VW seeks to strengthen its position in the Chinese automotive market through achieving cost reductions in production and boosting local partnerships

VW China

While EV demand in North America and Europe has been weaker than expected growth in this market in China has continued to be healthy. VW is seeking to strengthen its position in the Chinese market, building on an already established production network, through cutting costs related to its new China Main Platform (CMP) and working with local partners to develop new products for Chinese consumers.

This strengthening of localised resources includes the collaboration with Xpeng to develop a new zonal electrical/electronic (E/E) architecture and competitive battery technology with the aim to reduce CMP costs by 40%. VW can also leverage development work at its newly formed Volkswagen China Technology Company (VCTC) in Hefei in eastern China, the company’s largest development centre outside of Germany. As well as Xpeng, VW is collaborating other local tech companies such as Horizon Robotics and Thundersoft.

Here, the company says it is combining the development units and decision-making processes for vehicles produced for the Chinese market, with the sole focus of development on the local market. This will increase efficiency by reducing the number of connections needed between different areas of operations and coordinate communication across the same time zone.

The OEM says that developments at VCTC will reduce the time to market for components and vehicles by 30%, and that it will also benefit in areas of development and production through synergies with its other joint venture companies; SAIC Volkswagen, FAW-Volkswagen and Volkswagen Anhui.

“The Volkswagen Group is focusing on an ‘in China for China’ approach in the region. This means more local development, new tech partnerships and greater speed of implementation. At the same time, we are accelerating our electric offensive with additional products for new segments. In this way, we are taking advantage of the opportunities in the rapidly growing e-market,” said Ralf Brandstätter, Member of the Group Board of Management for the China region and CEO of Volkswagen Group China.