As the electric vehicle (EV) market continues to boom in China, foreign automakers like Volkswagen are racing to catch up with local competitors. The shift towards EVs in China is driven by green energy subsidies and tax breaks, leading to a surge in sales from 900,000 units in 2020 to 5.1 million units in 2021. Chinese automakers and start-ups have capitalized on this trend by developing EVs with advanced digital features, AI-enabled controls, and autonomous driving capabilities to cater to a new generation of tech-savvy car buyers.
Volkswagen, along with other foreign automakers like Nissan, is adapting to the changing market dynamics in China by developing new EV models tailored to the preferences of Chinese consumers. The company plans to launch 40 new models in China over the next three years and expand its lineup to include 30 EVs by 2030. The average age of an EV buyer in China is significantly younger than in Europe, leading to a demand for digital connectivity and smartphone integration in vehicles.
Chinese EV makers have been successful in driving down battery and production costs, leading to a price war in the market. As a result, prices of EVs in China have fallen significantly, making it a challenging environment for foreign automakers like Volkswagen. To compete effectively, Volkswagen is shifting its focus towards developing cars in China from scratch, rather than adapting existing European models. The company is investing in research and development in China to bring down costs and improve profitability in the competitive market.
Volkswagen’s efforts to accelerate its EV development in China have shown positive results, with an increase in EV sales in the first three months of the year. However, the company still has room for improvement to meet the demands of the rapidly evolving market. Volkswagen has also faced scrutiny for operating a plant in Xinjiang, where human rights violations have been reported. The company has initiated an audit to investigate the allegations and is exploring options for the plant’s future.
In an effort to connect with Chinese consumers, Volkswagen has introduced innovative digital features in its vehicles, including customizable avatars for on-screen assistants and interactive 3D avatars with changeable outfits. These features are not limited to EVs but are also being added to gasoline-powered vehicles to enhance the overall driving experience for customers. The company’s focus on digital development and connectivity reflects its commitment to meet the evolving needs of Chinese car buyers and stay competitive in the rapidly changing automotive market.
Overall, Volkswagen’s strategy to speed up EV development in China and adapt to the preferences of Chinese consumers demonstrates its commitment to remain competitive in the world’s largest automotive market. By investing in new technologies, digital features, and sustainable practices, Volkswagen aims to strengthen its presence in China and position itself as a leader in the evolving EV market.
