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On April 11, Volkswagen Group (China) announced that in order to deepen the localization R & D process and further focus its products on Chinese consumers, the Group has decided to invest 2.5 billion euros to further expand its production and innovation center in Hefei. It is understood that the two models of cooperation between Volkswagen and Xiaopeng will be put into production in Hefei, of which the first model is a medium-sized SUV, which is scheduled to be put into production in 2026.

Baird, chairman and CEO of Volkswagen Group (China), said, "relying on the strategy of'in China, for China', Volkswagen Group focuses deeply on customer demand, with faster development and stronger local research and development. Accelerate the pace of business adjustment in China. The continued investment in Hefei production and innovation center reflects the group's determination to strengthen local innovation strength."

At present, although Volkswagen has made brilliant achievements in the era of traditional fuel vehicles, the current Chinese automobile market has entered an era of comprehensive electrification, and fuel vehicles have been gradually abandoned by the market. The advantages accumulated by Volkswagen and other traditional automobile giants are slowly fading, and all traditional automobile companies are facing the tremendous pressure of electrified transformation.

The tide of the electric era is surging, the design of dolls, outdated style, intelligence can not keep up with the mainstream of the market, so that Volkswagen fuel cars have no advantages. Under this background, the electric transformation of Volkswagen is imminent, and it also makes Volkswagen see the necessity and feasibility of opening the "second curve" in China. From the current market layout of Volkswagen, whether it is internal self-evolution, or external cooperation is to stay in the Chinese market as much as possible, but it is not so easy for this huge ship to reach the other side quickly. Data show that Volkswagen Group delivered a total of 3.236 million vehicles in China in 2023, an increase of 1.6% over the same period last year, and remains the largest single market in the world. Among them, the annual delivery volume of pure electric models was 192000, an increase of 23.2% over the same period last year.

In January, Baird, chairman and CEO of Volkswagen Group (China), said at a media conference that Volkswagen Anhui will launch its first model for the Chinese market this year, and Audi FAW New Energy will officially launch its first model, Audi Q6L e-tron, by the end of the year. The medium-sized car jointly developed by Volkswagen brand and Xiaopeng Motor, which belongs to the Chinese market, will be unveiled in 2026. By 2027, the group will provide 30 locally produced fuel vehicles and plug-in hybrid models. By 2030, Volkswagen Group will offer at least 30 pure electric models in the Chinese market. In the field of fuel vehicles, all major fuel models will be transformed to new energy vehicles.

At the same time, Volkswagen Group is constantly looking for new opportunities. On July 26, 2023, Volkswagen Group announced that Volkswagen brand and Xiaopeng Motor signed a technical framework agreement for long-term cooperation. At the beginning of the cooperation, the two sides will jointly develop two Volkswagen brand electric models aimed at the medium-sized car market in China to complement the product portfolio based on the MEB platform, and plan to enter the market in 2026. At the same time, Volkswagen will invest about $700 million in Xiaopeng. Volkswagen will buy a 4.99% stake in Xiaopeng at a price of $15 per ADS and will have an observer seat on its board of directors.

In order to maximize the effectiveness of the cooperation, Volkswagen Group established Volkswagen (China) Technology Co., Ltd. (VCTV) to become Xiaopeng's partner, which is currently developing its first electric vehicle platform dedicated to the Chinese market, namely CMP. From 2026, the platform will lay the foundation for new entry-level models for the A-class mainstream market. However, in the face of the acceleration of the electrification of the market, Volkswagen Group is also facing great transformation challenges in China.

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