Volkswagen has started producing electric vehicles for export to Europe at its Anhui plant in China. The strategy aims to secure price competitiveness by leveraging lower production costs compared to Europe.
According to local media such as Shangguan News on the 1st, Volkswagen's third joint venture in China, Volkswagen Anhui, has begun production of the electric vehicle Tavaskan at its plant established in Anhui Province. The official online account of Hefei City, Anhui Province, also disclosed this information the day before.
Established in 2017, Volkswagen Anhui expanded its control by increasing its stake to 75% in 2020 following China's relaxation of foreign ownership limits in automobile companies. The remaining 25% stake is held by Jianghuai Automobile Group.
The Tavaskan is based on Volkswagen's proprietary electric vehicle platform, the MEB (Modular Electric Platform). When Volkswagen Anhui announced the construction of its third electric vehicle plant in 2021, it had already revealed that the vehicles would be based on the MEB platform. The other two Volkswagen plants were established as joint ventures with FAW and SAIC, respectively.
Chinese economic media Caixin explained, "Considering recent developments, Volkswagen Group is adjusting its original plans to make Volkswagen Anhui a testing ground for joint ventures," adding, "Several innovative business models are being developed centered around Volkswagen Anhui."
Volkswagen is regarded as the most proactive multinational automobile company in China in terms of adapting to market changes. It has made massive investments in building a pure electric vehicle platform, attempting to achieve electronic architecture similar to Tesla, and is updating software in real time. However, Caixin assessed that Volkswagen has faced challenges without achieving meaningful success in implementation.
Furthermore, Caixin reported, "With vehicle prices in Germany more than twice those in China, Volkswagen must adopt an aggressive pricing strategy," emphasizing to German consumers that not only are manufacturing costs lower in China, but costs within the local supply chain, such as batteries, are also lower. It added that Volkswagen is strengthening local research and development (R&D) capabilities in China and hopes to lead the market by leveraging the advantages of the Chinese electric vehicle market, mentioning Volkswagen's investments in technology, parts, and service companies.
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