Hefei is Volkswagen’s main technology hub

The ‘Volkswagen China Technology Company’ in Hefei (Anhui) is the main nerve center where Volkswagen group brands want to work with partners to bring smart and electric cars to the Chinese market. The 1,200 employees will increase to 3,000 by the end of 2024 and last week Volkswagen announced that it will invest a further 2.5 billion euros in the hub.

Volkswagen was the first international car manufacturer in China. It entered into partnership with in 1984 SAIC and joined in 1991 FAW to be the best selling car manufacturer in the country. Today, the VW network in China includes 39 factories, 90,000 employees and approximately 50 million customers who drive Group brand vehicles. More than 3,500 dealers in a national distribution network are the point of contact for these customers. They can choose from around 160 models of passenger cars from the Audi, Volkswagen, Porsche, Škoda, Bentley and Lamborghini brands.

Losing land

As new energy vehicles gain popularity, Europe’s biggest automaker has lost focus on local Chinese brands, not just them BYD. Chairman and CEO of Volkswagen Group China Ralf Brandstaetter says that VW used to make cars in Europe and bring them to China, sometimes with modifications. However, the models made in Germany were considered outdated and not considered by the Chinese market. The traditional approach no longer works when it comes to EVs, as car buyers in China are young and tech-savvy and local rivals come up with brand new products. VW However, it did not want to lose its appeal in a country that accounts for about 40% of its sales and profits.

A New Method

In recent years, the Volkswagen Group has invested one billion in the construction of a modern production, development and innovation center in the city of Hefei. The heart of the navel is made up of 100% subsidiary. Volkswagen China Technology Company (VCTC) which aims for intelligent, fully connected cars. This is the automaker’s largest development center outside of Germany. Volkswagen Group China chief technology officer Marcus Hafkemeyer claims that the institute is fully capable of developing new models from scratch with design, testing, certification and approval.

The modern manufacturing, development and innovation center in Hefei is an important pillar of the ‘in China for China’ business strategy. The work focuses on three clear goals: high development speed, high cost efficiency and at the same time strengthening Volkswagen’s standards for quality and safety. Volkswagen achieves this through the use of advanced technology such as Virtual Reality, which saves time when designing bodywork. It currently employs approximately 1,200 technical staff VCTC and this number is expected to increase to 3,000 by the end of 2024.

Deeper and faster

VCTC it is also developing China’s first electric-specific architecture with the China Main Platform (CMP), where at least four additional models of the entry-level segment in the compact class will be built in cooperation with Xpeng from 2026. This platform will be ready for the domestic market of only 36 months. This means that development time is shortened by about a third and new customer groups can enter China’s active electric vehicle market, Brandstaetter said. An ingredient in the new approach is greater involvement of local suppliers. Volkswagen states that approximately 1,100 Chinese suppliers are involved and the level of localization will be gradually increased to 100%. The company sources components from local Chinese companies and involves them in the early stages of development, which further reduces time and ensures better collaboration, Hafkemeyer said.

Further collaboration is achieved through a close network of development work and partnerships SAIC Volkswagen, FAW-Volkswagen in Volkswagen Anhuiand battery manufacturer Gotion in which Volkswagen has a 26% stake and for establishing China EV Xpeng. In the field of autonomous driving and user experience, Volkswagen’s software division works Love together with Horizon Robots, ROW in Thundersoft provide solutions that match China’s adversaries.

Examples

This will be very competitive, Brandstaetter said of the vehicles that will appear on its China-specific EV platform from 2026. Volkswagen’s first battery plant in Hefei started operating at the end of November. Factory of Volkswagen Anhui and the annual capacity of 350,000 units was built in a record 18 months. The first model to be released is the electric Cupra Tavascan, which was designed in Barcelona and will be exported to Europe. Those types will follow in conjunction with 2026 Xpeng and by 2030 the group wants to be able to produce 30 electric models in China. Brandstätter concludes: ‘Together we are now accelerating the transition to smart e-mobility. With our ‘In China, for China’ strategy, we have a solid plan and are accelerating the reorientation of our company, with more focus on customers, more speed and more internal development.’ This makes it immediately clear where the announcements were made this week additional investment of €2.5 billion must be used.

Starting today, Chancellor Scholz will make a three-day visit to China, namely Chongqing, Shanghai and Beijing. He has accompanied the CEOs of Siemens, Mercedes, BMW, Merck, Thyssen Krupp and Bayer, among others, as well as the Ministers of Environment, Transport and Agriculture.

Sources: China Daily, Reuters, volkswagengroupchina.com.cn