Author | Shen Tianxiang
Edit | Ge Bangning
Produced by | Bangning Studio (GBNGZS)
On August 1, 2022, when Ralf Brandstätter took over the scepter from Vron Sihan as the head of Volkswagen Group China, the first task that the Volkswagen Group Board of Directors received from the headquarters in Wolfsburg, Germany, was to make a clear analysis of the current situation in the Chinese market and develop a strategy accordingly.
After an in-depth discussion on the development prospects of China's new energy vehicles, and after comprehensively comparing the gap between the previous market forecast and the actual changes, the headquarters of Wolfsburg, Germany, made an important decision to adjust the inflection point of China's new energy vehicle market from 2027 and 2028 to about 2025, when the sales of new energy vehicles will account for 50% and become the mainstream of the market.
This is a key change. As Barred explains, this means that "we need to make adjustments accordingly, especially in terms of investment, such as reducing investment in combustion engine vehicles and increasing investment in pure electric models and intelligent connected vehicles." At the same time, a plan to reduce costs and increase efficiency was launched. ”
A year and a half later, Braid was careful to hand over a China answer sheet to the board of directors – a very competitive performance of the Volkswagen Group, given the collective transformation difficulties faced by multinational automakers in the Chinese market.
In terms of numbers, in 2023, Volkswagen Group will deliver 3.236 million vehicles in China, a year-on-year increase of 1.6%. Among them, 729,000 units of the Audi brand increased by 13.5% year-on-year, and 2.4 million units of the Volkswagen brand increased by 0.1% year-on-year. There were 191,800 pure electric vehicles, a year-on-year increase of 23.2%, and the ID.3 performed well with 75,700 deliveries, becoming one of the best-selling electric vehicles in the Chinese market.
There are four main things hidden behind the numbers: First, the Volkswagen Group will make full use of China's speed and power to accelerate the transformation. Second, strengthen local R&D and shorten the R&D cycle by 30%. Third, the "C family" promotes the rapid implementation of new technologies in products. Fourth, promote the hybrid transformation of fuel vehicles and accelerate the electrification offensive.
The Volkswagen Group has a clear goal to remain the No. 1 among international automakers in China and to play a leading role in the era of intelligent and connected vehicles, and to become one of the top three automakers in the Chinese market by 2030.
There are three pillars to achieve this goal: First, we will continue to strengthen our dominant position in the fuel vehicle market and extend it to the field of new energy vehicles. The second is to strengthen the offensive of pure electric products and open up the Chinese market segment. The third is to strengthen localized R&D and use local innovation to respond more quickly to the needs of Chinese consumers.
In summary, the Volkswagen Group hopes to continue to lead the era of intelligent networked vehicles with the strategy of "In China, For China" and "China speed".
On the afternoon of January 25, 2024, Volkswagen Group China held a New Year's media conference to comprehensively explain its China strategy, local R&D, software and product development work and its substantive progress.
Balance between fuel and new energy
From the perspective of Volkswagen Group's sales structure in China in 2023, fuel vehicles still occupy an absolute advantage, accounting for more than 90%. Moreover, in the context of the overall shrinkage of the fuel vehicle market, its share of fuel vehicles in China increased by 1.3% compared with 2022.
As it turns out, combustion engine vehicles are still an important source of profitability for automakers – which will finance the Volkswagen Group's electrification and intelligent transformation.
Matthias Glodny, Vice President and Head of Product Management at Volkswagen Group China, said that they will develop solutions for gasoline vehicles and plug-in hybrid vehicles based on MQB EVO and MLB EVO, and will provide 30 locally produced fuel vehicles and plug-in hybrid models by 2027.
All major fuel vehicles of the Volkswagen Group will be transformed to new energy sources, and the latest plug-in hybrid technology will be launched soon, with an all-electric range of more than 100km. At present, the pure electric range of plug-in hybrid models of most joint venture car companies has not exceeded 100km, but some Chinese brands have exceeded 200km.
Bangning Studio learned that SAIC Volkswagen and FAW-Volkswagen, two major joint ventures, have plans to develop their own plug-in hybrid technology and have already started relevant work. The empowerment of the joint venture will contribute to the Volkswagen Group's transition to hybrid combustion engine vehicles.
