Volkswagen’s China Comeback Plan: Outpacing BYD

Volkswagen Aims to Reclaim lost Ground in China with New Electric Vehicle push

Volkswagen is making a bold move to regain its footing in the Chinese automotive market, unveiling a lineup of electric vehicles specifically designed “in China, for China.” The move comes after the German automaker lost its leading position to domestic electric car brands like BYD.

A Shift in strategy: From Global to Local

Volkswagen’s initial success in China, like that of Citroën, proved that foreign manufacturers could thrive.However, the rise of local EV brands has forced a strategic rethink. The company acknowledged that its European-centric electric vehicles failed to resonate with Chinese consumers’ unique preferences and demands. This realization led to the “By and for China” strategy, emphasizing local partnerships and tailored vehicle advancement.

Shanghai Auto Show: A Showcase of new Models

The Shanghai Auto Show on April 22, 2025, is slated to be the stage for Volkswagen’s resurgence. the event will feature a range of new electric vehicles and concept cars developed in collaboration with Chinese partners. This includes models from Audi and various Volkswagen joint ventures.

Audi’s electric Ambitions

Audi plans to showcase an electric vehicle based on the PPE platform, perhaps an A6 e-tron with an extended wheelbase, a feature popular in China. More substantially,Audi will unveil its first electric car developed through its joint venture with SAIC Motor. This vehicle promises Level 2++ semi-autonomous driving capabilities, allowing for assisted navigation on highways and in urban environments. This feature directly addresses the growing demand for advanced driver-assistance systems in the Chinese market, mirroring trends seen in the U.S. where features like Tesla’s Autopilot and GM’s Super cruise are highly valued.

Volkswagen’s Concept Car Lineup

Volkswagen will present several concept cars developed through its joint ventures with FAW, SAIC, and JAC (Volkswagen Anhui). These include a 100% electric sedan (FAW), a compact SUV with extended range (SAIC), and another 100% electric SUV (JAC). These concepts highlight Volkswagen’s commitment to exploring various vehicle types and catering to diverse consumer needs within the Chinese market.

The Autonomous Driving Push

Along with new vehicles, Volkswagen is investing heavily in autonomous driving technology developed specifically for the Chinese market. The company’s dedicated entity, Carizon, is spearheading this effort. This move reflects the increasing importance of autonomous driving features in the Chinese market, where consumers are notably receptive to new technologies.The U.S. market is also seeing rapid advancements in autonomous driving, but regulatory hurdles and public acceptance remain key challenges.

While Volkswagen is pushing hard in the Chinese electric vehicle market they are also focusing on similar technologies here in the U.S. According to a Reuters article Volkswagen is investing up to $5 billion in Rivian for EV software and development.

Ambitious Goals for the Future

volkswagen has set ambitious targets for its electric vehicle expansion in China. By 2027, the company aims to launch over 20 electric and plug-in hybrid models. By 2030,the goal is to have nearly 30 fully electric vehicles available,solidifying its position as a leader in the “era of connected smart vehicles.”

These goals align with the broader global trend towards electrification, driven by factors such as stricter emissions regulations and growing consumer demand for more sustainable transportation options. In the U.S., the Biden management has set a goal of 50% electric vehicle sales by 2030, supported by tax incentives and investments in charging infrastructure.

Challenges and Opportunities

Despite its renewed focus, Volkswagen faces significant challenges in the Chinese market. Local brands have gained considerable ground, and Chinese consumers increasingly favor domestic options. Furthermore,Chinese EV startups are rapidly innovating,offering technologically advanced models tailored to local tastes.The question remains whether volkswagen’s offensive will be sufficient to regain its leading position.

The situation in China mirrors, to some extent, the competitive landscape in the U.S. market. While established automakers like GM and Ford are investing heavily in electric vehicles, they face competition from Tesla and emerging EV startups such as Rivian and lucid.The key to success in both markets will be the ability to offer compelling products that meet the evolving needs and preferences of consumers.

Key Objectives	Target Date	Implications for U.S. market
Launch 20+ electric/hybrid models in China	2027	Increased global competition in EV technology and pricing.
Offer nearly 30 fully electric cars in china	2030	Potential for technology transfer and partnerships with U.S. companies.
Become a leader in connected smart vehicles	Ongoing	Highlights the importance of software and connectivity in future vehicles.

The Xpeng Partnership: A Key piece of the Puzzle?

Notably absent from the discussion is the partnership with Xpeng, a Chinese EV manufacturer. The first models resulting from this collaboration are expected to debut in 2026. This partnership could be crucial for Volkswagen,providing access to Xpeng’s expertise in software and autonomous driving technology,areas where Chinese EV companies have a competitive edge.

>What are the key challenges does Volkswagen face in achieving its goals, including its partnership with Xpeng?

