NEWS

Dear Ladies and Gentlemen, distinguished guests. Thank you very much for the invitation. I am very happy to be with you today. 

Because meetings like this one today are essential in our rapidly changing industry. Especially in China. In no other country is the speed of transformation and innovation in the automotive sector as high as here. China has long been the powerhouse of the international auto industry. That is why it is so important to regularly exchange ideas and discuss the future of mobility in this circle. 

A future that we at Volkswagen want to help shape. We have been in China for 40 years. Together with our strong joint venture partners SAIC and FAW, we have made individual mobility accessible to many millions of people. And with JAC, we will soon be putting the power of a third joint venture in Anhui on the road.

We have driven the modernisation of the industry and in doing so supported China’s rapid industrialisation. Last but not least, this has also created a strong supplier structure that the entire industry can access. 

Cooperation has always played an important role in our journey over the last four decades. We will continue to work with other OEMS, suppliers, and authorities to successfully develop the industry in China. In this new phase of mobility, it is crucial to stay in touch with each other - for example on new industry standards. That is also why events like today are so valuable for our industry. A big thank you to CAAM for making this forum possible. 

Ladies and Gentlemen, China and Volkswagen have a long, shared history. We will continue to build on this. Together, we will once again shape a new era of individual mobility. A new era that is now beginning, with the rise of the Intelligent Connected Vehicle (ICV). 

Volkswagen wants to play a leading role in this new era in China! The coming years are crucial for this. Our plan, to take us the end of the decade, is in place: In our "Target Picture 2030" we rely on three essential pillars:

Firstly, we must make consistent use of our position in the ICE market. This year, Volkswagen has significantly increased its market share in the combustion engine business from 18 to 20 percent. In the coming years, we will continue to strengthen our product base with new models such as the new Tiguan, Sagitar, Magotan, Q4 and Q8. In the important SUV segment, no other manufacturer has such a comprehensive range as the Volkswagen Group, with 30 models. By 2030, we will have launched a total of 17 new combustion models. At the same time, we are investing smart in new technologies, like the China Rush Hour Pilot and the Navigations System 2.0. Both innovations were developed locally and very efficiently with our joint venture partners. 

In addition, we are pushing ahead with hybridization. By this, we are gradually moving our ICE fleet in the direction of PHEVs. We transform our strong ICE fleet into NEVs and become an even stronger player in this segment. 

The Group will play its strengths to the end here. With our high scales and good cost position, we remain very profitable even in a market that is becoming less so. This will provide us with the necessary cash to finance our investments into the ICV business here.

Secondly, the acceleration of our BEV offensive. With the Audi GT, Q4 and Q5 e-tron, we launched three new models last year. At the Shanghai Auto Show, we unveiled the ID.7, our first all-electric sedan. The first vehicles will be handed over to customers in the Autumn. Then, from the end of the year, our new joint venture Volkswagen Anhui will start production. Alongside the all-electric Cupra Tavascan, which will be exported exclusively to Europe. Another Volkswagen brand model will come off the production line there as early as 2024. The Audi PPE Company will also start production in Changchun at the end of 2024. Three new Audi vehicles will be launched in 2025 and 2026. By 2030, we want to expand the range of fully electric vehicles for the Group to at least 30 models. 

Thirdly: More development in China for China. With our ‘in China for China’ strategy, we will develop much more technology here in the future. To make even better use of local innovative strength and respond more quickly to the needs of Chinese customers. To achieve this, we are rapidly expanding our own local development capacities. 

Only recently we announced the establishment of a new development company in China: the Volkswagen Group China Technology Company. 

We are investing more than 7.5 billion RMB in the province of Hefei. It is the Group's largest development centre outside our headquarters in Germany, with an exclusive focus on the development of most advanced EV and ICV models. 2,000 additional developers will work there on new products in the future. Closely networked with our procurement team. This will allow us to closely involve new and existing suppliers in product development at an early stage. 

Our software unit, CARIAD China, is also continuing to expand its capacities. By the end of the year, the number of its software experts will increase from 800 in 2022 to around 1,200 – including personnel in the newly set up Joint Ventures of CARIAD. At least 90 per cent will be Chinese software talent. At the same time, we will recalibrate CARIAD. With a clear focus on integrating software features into our products. Also, in close cooperation with local partners.

