Volkswagen is set to introduce a novel entry-level electric vehicle (EV) platform in China, designed to keep pace with market leaders Tesla and BYD. The automaker is poised to enter the electric vehicle market with a competitively priced range of models starting at around $20,000 (£14,000 or 140,000 yuan), a move aimed at rekindling loyalty among customers in its largest market.
As the largest electric vehicle (EV) market in the universe sees competition escalate, manufacturers face mounting pressure following value cuts initiated by industry leaders Tesla and BYD.
According to VW China’s head, Ralf Brandstaetter, the Chinese language market is very price-sensitive, he cautioned reporters on Friday.
During his visit to the company’s new EV facility in Hefei, Brandstaetter highlighted that the brand-new entry-level platform is specifically designed for local Chinese customers, featuring a unique combination of battery, electric drive, and motor tailored to their needs. In particular, Chinese language users being young and eager for the latest technology and software.
Utilizing Volkswagen’s tried-and-true Modular Electric Drive Matrix (MEB) architecture, the innovative platform leverages local suppliers to drive down costs effectively.
Brandstaetter is introducing a cutting-edge platform in 2026, which is expected to boost growth opportunities by approximately one-third.
Volkswagen aims to accelerate its electric vehicle (EV) expansion, planning to launch ten new models worldwide by 2026 in a bid to keep pace with Chinese auto manufacturers. It aims to introduce new fashion lines within a shorter timeframe of approximately two and a half years, a significant reduction from its current four-year cycle.
The corporation has already seen some traction in its efforts to reduce prices. According to Ludger Lührmann, Chief Technology Officer at Hefei, a Volkswagen Group China technology firm, they can reduce the cost of the dashboard display by 37% upon switching suppliers.
Volkswagen plans to launch an all-electric vehicle series in China priced at around $20,000.
As traditional players like Volkswagen and Audi have long held a stronghold on the market, they’re increasingly being eclipsed by homegrown brands that boast cutting-edge technology. While many electric vehicles (EVs) may initially seem out of reach due to their premium price tags, numerous opportunities arise where they can be acquired at a significantly lower cost.
Volkswagen lost its position as China’s best-selling model to BYD earlier this year, as consumers increasingly seek out the latest electric vehicle offerings.
In China, Volkswagen’s largest and most vital market, nearly 50% of the company’s revenue originates from this region. The Volkswagen ID.3, its best-selling electric model, was ranked 22nd among Chinese EVs in 2022. After slashing costs by 16%, the total had been reduced to around $17,500 (or 125,800 yuan), achieved in August.
The cost reduction contributed to rising demand, as ID.3’s gross sales surged to 10,000 units in July, a significant jump from the typical monthly average of around 2,200.
The automaker will leverage this innovative approach within its reimagined architecture, dubbed the Ambitious Modular Standard for Tomorrow’s Innovation and Performance Platform. Volkswagen is set to introduce four new electric vehicles with price tags ranging from approximately $20,000 (140,000 yuan) to $23,800 (170,000 yuan).
Volkswagen’s latest models are being produced in collaboration with its joint venture partners SAIC and FAW, according to Brandstaetter. The corporate invested $1.1 billion to secure a majority stake in VCTC, a crucial move aimed at regaining market share.
The ability leverages partnerships with native suppliers and Volkswagen’s strategic partners to accelerate growth opportunities. Volkswagen’s China division head clarified plans to streamline processes by eliminating the need for “time-consuming coordination across different time zones with German suppliers.”
This logistics collaboration will enable Volkswagen to reduce delivery times for Chinese customers by approximately 30%.
The Chinese market saw the opening of ID.7 Vision orders from the automaker this week, starting at a price point of $33,000. The Vizion is FAW-Volkswagen’s flagship electric sedan model designed specifically for the Chinese market.
Volkswagen has begun producing batteries at its Hefei manufacturing facility. The company will pioneer the development of cell-to-pack (C2P) batteries, a technology that enables increased energy density and efficiency.
Electrek’s Take
As Volkswagen’s value cuts stimulate demand in China, the company takes heed. Volkswagen aims to revitalize its customer base by launching four new electric vehicles (EVs) with price points ranging around $20,000.
Volkswagen may consider producing low-cost electric vehicles, such as BYD’s Dolphin, which starts at approximately $16,100 (116,800 yuan), or the Yuan Plus electric SUV, priced around $18,500 (134,000 yuan).
In May, BYD supplied approximately 30,000 units of its Dolphin electric vehicle model, a significant increase of around 10 times the number sold by the ID.3.
As BYD’s ambitious electrification strategy gains momentum, the company marked a significant milestone on Friday when its 6 millionth new energy vehicle (NEV), inclusive of hybrid models, left the production line.
Volkswagen has injected $700 million into XPeng, a Chinese electric vehicle manufacturer, to secure a roughly 5% stake in the company as of July.
Although XPeng’s new fashion constructions are expected to boost sales, VW’s Chief Financial Officer (CFO) Arno Antilitz forecasts that the company might cede more market share until their products reach the market in 2026.
