Volkswagen Group Pushes Into China With New Partnerships To Advance Electric Vehicle Tech

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The Volkswagen Group has signed the initial letters of intent with the FAW Group and the Connected Vehicles Research Institute during a visit of Chinese Premier Li Keqiang to Berlin.

Volkswagen Group CEO Dr. Herbert Diess shared that the new partnerships are a part of an overarching plan for China, stating that, “the Volkswagen Group will strengthen its position in China’s important market by systematically expanding its partnerships there.” The Volkswagen Group is putting its money where its mouth is, with plans to invest €15 billion for new ventures in the lucrative country through 2022 that will be fed into both local investments and new research and development efforts.

The new agreements inked with VW’s Chinese partners are focused on the same “CASE” strategy — or Connected, Shared, Autonomous and Electric vehicle technologies – that most relevant automakers are pursuing today. The day before the new agreements were signed, VW doubled down on its commitment to electric vehicles with its wholly owned Spanish automaker SEAT and Chinese state-owned automaker JAC Motors.

“The car of the future will not just be powered by electricity. It will also be digitally connected and will increasingly drive itself,” Diess shared. “This will prevent accidents, reduce traffic congestion and drastically reduce noise pollution and exhaust emissions. By expanding these partnerships, the Volkswagen Group plans to strengthen its position in China’s critically important market.”

The new partnerships make it clear that the Volkswagen Group sees that the future is electric and is aggressively moving to not only establish itself as a provider of electric vehicles, but as an early mover. CEO of Volkswagen Group China Professor Jochem Heizmann added at the official signing event that, “The new partnerships represent additional milestones in our electro-offensive in the Chinese market. Working with our new and existing joint venture partners, we are developing an electric, smart and sustainable future for individual mobility for our customers in China.”

Hearing Volkswagen Group leadership talking of an ‘electro-offensive’ show that it fully understands both the importance and growth potential in the Chinese automobile market as well as the certainty of that market only responding favorably to plug-in vehicles. China is a core component of the Volkswagen Group’s ‘Roadmap E’ which maps out the masterplan to dive into electric vehicles on the journey towards 1.5 million ‘new energy vehicle’ sales in 2025.

Tapping into the Chinese market allows the Volkswagen Group to capitalize on the rapid development of plug-in vehicles taking place in China, build local and establish itself as a force to be reckoned with in the plug-in vehicle space. Western markets have been slower to adopt electric vehicles, with a few notable exceptions at the national and sub-national levels. China, on the other hand, has established itself as an early leader in plug-in vehicles with sweeping conversions of thousands of buses to electric, entire cities worth of taxis and increasingly restrictive vehicle registration tactics forcing a rapid transition of all new vehicles to electrified options.

The official Volkswagen Group roadmap will see 40 new fully electric vehicles and plug-in hybrids being introduced by Volkswagen, Audi, ŠKODA, SEAT and a new joint venture with JAC as the automaker attempts to pivot towards clean energy vehicles after the dieselgate scandal.

Professor Jochem Heizmann said: “China and Volkswagen have been strong partners for more than 30 years now. As the world’s largest automotive market and one of our Group’s leading production sites, China plays a very special role in our company. We are creating the most advanced infrastructure here to support our broad SUV offensive and our e-mobility strategy – Roadmap E.”

The timing for the offensive in the rest of the world is coming, but is still a few years out. The Volkswagen I.D. is set to take on the world in 2020, while the highly anticipated VW Microbus is slated for production in 2022. Whether that’s soon enough to stay relevant is yet to be seen — after all, the future is now. Electric cars are here to stay, today. Just take a look at how Audi and other luxury automotive sales are being brutalized by the Model 3:

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Kyle Field

I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. As an activist investor, Kyle owns long term holdings in Tesla, Lightning eMotors, Arcimoto, and SolarEdge.

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