German automakers want to catch up in the highly competitive electric car market in China. The electrification strategy for the Chinese market is being “driven at full speed,” Volkswagen announced at the start of the international auto show in Shanghai on Tuesday. VW will accelerate its decision-making and development processes in China, emphasized CEO Oliver Blume.
Against the background of the tough competition, the Wolfsburg-based company announced that it intends to expand its investments. Around one billion euros are to be invested in the construction of a new development, innovation and procurement center for fully networked electric cars in the Chinese city of Hefei. In the new company, the development times for new products and technologies are to be reduced by around 30 percent.
Difficult situation for the German auto industry
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, many German brands have so far hardly played a role in electric cars in China. Local brands dominate there. The VW brand recently even lost the title of the largest car manufacturer in China, which it had held for decades, because the domestic competitor BYD passed thanks to great successes in the e-segment.
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 in Shanghai for the first time. “We are confident that we will see significant growth rates,” said Mercedes board member Markus Schäfer on Tuesday with a view to the e-car business on the sidelines of the auto show.
Only BMW is optimistic about the business
BMW sees itself well positioned on the Chinese market. The company is very happy with its position and is optimistic about the business, said CEO Oliver Zipse at the fair. In China’s highly competitive market for electric cars, BMW is doing better than all German premium competitors. In the first quarter alone, sales of electric cars in China tripled to around 19,800. The group thus has a market share of around ten percent in the area of electric premium vehicles.
In contrast to the entire premium market, however, BMW does not occupy a leading position in electric cars. Tesla and the Chinese brand Nio, for example, were recently ahead of the Germans.
Audi wants to catch up
Audi wants to catch up with its hitherto sluggish electric car business. “We continue to see the Chinese market positively,” said Audi boss Markus Duesmann on Tuesday on the fringes of the auto show. Electric cars recently accounted for 25 percent of sales on the Chinese car market. However, Audi still hardly sells any vehicles in this segment and only has a small market share. According to Duesmann, Audi intends to significantly expand the vehicle range. In the next three years alone, ten purely electric models are planned. “This will significantly improve our position,” said Duesmann. Audi claims to play a “very significant role” in the premium electric car segment.
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 said.
Industry expert sees major challenges
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, said Dudenhöffer. Anyone who simply continues with the current price and production strategy will lose customers.