In addition, its main combustion engine vehicle products will achieve high-end technological upgrades in the next few years, especially in terms of intelligence, including high-end driver assistance functions for the Chinese market, intelligent cockpit, new in-car navigation system, and AI intelligent assistant.
The Volkswagen Group will accelerate its electric vehicle product offensive and will offer at least 30 pure electric models for the Chinese market by 2030. In addition to the ID. series, the Volkswagen Group has more market segments.
First, Volkswagen Anhui's Cupra Tavascan will launch its first model for the Chinese market in 2024, in addition to exporting to the European market.
Second, by the end of 2024, Audi FAW New Energy Automobile Co., Ltd. (Audi FAW New Energy Co., Ltd.) will start production of its first model, the Audi Q6 L e-tron, at its Changchun plant, which will be based on the PPE platform.
Third, the Audi brand and SAIC Motor will jointly develop new models.
Fourth, it will cooperate with Xpeng Motors to develop a new model, which will be unveiled in 2026.
Fifth, in 2026, Volkswagen (China) Technology Co., Ltd. (VCTC) will launch an electric vehicle platform (CMP) dedicated to the Chinese market, and based on this platform, develop A-segment mainstream market entry models.
In 2024, the Volkswagen Group will introduce the latest technologies to new products (combustion and electric vehicles), including upgrading ADAS advanced driver assistance functions from L2+ to L2++, cooperating with Gotion Hi-Tech to develop next-generation power batteries, cockpit experience upgrades, and Gen X steering wheel (a steering wheel module tailored for Chinese customers).
From the product planning, it can be seen that the Volkswagen Group hopes to blossom more and layout to every market segment.
Wolfsburg moved 9,000 kilometers east
In order to comprehensively improve the competitiveness of its products, the Volkswagen Group has moved its technology development and docking work from Wolfsburg to Hefei, China, 9,000 kilometers east.
"In order to achieve 'in China, for China', we must quickly localize development according to the needs of the Chinese market. Marcus Hafkemeyer, Chief Technology Officer and Executive Vice President of Volkswagen Group China, and CEO of Volkswagen (China) Technology Co., Ltd., said.
During the Shanghai Auto Show in April last year, the Volkswagen Group announced an investment of about 7.5 billion yuan to establish a R&D, innovation and procurement center focusing on intelligent and connected electric vehicles.
The VCTC is the central interface for the Volkswagen Group to connect the needs of joint ventures and partners, as well as its local technology center for intelligent and connected vehicles in China. In January of this year, the company began operations.
VCTC will not only speed up local R&D, but also reduce costs – the decision-making process will be accelerated using advanced development tools, reducing the development time of new products and technologies by about 30%. At the same time, a local supplier ecosystem will be linked, involving suppliers in the early stages of development to optimize the supply chain and reduce costs.
In addition, through VCTC, we will find more Chinese partners, reduce production costs, reduce logistics costs, achieve faster technological breakthroughs, and be able to integrate all modules together.
"We can use Hefei as a hub for better performance, faster decision-making, and more cost-effective solutions. Gao Mengtian said.
VCTC's R&D capabilities have already yielded their first product, the Tavascan, the first model produced at Volkswagen's Anhui plant for the European market, delivered this year and exported to Europe by sea.
The car showcases the Volkswagen Group's R&D capabilities in China, which uses a large number of Chinese modules and components, including lithium iron phosphate batteries. In the future, the company will focus on providing standard battery cells for the Chinese market.
Currently, VCTC is developing its first dedicated electric vehicle platform for the Chinese market, known as CMP.
From 2026 onwards, the platform will feature battery, electric drive and motor solutions for the Chinese market, which will be more cost-effective and enable rapid time to market. The development time was only 36 months, which is about a third shorter than the Volkswagen Group's previous platform development cycle.
Through the new company, the Volkswagen Group will establish closer synergies with its joint ventures and partners in China.
At this communication meeting, He Xiaopeng, chairman and CEO of Xpeng Motors, said on the spot that after more than half a year of cooperation, the deepest impression is trust and efficiency.