Archyde Interview: Volkswagen’s China EV Push with Dr. Anya Sharma, Automotive strategy consultant

Archyde news Editor sits down with Dr. Anya Sharma, a leading automotive strategy consultant, to discuss volkswagen’s enterprising plan to regain its footing in the burgeoning Chinese electric vehicle market.

A Shift in Strategy: “By and For China”

Archyde: Dr. Sharma, welcome to Archyde. Volkswagen is making a meaningful shift with its new “By and For China” strategy.What are the key drivers behind this move to tailor its electric vehicles specifically for the Chinese market?

Dr.Sharma: Thank you for having me. The primary driver is the rise of domestic EV brands like BYD. Volkswagen’s previous global EV offerings didn’t quite resonate with Chinese consumer preferences, which emphasize technology, advanced features, and local partnerships. This shift is about acknowledging those unique needs and becoming truly competitive.

Shanghai Auto Show and New Models

archyde: the Shanghai Auto Show on April 22nd is pivotal. What are the most exciting prospects coming from VW, especially regarding Audi’s new EV offerings and its joint venture with SAIC Motor?

Dr.Sharma: Audi’s focus on the PPE platform, perhaps with a China-specific extended wheelbase A6 e-tron, is smart. However, the SAIC joint venture’s car is notably interesting, focusing on Level 2++ semi-autonomous driving. It shows a direct understanding of the high demand for advanced driver-assistance systems,mirroring trends that we see in the U.S. market too.

Archyde: and what about Volkswagen’s own concept cars, especially those developed with FAW, SAIC, and JAC?

Dr. Sharma: The diversification is key. A 100% electric sedan (FAW), a compact SUV with extended range (SAIC), and another electric SUV (JAC) show a willingness to cater to different consumer segments.It signifies VW acknowledging the broad spectrum of needs within the Chinese market, unlike the earlier more concentrated approach. These examples are of course, are direct competitors to Tesla, BYD and other local EV start-ups. They will need to differentiate to compete.

Autonomous Driving and the U.S. Market’s Influence

Archyde: Autonomous driving is a crucial area. How significant is Volkswagen’s investment in its entity,Carizon,for the progress of autonomous driving technology specifically for China?

Dr. Sharma: Very significant. Chinese consumers are embracing new technologies rapidly. Carizon gives VW a dedicated focus, particularly important when competing with chinese tech giants. This is an area where local, rapidly innovative competitors have an advantage and where VW must be ready to innovate.

Archyde: We see similarities in the U.S. market, with VW investing in Rivian? What does this imply for the global automotive landscape?

Dr. Sharma: It highlights that any market is a global market, and these companies must be thinking “local.” Investment in Rivian represents the global nature of the competition in both the U.S. and China. These technology transfers will continue, partnerships, and investment will need to be a major part of their strategy.

Future Goals and Challenges

Archyde: Volkswagen has set ambitious targets for this. What key challenges does Volkswagen face in achieving its goals, including its partnership with Xpeng?

Dr. Sharma: The primary challenge is the fierce competition from established local brands. They’ve built brand loyalty. Chinese EV startups are also extremely innovative and technologically advanced. The Xpeng partnership is extremely important.It grants access to software and autonomous driving expertise, a key differential. The absence of Xpeng on the initial launch shows the importance of the partnership and how VW is already shifting toward this technology.

archyde: With U.S. EV sales goals for 2030? What are the key implications for the broader industry in the coming years?

Dr. Sharma: The implications are significant. There will be increased global competition in EV technology and pricing. The U.S. market,with its own set of challenges and strong domestic players,will be deeply impacted by the success – or failure – of this strategy. Volkswagen’s strategic moves will affect the rest of the world, especially in the U.S. market.

The Xpeng Partnership: A Key piece of the Puzzle?

Archyde: The partnership with xpeng, models due by 2026, is a key aspect of this effort. How critical is this alliance for Volkswagen’s success in China?

Dr. Sharma: Absolutely crucial. Xpeng’s expertise in software and autonomous driving could be a game-changer. The Chinese market places a premium on these technologies. if Volkswagen integrates Xpeng’s capabilities effectively, it could gain a significant edge.The success of this will decide VW’s fate in China.

Concluding Observations

Archyde: Given the intense competition, what are your final thoughts on Volkswagen’s prospects in China?

Dr.Sharma: It’s an uphill battle, but Volkswagen has recognized its mistakes and it has shown the willingness to adjust its plans for the market. By embracing the “By and For China” strategy. It has created the necessary partnerships. Their success will depend on how quickly and effectively the company executes its China-specific plans. The question is whether VW can regain lost ground.They must push forward by leveraging local knowledge, and technology, and responding to changing consumer demands to emerge as a major player. I am excited to see how this competitive landscape will play out. I would like to ask our readers, are partnerships with local companies key to competing in an already competitive market? What will it take for VW to become an EV maker again?