German car manufacturer Volkswagen has announced that it can produce an electric vehicle in China for half the price of Europe. The company claims that this success is the result of the localization of production and the application of new technologies. "The new R&D center gives our engineering teams a completely new level of integration. We can now run software, hardware and complete vehicle validation processes in parallel, shorten decision-making loops and bring innovations to maturity much faster," said Thomas Ulbrich, CTO of Volkswagen's China operations.
The company plans to launch about 30 electric models in China over the next five years. The production costs of certain models have been reduced by as much as 50 percent compared to production in Germany in 2023. The reason for this lies in the better efficiency of the supply chain, optimized procurement of batteries, shorter development periods and lower operating costs. In Hefei, in eastern China, VW opened an innovation center with more than a hundred laboratories for testing software and hardware, as well as battery drives and electrical circuits.
The development cycle of new Chinese electric vehicles has been shortened by 30 percent compared to the classic process that lasts about 50 months. "The strategy was initially described with the slogan 'in China, for China', but now we are also considering the export of cars produced in China, as well as the application of technological discoveries there in global operations," adds Ulbrich.
VW is not the only one trying to accelerate development in C*ina. Other European manufacturers employ local engineers and work with partners, even analyzing vehicles from rivals like BYD to learn. Renault aims to develop dozens of models in less than two years, while Dacia plans to develop a new mini car in Slovenia in just 16 months.
The company is investing almost four billion euros in order to remain competitive in the Chinese electric vehicle market. These included opening a center in Hefei, investing in Horizon Robotics and partnering with Xpeng. At the same time, VW is reducing the number of employees in Germany by 35,000 due to high costs and weak demand in Europe.