Local partners key to Volkswagen's China success, says CEO

Volkswagen deems it a smart move to join hands with local partners as it strives to become the most popular international brand in the country's NEV market by 2030.

"In China, it is smart to work with partners," said Stefan Mecha, CEO of Volkswagen China Passenger Cars Brand, at the sixth China International Import Expo that ran from Nov 5 to 10 in Shanghai.

"As a global player, you need the global elements in your business setup. But in a market like China you need to understand what is happening in the local market. So collaboration in the Chinese ecosystem is and remains very important for us," he said.

Besides FAW and SAIC, with which it has been producing vehicles for decades, Volkswagen has partnered with companies in sectors including autonomous driving and batteries to sharpen its competitive edge in the age of smart electric vehicles.

"Xpeng is one example. We have Thundersoft for our HMI (human-machine interface), we have our joint venture with Horizon Robotics, and we have Gotion and many, many other partners in the ecosystem in China. We believe this is a very good move," said Mecha.

Earlier this year, Volkswagen inked a deal with Xpeng to develop two electric vehicles on the Chinese startup's G9 platform. The two models, which will bear the Volkswagen logo, are scheduled to roll out in early 2026.

Mecha said the cooperation is "in full swing". He added that the two companies' teams are working on a daily basis; the senior management from both sides have weekly meetings; and once a month Volkswagen Group China's CEO Ralf Brandstaetter will meet with Xpeng CEO He Xiaopeng.

He said the cooperation is very fruitful as they complement each other in many aspects, explaining that Volkswagen is engineering-driven and good at cost control while Xpeng shows the drive for speed and their technological skills.

"It is a start of very good cooperation," said Mecha. He added that the deal between Volkswagen and Xpeng is a strategic one, which means "we have many, many ideas far beyond these two cars."

Yet Mecha is quick to add that the partnership with Xpeng will serve as a complement to its own lineup of NEV models.

After a lackluster start, the VW brand saw sales of electric I.D. vehicles hit a record 20,500 units in October, primarily thanks to the popularity of the I.D. 3 hatchback.

Volkswagen is introducing its ID. 7 into the Chinese market this year, with an improved onboard experience based on Chinese car buyers' feedback.

Meanwhile, Volkswagen Anhui, its third car-making joint venture in China, is to launch its first model in 2024.

Mecha said NEVs will account for half of new car sales in China in 2025 and the figure will rise to 70 percent in 2030.

He added that the Chinese NEV market is getting more competitive with the arrival of new players and a growing number of Chinese people taking pride in purchasing vehicles from local brands, like in other parts of the world.

"But our strategy is clear. By 2030 we are the No 1 foreign brand in China … we have been in China for such a long time, we have a lot of credibility and we are considered a part of the Chinese ecosystem of mobility," Mecha said.