NEWS

Dear Professor Wan Gang, Dr. Feng Fei, Mr. Liu Xiaoming, Ladies and Gentlemen, good afternoon!

Thank you very much for the invitation.

The automotive industry is facing a paradigm shift. Until now, it was primarily scale and technology that determined the success of car manufacturers. In recent years, a new parameter has been added: Speed. This applies in particular to China. 

In no other country the dynamic of transformation and innovation in the automotive sector is that high. That’s why China is the powerhouse of the international automotive industry.

Today, I would like to talk about how we at Volkswagen Group adjust to it. And how we accelerate to “China speed.” . Our company has initiated the biggest transformation process in our history.

The basis are our strong brands, which excites customers around the world. They stand for state-of-the-art technology, performance, top quality, durability and maximum safety. At the same time, they also stand for reliability. This is especially true in a market that changes rapidly and brands can disappear overnight.

In addition to our broad product portfolio, the Volkswagen Group also benefits from our strong position in the global markets. 

Summary Volkswagen Group

The Volkswagen Group is by far the largest industrial company in Europe and among the top 15 worldwide. We employ 675,000 people in all regions of the world, 90,000 of them in 39 plants in a network of more than 3000 dealers in China. In 2022, we have delivered 8.2 million vehicles to customers. 

This year, we expect a strong growth compared to the previous year. We are currently assuming total sales of 9 to 9.5 million vehicles in 2023. From January to October, our deliveries increased by around 11 percent. The Group achieved substantial growth of sales in all brand groups, particularly in the highly profitable premium and luxury segments. 

Our company is represented in all regions of the world. With a particular focus on Europe and China. Both regions are also key drivers for us in the transition to smart electric mobility. In Europe, we are already the market leader in the electric segment by a clear margin. 

Ladies and gentlemen, Volkswagen transforms itself into a software oriented company and a provider of sustainable mobility. For this background, the Group has bundled our key strategic considerations in its TOP10 program. 

On this basis, we prioritize the use of our resources and the implementation of projects. As a global company, this enables us to maintain the necessary focus in this very sensitive phase of transformation. I would like to go into two topics in more detail today, since they are highly relevant for our business in China.  

Firstly: our global battery strategy. With the rapid ramp-up of electric mobility in China, Europe and the USA, the Group expects demand for batteries to grow rapidly. We currently anticipate more than 450 GWh for Volkswagen Group by 2030. We want to cover more than 50 percent of this demand from our own production. 

To this end, we have founded our own battery company, PowerCo. Unlike many competitors, the Group is thus integrating the development and production of battery cells into its value chain. The aim is to keep a significant part of the added value of a fully electric vehicle within the company. The first cell factories in Salzgitter, Valencia and Ontario have been decided and are already under construction. In addition, we have concluded extensive supply contracts with international raw material suppliers. That will secure our demands and competitive costs for the coming years.  

Besides producing its own battery cells, PowerCo also relies on regional sourcing strategies and co-operations. Strategic supplier relations remain important to us. While we intend to supply a significant proportion of our battery demands from our own production in North America and Europe, we will work closely with local partners in China. We set the course for this at an early stage.

In 2020, we therefore acquired a stake of more than 25 percent in the Chinese battery manufacturer Gotion. The company is one of the leading local suppliers. A production line is currently being built in Hefei, which will supply our business in China with PowerCo's self-developed prismatic unit cell from beginning next year. 

The new cells will reduce costs by around 50 percent compared to the battery generation currently used in our electric platform MEB. The new cell can be adapted to various cell chemistries that are available today or will be ready for the market at a later date. This gives us the highest flexibility.

By 2030, the unified cell will be used in 80 percent of our all-electric models worldwide. As with our platforms, we are thus utilizing our global scales to significantly strengthen our competitiveness in the field of batteries. At the same time, we focus on integrating the entire value chain into our companies. From raw materials to recycling. Also in China. 

China Strategy

Ladies and Gentlemen, this leads me to the second topic from our Top10 program with relevance for China: The overall strategic realignment of our business in the region! 

Volkswagen has been an important part of the Chinese automotive industry for over 40 years. We have contributed to the development of the Chinese automotive industry and are still an important driver of the local automotive market today. We want to utilize this strong position in order to continue to exploit the market's great growth potential in the future. But also to use China's innovative strength to drive forward the Group's transformation. 

China therefore remains a key market for our Group. And it is therefore only logical that it is an important component of our Top10 program. With this in mind, we have set ourselves clear goals: We want to remain number 1 international OEM in China and be a leader in the era of  Intelligent Connected Vehicles! 