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Efficiency will be the key word for the Volkswagen Group's transformation in China. The increased R&D autonomy of the VCTC enables the Volkswagen Group to leverage local innovation and market insights to deliver advanced solutions to Chinese customers more quickly.
This is a new management model and the core of its "In China, For China" strategy. Under this model, Volkswagen is given more autonomy and decision-making power in China, and the mechanism is more agile and efficient.
"In the past, scale and technology were key to the success of an automaker. But in recent years, a completely new factor has become increasingly important: speed. ”
However, the speed may need to be accelerated. In the eyes of industry insiders, the development cycle of a new model of a local Chinese brand has been reduced to 12 months, some even faster, and it will be further accelerated to compete with these brands.
The second half of the "C family" showdown
Together with VCTC, CARIAD China will become an important pillar of the Volkswagen Group's transformation.
To a certain extent, the success or failure of CARIAD China will determine whether the Volkswagen Group can win in the second half of the new energy competition.
CARIAD was founded in 2020 as the software and digital development subsidiary of the Volkswagen Group. Formerly known as the Car.Software Organisation, Volkswagen's software division, its primary task was to create a three-in-one software platform for the Group's global model platforms.
In April 2022, CARIAD China announced its establishment to define its local R&D strategy in China, focusing on local customer needs and experience, focusing on localized R&D and adaptation in six key areas.
In less than two years, CARIAD China has built a strong local R&D team at "China speed" - the number of software R&D talents has increased from more than 600 in 2022 to 1,110, and 90% of them are local talents.
At present, CARIAD's R&D network covers the whole country, and R&D teams have been established in five cities with a concentration of software talents: Beijing, Shanghai, Chengdu, Hefei and Hangzhou.
It has also established an innovation incubation platform "Forward! Lab" aims to explore innovative project cooperation combined with the local digital ecosystem, such as the cross-border cooperation of local mobile phone brand vivo, focusing on technology and application innovation related to the integration of smart hand cars.
What's more, CARIAD China has also joined hands with Chinese technology companies to form the "C Family".
In September last year, it acquired Shanghai Muchuan Industrial Design and integrated its design team into CARIAD China's UX (Intelligent Vehicle User Experience Design and Innovation) and UI (Intelligent Car Human-Computer Interface Design and Innovation) competence center CARIATIVE, which is committed to user experience and interaction innovation.
In the same month, it established a joint venture with Thundersoft CARThunder to focus on the research and development of local cockpit infotainment systems and intelligent connected functions.
IN NOVEMBER, THE COMPANY ESTABLISHED A JOINT VENTURE WITH HORIZON ROBOTICS TO DEVELOP HIGHLY OPTIMIZED FULL-STACK ADVANCED DRIVER ASSISTANCE SYSTEMS AND AUTONOMOUS DRIVING SOLUTIONS THAT REACH THE L4 LEVEL, AND INSTALL THEM ON THE VOLKSWAGEN GROUP'S LOCAL ELECTRIC MODELS.
The "C Family", consisting of CARIATIVE, CARThunder and CARIZON, will accelerate the delivery of solutions "in China, for China" and enhance competitiveness in the field of software solutions.
With the inauguration of VCTC in Hefei last year, CARIAD China and VCTC form the Group's local R&D core team in China, and work closely with the R&D teams of the Group's joint venture partners.
In the new R&D structure, CARIAD China will not only continue to focus on the development and delivery of software solutions, but also work closely with VCTC on vehicle integration testing to deliver leading connected technology products to the Group's three joint venture partners in China.
Chang Qing, CEO of CARIAD China, said that the establishment of the "C Family" will further enhance CARIAD China's R&D and delivery capabilities. By building a more systematic and collaborative approach, we can help shorten the R&D cycle and speed up the local R&D process by at least 30%.
In 2024, CARAID China will work more closely and efficiently with VCTC and the three joint ventures to achieve collaborative development, deliver innovative products more quickly, fully align with the overall R&D acceleration goal of "In China, For China" strategy, and build sustainable and iterative software solutions for the needs of the Chinese market.
The real test will manifest itself in practice.