A Volkswagen ID electric car is seen during a construction completion event at the SAIC Volkswagen MEB Electric Vehicle Plant in Shanghai, China, November 8, 2019. REUTERS/Aly Song Acquire License Rights
HEFEI, China/BERLIN, Nov 24 (Reuters) – Volkswagen ( VOWG_p.DE ) said on Friday it will develop a new base electric vehicle platform in China and use more local components to cut costs as the German company seeks to regain lost positions in the world’s largest automotive market.
The new architecture, known as A Main Platform, will be tailored to Chinese consumers’ tastes in terms of battery, electric drive and electric motor, China chief Ralf Brandstatter told reporters during a visit to the new EV development and delivery center in the central city of Hefei.
Chinese new car buyers are younger, tech-savvy and like an immersive digital experience from their cars, he added.
Built from the so-called Modular Matrix Electric Drive (MEB), Volkswagen’s existing electric-only platform that has been in use since 2019, it will use mostly Chinese suppliers and should be ready for the market in 2026, a third of – faster than the development time of the previous platform, he added.
The company said it plans to introduce 10 more EV models globally by 2026 and speed up its time to market for new models from four years to closer to the 2.5-year average for Chinese peers.
China was a very “price-sensitive” market and Volkswagen needed to optimize costs, Brandstatter said.
“When (EV) volume goes up, … it’s important to be profitable to be sustainable. That’s why we drive technology, speed and cost efficiency.”
Ludger Luehrmann, chief technology officer of the Hefei center, which is called Volkswagen Group China Technology Company (VCTC) and develops the platform, said, for example, that the company was able to reduce the cost of its dashboard displays by 37% after switching to Chinese supplier from worldwide.
Volkswagen relinquished its title as China’s best-selling car brand to BYD ( 002594.SZ ) late last year due to intense competition from local electric car makers and its heavy reliance on gasoline cars, whose sales in the country are declining.
Its best-selling EV, the ID.3, ranked 22nd among EV models in sales in China this year after heavy discounts boosted its monthly sales to around 10,000 in July to October from an average of 2,200 a month last year year, according to industry data.
STARTING MODELS
Volkswagen is pushing to expand its product range in China to attract customers particularly in the entry-level and mid-range electric car segment, with its current offering priced above that of many electric-only Chinese rivals.
The company plans to develop four models priced between 140,000 yuan ($19,400) and 170,000 yuan on the new platform to compete with rivals in a segment currently dominated by gasoline cars, Brandstatter said.
The cars will be produced by Volkswagen’s joint ventures with SAIC ( 600104.SS ) and FAW, he added.
Volkswagen is investing about 1 billion euros ($1.1 billion) to build the VCTC, which it says is crucial to its “China for China strategy” and will eventually employ more than 2,000 people.
The center’s operations include coordinating deliveries for the early involvement of suppliers and linking the development projects of Volkswagen’s three joint ventures in China with SAIC, FAW and JAC Motors.
The hub meant that “time-consuming coordination between time zones with developers in Germany was no longer necessary,” Brandstatter said.
“We will increase the efficiency of our development processes and be able to reduce the time it takes to deliver products to Chinese customers by 30%, while ensuring that we meet their specific needs.”
In July, Volkswagen struck a deal with Chinese electric car maker Xpeng Inc ( 9868.HK ) to boost its electric car lineup. There are two new models in development as part of this partnership that will be aimed at mid-range users and will be built on the older generation Xpeng platform. These models should be released from 2026.
($1 = 7.2111 Chinese Yuan Renminbi)
Reporting by Zhang Yang, Brenda Goh and Victoria Waldersee; Editing by Kim Coghill
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