western world standards. 

Additionally, local carmakers have been quicker at engineering new models, taking some two and a half years compared to four years for VW in Germany

Future Growth

The Chinese auto market is set to grow in 2023 and Volkswagen stands to benefit greatly. With its investments in electric technology, autonomous driving, and its ability to leverage local trends, Volkswagen appears well positioned for future growth. By adapting to the changing needs of the Chinese customer, VW can continue to be a major player in the Chinese auto market. 

The combination of VW’s reputation for quality and the competitive advantages of electric vehicles has the potential to reinvigorate Volkswagen’s presence in China and cement its place as a leader in the global automotive industry.