Volkswagen AG’s commitment to accelerating the pace of electrification in China remains firm despite challenges such as intense competition and weak demand, a senior executive said on Saturday. Stefan Mecha, CEO of the Volkswagen brand in China, told the EV 100 forum in Beijing that the German automaker planned to increase the number of charging posts for electric vehicles in China to 17,000 by 2025. This forms part of a wider €15bn ($16.26bn) investment in electric mobility in China with Volkswagen’s three joint ventures by 2024.
Mecha stated that despite the highly competitive market in China, strong competition is a driving force behind innovation and improvement. He also expressed confidence that the company would recover from any short-term demand issues in the Chinese market. In February, Chinese electrified vehicle manufacturer BYD outsold Volkswagen-branded cars to become the best-selling passenger car brand in the world’s largest auto market for the second month in four.
Mecha also called for China to extend a purchase tax exemption on new energy vehicles (NEVs), which include both pure electric and plug-in hybrid cars, beyond this year, as part of the policy support for the sector. The Chinese government extended the tax exemption on such vehicles by a year to the end of 2023 in September.
At the same forum, Xin Guobin, vice minister at the Ministry of Industry and Information Technology, stated that the government is studying policies to promote auto consumption and eliminate backward automakers, as China’s NEV market faces challenges of weak domestic demand. Xin also urged the industry to enhance its capabilities in securing supplies of metals such as lithium, cobalt and nickel, as it also faces threats of global trade protectionism.
In conclusion, Volkswagen AG’s plans to invest in electric mobility in China despite challenges demonstrate the company’s commitment to the electrification of the global automobile industry. The Chinese government’s extension of the tax exemption on NEVs is a positive signal for the industry, while its study of policies to promote auto consumption will likely boost demand. However, automakers will need to overcome global trade protectionism and ensure the security of raw material supplies to capitalize on the market’s potential.