The important auto show in Shanghai opened on Tuesday with a declaration of war by the German car manufacturers. The electrification strategy for the Chinese market is being “driven at full speed,” Volkswagen announced at the start of the trade fair. VW will accelerate its decision-making and development processes in China, emphasized CEO Oliver Blume.

Volkswagen and the German auto industry as a whole are in a difficult situation in China. Around every fourth car sold in China is already electric. But unlike with combustion engines, German brands have so far hardly played a role in electric cars in China. Local brands dominate there.

Volkswagen had scheduled the world premiere of its new ID.7 on the evening before the trade fair. The Wolfsburg have high hopes for the new electric sedan in China. Mercedes, on the other hand, presented a fully electric version of its luxury brand Maybach for the first time in Shanghai on Monday evening.

Expert: Price wars are troubling the Germans

Industry expert Ferdinand Dudenhöffer sees the Germans facing major challenges. In March alone, sales of pure combustion engines in China fell by around one percent, while sales of pure electric cars and vehicles with plug-in hybrid drives (NEV) rose by more than a quarter. According to Dudenhöffer, the Germans are also troubled by the price war raging on the Chinese market. “Tesla and the Chinese have the edge in price and cost competition,” he says.

A lot of money can still be made in China with combustion engines. “But if you don’t want to lose customers, you have to make significant price and margin concessions for electric cars.” Western carmakers would have to recalibrate their production processes for electric cars, says Dudenhöffer. Anyone who simply continues with the current price and production strategy will lose customers.