Volkswagen is presenting in China the first generation of cars developed entirely on site, marking a radical change in its strategy to face growing local competition and geopolitical tensions. The group unveiled seven new models in Beijing, from the electric Jetta at about 12,500 euros to the high-performance Audi E7X, all featuring large screens, advanced autonomous driving, long range, and competitive prices for the Chinese market. This move prepares VW for a divided world, making production independent of European or American components to withstand possible US sanctions.
The Wolfsburg giant is investing heavily in local development of new models, in collaboration with Xpeng for software and Horizon Robotics for autonomous driving, creating identities like AUDI in uppercase and the relaunch of Jetta. Unlike BMW and Mercedes, which only adapt European models, Volkswagen goes further to compete in China and use the country as a base for exports to Vietnam, India, Brazil, and Mexico. The vehicles will use raw materials from the eastern hemisphere and locally developed chips to ensure resilience to economic decoupling.
Despite the halving of subsidies for electric vehicles, the decline in battery sales, and the weak economic situation, Volkswagen is launching an offensive with a new model every two weeks, leveraging profits from traditional engines. Management hopes that rising gasoline and diesel prices will boost demand for electric vehicles. The goal is third place behind Geely and BYD, turning China into a hub for global exports. Experts warn that success will depend on the next 5-10 years and that the market could contract.
The beginning of a new era
“This event marks the beginning of a new era for Volkswagen in China. […] With this, we announce that Volkswagen in China must be reckoned with again – even in the field of electric cars.”
Resilience in a complicated world
“Volkswagen is making itself more resilient in a complicated world. […] In the future, many of the cars produced in China will hardly require components from Europe or the United States anymore.”
Raw materials from the eastern hemisphere
“The raw materials for cars in China must come from the eastern hemisphere, i.e., from the Chinese sphere of influence. […] VW could thus continue undisturbed in the Far East even if the USA imposed harsh sanctions on raw materials and technologies.”
Realistic goal: third place
“VW aims only for third place as the main foreign manufacturer, behind Geely and BYD. […] At first glance, the consequences of Chinese subsidy policy seem positive for VW, but the leading position is not sustainable in the long term.”
It is not a short-term thing
“It depends on the next five to ten years. It is not a short-term thing. […] ‘German manufacturers are currently the only ones holding their own against the Chinese ones.’”
(Excerpt from the newsletter by Giuseppe Liturri)
