Volkswagen AG aspires to come out top in electric era, says CEO

Volkswagen AG, the No 1 international carmaker for decades in China, aspires to defend its position in the new age of electrification and digitalization.

"We have been here in the market for over 40 years. It's like a home for us. We are sometimes perceived as a Chinese brand coming from this strong positioning," said CEO Oliver Blume on Tuesday at the Shanghai auto show.

Blume was qualified to make such remarks. The German car group boasts a bond with China that no other auto firms have. When China reached out to global car companies after its reform and opening-up in 1978, Volkswagen was the only to show interest.

Its first joint venture, SAIC Volkswagen, was soon set up in 1984. The second, FAW-Volkswagen, followed in 1991. The Santana and Jetta sedans, followed by others, soon won the hearts of Chinese customers with their technology, engineering and reliability.

To a large extent, Volkswagen laid the foundation for the collective reputation of German brands including Mercedes-Benz and BMW in the age of gasoline vehicles.

When it comes to electrification, Volkswagen was one of the first to come up with a concrete plan of platforms and products.

Yet in China, which has experienced a sudden surge in EV's popularity, Volkswagen is dwarfed by local brands including BYD, although it still leads global brands.

"The market is driven in the automotive sector by electric mobility, digitalization and connectivity. It's exciting how the ramp-up curve of electromobility is evolving," said Blume, who has made three trips to China within the past six months.

He noticed that more than 25 percent of new cars were fully electric ones in China in 2022, a speed of growth not seen in other parts of the world, and he acknowledged that it is crucial to drive the car group's product strategy.

"Now it's up to us to write the success story toward the future," said Blume. "We have the goal to be in the future the most successful international carmaker here in the market."

Volkswagen AG has launched several models under its marques, from the namesake Volkswagen to Audi and Porsche.

He said more are on the way over the next two or three years, with those in the Chinese market equipped with China-specific functions to meet the expectations of tech-savvy customers.

The ID.7, the first sedan of the electric ID. family, will be locally produced in the second half of this year at its joint venture FAW-Volkswagen.

Construction of an Audi plant is underway, which will manufacture EVs from 2024 on a platform code-veloped by Audi and Porsche.

Volkswagen has announced it is to spend around 1 billion euros ($1.09 billion) on a new state-of-the-art development, innovation and procurement center for smart electric vehicles.

Located in Hefei, Anhui province, it is expected to slash the time spent on the R&D of new products and technologies by around 30 percent.

"That is our goal, to transfer our success from the internal combustion engine vehicles, knowing how to build cars, bringing stunning design from all brands also to the BEV segment," said Blume.

China, which has been the world's largest vehicle market since 2009, has taken on a new role in the eyes of Blume.

"The Chinese market is a trend-setter. We can learn a lot from the Chinese innovations and technology and the requirements of the Chinese customers who are using their cars as a software device.

"Chinese customers are young. They are very addicted to technology, to innovations. That drives the whole market. And I think customers worldwide will benefit from this speed and these innovations."

Blume, who did his doctorate at Tongji University in Shanghai, was candid about Chinese NEV makers' progress.

"I'm passionate about cars, so I will visit Chinese car brands (at the Shanghai auto show). For me, it's always inspiring. I'm visiting an auto show which is so well organized. I feel very excited to be here," he said.

He said some Chinese automotive brands have very competitive products, and there are opportunities for Chinese brands to be successful not only in China but worldwide in the future, although there is still a long way to go.

Competition is something the Volkswagen Group welcomes, he said. "We think that competition is positive. It's driving us to innovate in all respects, but in the end, it's positive for the customers. That's what counts," said Blume.