Volkswagen to launch $20,000 EVs on a new platform in China, its most important market

Volkswagen plans to launch a new entry-level EV platform in China to keep pace with Tesla and BYD. The automaker will introduce EVs starting at around $20,000 (140,000 yuan) to win back buyers in its most important market.

Competition in the world’s largest EV market is intensifying as price cuts from market leaders like Tesla and BYD are pressuring other automakers.

The Chinese market is very “price-sensitive,” VW China boss Ralf Brandstaetter told reporters Friday, according to Automotive News Europe.

During a visit to its new EV facility in Hefei, Brandstaetter said the new entry-level platform will cater to local Chinese buyers in regards to the battery, electric drive, and motor. Perhaps, more importantly, Chinese buyers are younger and looking for the latest tech and software.

Based on VW’s MEB architecture, used for its existing lineup of EVs, the new platform will use local suppliers to cut costs.

Brandstaetter added the new platform, slated for 2026, will improve development times by a third.

With plans to introduce ten new EVs globally by 2026, Volkswagen wants to accelerate development time to keep pace with Chinese automakers. It aims to launch new models in around 2.5 years, compared to its current four-year cycle.

The company is already having some success with lowering costs already. Ludger Luehrmann, CTO of Hefei (Volkswagen Group China Tech Company), which is developing the platform, said the company can lower the price of the dashboard display by 37% after switching suppliers.

Volkswagen to introduce $20,000 EVs in China

Legacy brands (like VW and Audi) that have long dominated the market are now being swapped for domestic brands with more modern tech. And many times, these EVs come at a lower price.

VW lost its long-standing title of bestselling brand in China to BYD earlier this year as buyers look for the latest EVs.

China is VW’s most important market, accounting for nearly half of its profits. Its top-selling electric model, the ID.3, ranked 22nd among Chinese EVs this year. And that’s after slashing prices by 16% to around $17,500 (125,800 yuan) in August.

The lower prices helped boost demand, with ID.3 sales reaching 10,000 in July compared to an average of around 2,200.

The automaker will use this strategy with its new architecture, called A Main Platform. Volkswagen plans to launch four new EVs priced from around $20,000 (140,000 yuan) to $23,800 (170,000 yuan).

The new VW models will be built by its joint ventures with SAIC and FAW, Brandstaetter said. The company invested around $1.1B (1B Euros) to establish VCTC, which will be key in regaining market share.

The facility uses local suppliers and involves VW’s joint venture partners to accelerate development times. VW China’s boss explained this will cut out “time-consuming coordination across time zones with developers in Germany.”

He added this will enable VW to “shorten the time it takes to bring products to Chinese customers by 30%.”

The automaker opened ID.7 Vizzion orders in China this week, starting at $33,000. The Vizzion is FAW-VW’s version of the flagship electric sedan built for China.

Volkswagen also began producing batteries at its Hefei factory. The plant will be the first to manufacture cell-to-pack (C2P) batteries, which will help improve energy density and efficiency.

Electrek’s Take

With VW’s price cuts helping to boost demand in China, the company is taking notes. VW now plans to double down and introduce four new EVs priced around $20,000 to regain buyers in its most important market.

VW will need to with low-cost EVs like BYD’s Dolphin, starting at about $16,100 (116,800 yuan) and Yuan Plus electric SUV at about $18,500 (134,000 yuan). BYD sold around 30K Dolphin models in May, about 11 times the ID.3.

BYD’s 6 millionth NEV (including hybrids) rolled off the line Friday as the automaker aggressively expands the brand.

To regain competitiveness, VW invested $700 million into Chinese EV maker XPeng for a nearly 5% stake in July.

Although the brand expects new models built with XPeng will help sales, CFO Arno Antilitz explained VW could lose further market share until they hit the market (from 2026).