German carmaker Volkswagen AG is to play a leading role in China's new energy vehicle era, as it has done in the country's gasoline car industry, said a senior executive.
Since the Santana rolled off SAIC Volkswagen's production line in Shanghai in 1983, the carmaker has been present in the country for almost 40 years, and China has become the largest market for the group worldwide.
Last year, it sold 4.23 million vehicles in the country, seizing a 20 percent share of China's vehicle market.
"We were participants in China's reform and opening process. We have witnessed this success and benefited from this development," said Volkswagen Group China CEO Stephan Woellenstein on Monday at the World New Energy Vehicle Conference.
He said the automotive industry is undergoing a deep transformation, but Volkswagen continues to be committed and connected to China and the country's mobility industry.
E-mobility, digitalization and intelligent connected vehicles will determine the future of cars. Like what it did over the past four decades, Volkswagen will shape the mobility for generations to come, said Woellenstein.
"Our approach is in China for China and in China for the world. We are positioned to take a leading role in the development of the Chinese new energy vehicle industry," he said.
The new energy vehicle sales have slowed in comparison to previous years. Statistics show that sales in the first eight months totaled 596,000, down 26.4 percent from the same period last year.
Despite ups and downs in the market, Volkswagen said it is confident in its medium-and long-term potential.
It has observed a rise in the interest in buying electric vehicles. Licensing benefits and low running costs are key factors in purchase decisions.
Notably, there is rising awareness of product benefits like a quieter ride, advanced technology features and functions.
That is why Volkswagen is speeding up efforts in these aspects. Woellenstein said the group and its Chinese partners will invest at least 15 billion euros ($17.46 billion) in e-mobility by the end of 2024 in China.
He added this is on top of the 33 billion euros Volkswagen Group will be investing globally in the same period.
The group is offering some electrified models under different brands, and its first models built on its electric car-only MEB manufacturing platform are to roll off the assembly line soon.
Its MEB factories in Anting, Shanghai, and Foshan in Guangdong province have a total capacity of 600,000 electric cars per year.
The models, called ID.4s, represent the first two vehicles on that platform and the beginning of Volkswagen's electrified, fully connected, carbon dioxide-neutral future.
By 2025, local MEB production will include 15 models across various brands and 35 percent of the portfolio in China will be electrified models.
"With this portfolio, we foresee around 1.5 million new energy vehicle deliveries in China annually," said Woellenstein.
The company's efforts in the new energy vehicle industry center around more than vehicles. It is making strategic moves in batteries and charging services as well, which are believed to be crucial to the segment.
The carmaker is now assembling battery packs in six plants in the country, and it is estimated to have an annual requirement of 150 gigawatt-hours of battery capacity by 2025.
Woellenstein said the company will purchase batteries from Chinese supplier CATL, and A123 will be its second qualified local battery supplier in China.
"We will qualify more local suppliers to meet international standards and prepare for future demand," he said.
Volkswagen is spending 1.2 billion euros on a 26 percent stake in China's third largest battery maker Gotion High-Tech. When completed, it will be Gotion's largest shareholder.
Gotion has various current and future projects over the entire battery value chain, from sourcing, development and production to recycling.
"Our partnership is an opportunity for Volkswagen to integrate deeper into the battery value chain," said Woellenstein.
Volkswagen has also formed a joint venture with its Chinese partners including FAW and JAC to improve the country's charging infrastructure.
China has also built 38,000 battery charging stations, 449 battery-swap stations and 1.3 million charging poles, data from the Ministry of Industry and Information Technology show.
The carmaker's market research shows charging and driving range are still the top reasons that discourage potential customers.
The joint venture's first superchargers, ranging from 120 kilowatts to 180 kW, have been installed in Beijing.
A total of 40 charging stations are in place in Chengdu, Sichuan province and Shenzhen, Guangdong province.
Another 255 charging stations and 1,800 charging poles across 16 cities are planned before the end of this year.
More than 2,000 Volkswagen and Audi dealerships have installed charging poles, with a total of more than 7,500 stations.
Volkswagen is also stepping up efforts in terms of intelligent connected vehicles and autonomous driving with local partners.
Its premium arm Audi and Huawei are to leverage their resources together to research automated driving and the digitalization of services in the vehicle environment.
Volkswagen has also started a trial autonomous driving program in Hefei, Anhui province.
Woellenstein said as a world-leading carmaker, Volkswagen expects to be further involved in policy drafting, which he believes is part of China's pledge for a level playing field.
"We can only encourage all related parties to open the dialogue on future standards and policies to those foreign automotive companies that have proven over many years to be reliable partners for the sound development of the Chinese automotive industry," he said.
"We appreciate the effort of the Chinese government in driving the industry forward. This effort will offer the unique opportunity to make China the new automotive powerhouse for the future."