The coming years are crucial for this. Our plan to take us to the end of the decade is in place. In our "Target Picture 2030" we rely on three essential pillars. 

Firstly, we will further strengthen our position in the ICE market transforming this into New Energy Vehicles. This year, Volkswagen has significantly increased its market share from 19 to 20 percent. In the coming years, we will continue to strengthen our product base with new models. 

All major products will get an high-end update in the next years. At the same time, we are bringing highly innovative technologies into the cars, like the China Rush Hour Pilot, Smart Cockpit, Navigations System 2.0 and AI Avatar. This makes our fleet even smarter.  

In addition, we are pushing ahead with hybridization. Our strong product portfolio of today will become a strong New Energy portfolio.

With our high scales and good cost position, we remain very profitable even in a market that is becoming less. This will provide us with the necessary cash to finance our investments here into Intelligent Connected Vehicles. This shows once again that a strong legacy does not have to be a disadvantage!

Secondly, the acceleration of our BEV offensive. First results are already visible in the market. With the Audi e-tron GT, Q4 and Q5 e-tron, we launched three new full electric models last year. At the Shanghai Autoshow, we unveiled the ID.7, our first all-electric sedan. The first vehicles will be handed over to customers soon. With this vehicle, we are occupying a new segment and tapping into a new customer group. The initial media feedback is very promising. 

Meanwhile the ID.3, is now the clear market leader in its segment. In recent months, delivery figures have leveled off at an average of 10,000 units. This has given the model a strong visibility on the roads. That strengthens its position in customer perception.  We expect this trend to continue. The ID.4 is also developing into an important pillar of our product portfolio in the A-segment. The vehicle is now one of the four best-selling vehicles in its class.  

Other products are already in the starting blocks. Right now we are preparing another production launch in our Volkswagen Anhui joint venture. From next year on a new Volkswagen brand model will come off the production line. And also the Audi PPE Company will start production in Changchun at the end of 2024. Three new Audi vehicles of Q6 e-tron and the A6 e-tron – 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. By this we will make all our volume and premium customers a board off in all important segments.

Last but not least - thirdly: More development in 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. 

Our new state-of-the-art development center in Hefei plays a central role in this strategy. We will invest more than 7.5 billion RMB in the province in the coming years. The Volkswagen Group China Technology Company, also known as 100% TECHO, will be the Group's largest development center outside Germany. It will be integrated into the high-tech cluster of companies and scientific research centers in Hefei. And with a clear and exclusive focus on the development of state-of-the-art ICV models. 

The VCTC will be the central point of contact for all our joint ventures in the development of new products. This creates synergies and speeds up our processes. The VCTC will also benefit from a cooperation with a number of partnerships with local tech companies.

• With Gotion we will produce the unified cell.

• For autonomous driving and chip design, we have agreed a long-term cooperation with Horizon Robotics. 

• And with the Chinese Smart Cockpit expert ThunderSoft, we will jointly develop China-specific infotainment systems. 

With these measures and partnerships, we aim to reduce the development times for new products to 30 to 36 months. At the same time, VCTC is developing a new platform for the entry-level segment. This is the first time that a platform has been developed in China for China. 

Ladies and Gentlemen, in addition to partnerships with technology companies, we are also focusing on partnerships with new OEMs to accelerate our electrification strategy beyond our original plans with additional products in new segments. In this way, we are creating an additional offering for our customers and leveraging the rapid market growth.

In this context VW brand has concluded a technological framework agreement with XPENG, one of the leading Chinese car and technology companies. Together, we are working on development of two VW brand electric models for the mid-size segment. The first model will hit the road as early as 2026. 

Furthermore, Audi has signed a memorandum with SAIC to further expand existing cooperation. Joint development activities are to extend the portfolio of fully connected electric vehicles in a segment where Audi does not yet have a presence in China. The new project is the next step in Audi's North-South strategy, which focuses on clear product differentiation between the partners.

Conclusion

Ladies and Gentlemen, Volkswagen will continue to be the largest international OEM in China in the future. We are accelerating to "China speed". In recent months, we have taken important steps in this direction. With our “in China for China” strategy, our investments in Hefei and partnerships with local tech companies, we will reduce the development times of new products and technologies by around 30 percent.

Volkswagen will also play a leading role in the world of ICVs! We have a strong plan for this. 

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 2023 WNEVC and delivered a speech

Ralf Brandstätter, Chairman and CEO of Volkswagen Group China, attended 2023 WNEVC and delivered a speech

Ralf Brandstätter, Chairman and CEO of Volkswagen Group China, attended 2023 WNEVC and delivered a speech