Beyond our own capacities, we are building partnerships with strong local companies. With the Chinese UX expert ThunderSoft, we will jointly develop China-specific infotainment systems. For autonomous driving and chip design, we have agreed a long-term cooperation with Horizon Robotics. 

In 2021, we acquired a 25 percent stake in the battery manufacturer Gotion. In the future, we will produce the so-called unit cell there. The company is integral to our global battery strategy. Based on this we are building up plants in the USA, Europe, and China. And we are also securing direct access to our own sources of raw materials. This will allow us to quickly increase the performance of our batteries and significantly reduce costs. In China, we will also be able to use different chemicals such as LFP or NCM flexibly. 

And last but not least – fourthly: We have to make decisions faster. To this end, Volkswagen now has more autonomy and decision-making powers in China than ever before. With our new governance model, we now also make more decisions in China for China. Through this, Volkswagen Group China is gradually becoming a second headquarters for the Group. 

Ladies and Gentlemen, Volkswagen is accelerating to "China speed". With these investments and partnerships, we will reduce the development times of new products and technologies by around 30 percent. And significantly strengthen our competitiveness. 

We have set a course to be able to offer state-of-the-art ICV vehicles in China, with the next big leap in technology. 

At the same time, we continue to expand and optimize our existing electric model range. New models will further strengthen our position in the fast-growing Chinese electric market. 

NEV share is forecast to rise to over 30 percent this year, and by 2025 to over 50 percent. By 2030, the total market will grow to 28 million to 30 million vehicles. 

74 percent will be NEVs, more than 55% will be fully electric. The Group's brands will have at least 30 fully electric models on offer by this time. 

This dynamic development is partly the result of a consistent subsidy policy, which made a lot of sense especially in the early days of electrification. It created important additional incentives for customers. As a result, China is now a leader in the transformation towards all-electric mobility. 

We expressly welcome the new tax program for electric vehicles, in the interest of a rapid green transformation. These purchase incentives will ensure volume segments also further benefit from the change to e-mobility and that electrification reaches the full breadth of the market. 

However, we are currently facing an overheated market. An intense competitive environment, with more than 120 manufacturers and around 150 new models in 2023, has led to some drastic discounts in recent months. 

Many OEMs in the market are highly dependent on their BEV business, since they have no second leg to stand on. With intense competition and high battery prices, there is currently high economic pressure. Short-term sales successes are only possible with an extremely high capital investment. These funds are then unavailable for a long-term positive development of the market. 

Analysts assume that around 80 percent of the start-ups that entered the market in recent years are now leaving it, will leave it soon, or urgently need capital from investors. A consolidation of the competitive environment is in full swing. 

The ones who suffer are the customers, who can no longer have their vehicles serviced or see a drastic drop in the price of their vehicle. In this environment, strong brands in particular, such as Volkswagen and Audi, continue to offer stability and reliability. 

One thing is clear, Ladies and Gentlemen: 

Volkswagen wants to continue to grow, even in this challenging environment. But certainly not at any price. For us, the profitability of our business has the highest priority. We will not participate in this unhealthy market development for the sake of short-term volume increases. 

We are able to initiate and implement groundbreaking investments, such as in the Volkswagen Group China Technology Company. With this, we are making ourselves ready for the next phase of the market. And preparing our business for margin parity between ICE and BEV products. 

Ladies and Gentlemen, as an international OEM, China has become something of a fitness centre for us. We have to ‘work out’ harder and faster to keep up with the dynamics of the market.

In recent months, Volkswagen has taken important steps in this direction. With our ‘Target Picture 2030’ and our ‘in China for China’ strategy, we are now systematically preparing for the next major technological step. 

In doing so, we are laying the foundation with our strong brands, strong JV partners, more local development competence and partnerships with local high-tech companies. We have already launched many important projects, and more will follow.

Our goal is clear: we want to play a leading role in the world of ICVs! 

We have a strong plan for this. You can also count on us in the future! 

I look forward to the exchange with you. 

Thank you for your attention. Xie Xie.

Ralf Brandstätter, Chairman and CEO of Volkswagen Group China, attended the 2023 China Auto Forum and delivered a speech

Ralf Brandstätter, Chairman and CEO of Volkswagen Group China, attended the 2023 China Auto Forum and delivered a speech