Volkswagen China Faces EV Price War: A Year of Rebuilding Amid Tesla & BYD Competition

Volkswagen China Navigates EV Price War: A Year of Rebuilding

Volkswagen Group China is preparing for a difficult 2025, which CEO Ralf Brandstätter describes as a year focused on rebuilding. Having previously dominated China's car market, the company now faces fierce competition from electric vehicle (EV) leaders such as BYD and Tesla, as well as new entrants like Xiaomi.

The Price War's Impact

The aggressive EV price war in China is putting significant pressure on Volkswagen's market share. Brandstätter has indicated a willingness to sacrifice sales volume in order to maintain the value of the company's brands.

Future Plans and Challenges

A new line of affordable EVs, constructed on a platform exclusive to China, is anticipated to provide some relief in the coming year. The crowded market, with over 130 brands competing for EV and plug-in hybrid sales, makes it challenging for businesses to achieve positive returns, which in turn restricts investment in future technologies. Despite these challenges, Volkswagen intends to boost its sales in China by one-third in the medium term, taking advantage of its annual capacity of 4 million vehicles.

Despite the lower prices, China's EV market is technologically advanced and features innovative vehicles. Volkswagen's history in China dates back to 1985, but recent economic changes, including a real estate bubble burst, have affected sales. Tesla's price reductions in 2022 heightened the price war, eventually resulting in BYD outperforming Volkswagen in sales.