Volkswagen invests in Chinese production site in Hefei

Volkswagen is investing an additional 2.5 billion euros in its Chinese factory in Hefei. On top of expanding R&D capacities, it is also preparing for the production of two VW brand electric models that it is developing with Chinese partner Xpeng.

Image: Volkswagen Group China

The first of the two models will be a medium-sized electric SUV, which will roll off the production line from 2026. The VW Group wants to offer a total of 30 models across its brands in China by 2030, while pursuing its localisation strategy “in China, for China.”

With the investment, Volkswagen hopes to shorten the product development cycle “by more than 30 per cent.” Moreover, by focusing on “local technology,” the carmaker wants to speed up its research and development in particular. “As the domestic industry rapidly develops towards fully connected electric mobility, the Group is accelerating the transformation of its business in China, actively implementing the “in China, for China” strategy, continuously deepening the localisation development process, and focusing its products more specifically Changing customer needs,” the company states in it press release.

Moreover, Volkswagen China Technology Company (VCTC) is working on the first China-specific electric architecture, the China Main Platform (CMP). It will become the platform for at least four further models for the entry-level EV segment in the compact class. These will launch from 2026. These are in addition to the above-mentioned EVs developed with Xpeng.

Volkswagen and Xpeng have been officially working together since February. At the time, VW also published the first teaser image of the jointly-developed electric SUV. The German carmaker also invested 700 million dollars in its new Chinese partner.

Further details on Volkswagen’s China strategy could follow soon. Volkswagen has invited investors and analysts to a China Capital Markets Day on 24 April. Also, Auto China will take place in Beijing later this month – with Volkswagen’s participation. The Group still generates around 40 per cent of its sales in China. However, it is increasingly losing market share to strong Chinese competition.

“Today, approximately 50 million Chinese car owners drive models from the Group’s brands. The basis for this success is that it lies in our close cooperation with our strong local joint venture partners – SAIC Group and FAW Group for many years. We will work together to accelerate the transformation to the smart electric era,” says Bei Ruide, Volkswagen Group’s managing director in charge of business in China and chairman and CEO of Volkswagen Group (China). “Relying on the ‘in China, for China’ strategy, the Volkswagen Group is focusing on customer demand, faster development speed, and stronger local R&D, which will accelerate the pace of adjustment of China’s business. In the future, through the production and innovation centre in Hefei, the speed of new technologies entering the market will increase by about 30%, which will continue to support the centre. The investment reflects our determination to rapidly strengthen local innovation capabilities.”

1 Comment

about „Volkswagen invests in Chinese production site in Hefei“
15.04.2024 um 09:41
Interesting, since the Chinese Mitsubishis that Coda used in the USA were made in Hefei. Is VW sure that this is a good idea, since the higher quality and improved parts used on Coda EVs did not come from Hefei.

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