BEIJING — As auto giant Volkswagen AG races to catch up with its upstart Chinese competitors, it has drivers like 26-year-old Ren Yiling in mind.
She is young and wants to play video games in her car. She is drawn to the digital features of the Zeekr 001, a European-designed electric car from China’s Geely Holding Group. She uses her smartphone to help her parents adjust her seats and tells an animated voice assistant to open the window or play music.
“I once sang karaoke in the car while traveling a long way with my family,” he said. “For me, the car is more of a place of entertainment. I’m a singer.”
Foreign automakers have been caught off guard in China by the electric vehicle boom that has shaken the market, the world’s largest, over the past three years. Following Tesla’s lead, China’s automakers and hundreds of startups have developed electric vehicles loaded with tablet-like displays, AI-based infotainment options, and self-driving capabilities.
Sales of electric vehicles in China, encouraged by green energy subsidies and tax breaks, rose from 900,000 units in 2020 to 5.1 million last year, accounting for 24% of new car sales, according to the China Passenger Car Association, an industry group. The boom caters to a new generation of car buyers who equate an electric vehicle with digital connectivity and demand smartphone features in their vehicles.
That has left manufacturers like Volkswagen, which sells about a third of its cars in China, struggling to develop new models for a market very different from its own, and expanding far beyond its roots in China as a maker of used sedans. low cost. by taxi fleets.
The Volkswagen Group, which also includes Audi and Porsche, plans to launch 40 new models in China over the next three years and have a lineup of 30 electric vehicles by 2030 in what Volkswagen CEO Oliver Blume told investors on Wednesday is the company’s “second local market.” .”
Japanese manufacturer Nissan has also stepped forward, saying it will develop four new energy models, which may include hybrids, for the Chinese market by 2026.
Ralf Brandstätter, VW’s chief executive in China, said drivers use their cars differently in China, where the average age of an electric vehicle buyer is 35, compared to 55 in Europe.
“It’s not just about getting from A to B, but they live in their car as additional living space. They spend time there with friends. “They spend time there with their families,” she told reporters before the opening of the Beijing Auto Show on Thursday. “And they are…very tech savvy. (They are) using their cell phones five hours a day and want to have the same digital connectivity with their cars. “So we will deliver those amazing effects that Chinese customers expect.”
The battle is not just about digital devices. Chinese electric vehicle makers have slashed production and battery costs and flooded the market with options, driving prices down to levels that are likely unsustainable. China’s largest electric vehicle manufacturer, BYD, has lowered the price of its Seagull model to below $10,000 in its country, about half of what it sells in Mexico and Brazil.
“The Chinese market is still very difficult, especially when it comes to electric vehicles,” Brandstätter said, noting that electric vehicle prices in China had fallen 30% last year, even before a new round of cuts began. prices this month.
Volkswagen’s response has been to move to developing cars in China from scratch, rather than adapting European models to the local market. The company announced earlier this month that it would invest 2.5 billion euros ($2.7 billion) to expand research, development and production in the city of Hefei, where it has partnered with Chinese electric vehicle maker XPENG Motors to develop two mid-size VW models to be launched in 2026.
The company is developing a new electric vehicle platform, including chassis and battery packs, only for China to try to reduce costs by 40%. That would allow VW to be profitable at current market prices, Brandstätter said, calling China an essential market for Volkswagen.
“I think they’re really putting their foot down and saying we have to do more, we have to accelerate,” said Beatrix Keim, China director at CAR, an automotive research center in Germany.
Volkswagen still has a way to go. It sold just 41,000 electric vehicles in China in the first three months of the year, although that figure was 91% more than a year earlier and followed the launch of new or updated models. “I think they really learned the lesson: that they need to be faster,” Keim said.
The company has been criticized for operating a plant in China’s western Xinjiang region, where Western governments have accused the Chinese government of human rights violations. Volkswagen has said an audit it commissioned found no evidence of forced labor at the facility, although Brandstätter said Wednesday that VW is in talks with its Chinese partner on a joint venture in Xinjiang and is investigating options for the plant’s future.
The company showed off its digital development efforts to journalists in a R&D in Beijing earlier this week. Drivers can choose avatars for an on-screen assistant that responds to voice requests for directions or to adjust the interior temperature. A 3-D avatar launching this year has interchangeable outfits and can rock to music.
These features are also being added to VW’s gasoline vehicles, said Matthias Glodny, vice president of products in China. “We think we have a plan,” he said, “and now we have to follow through with it.”
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Associated Press researcher Yu Bing contributed.