As Tesla cuts prices, VW to rival Chinese cars with cheaper electrics

By dpa | 16 January 2023


BERLIN/BEIJING: Volkswagen says it wants to respond to strong competition from China with cheaper electric models in the coming years.

There are, however, currently no plans for a mini electric car comparable to the VW Up or Polo in the company's most important market, says VW China boss Ralf Brandstätter.

"We do not serve the mini electric vehicle market. But we will expand our offerings in the entry-level segment, for example in smaller saloons similar to the (small family-friendly) Bora or smaller SUVs below the ID.4."

The remarks come after Tesla announced that it was cutting prices of its electric cars in several markets amid growing competition from China. Brandstätter did not comment on possible price reductions at VW like those at Tesla.

So far, car companies from Germany and other Western countries have been trying to earn more from larger and more expensive electric models, but Chinese manufacturers have recently achieved high growth rates with smaller electric cars.

VW not only wants to adapt the kinds of electric cars it is selling, but how they are selling them, and China's means of consumption may see the company shift away from the traditional approach of investing in a new set of wheels at a car dealership.

"Many (buyers) are primarily interested in modern design and the most advanced technology," Brandstätter said. "They want to have sales conversations online or wherever they go shopping in the city - not in a car dealership somewhere on the outskirts."

The development of autonomous driving also has a major role to play for the company, and the networking of cars on roads is becoming a decisive purchasing criterion.

As a result, VW wants to double the number of software experts in the group's Cariad division to 1,200 in China this year, he said. VW also wants to cooperate with the company Horizon Robotics.

"We will continue to push our e-offensive in China," Brandstätter said, pointing to the launch of the ID.7 saloon in mid-2023.

Chinese carmakers have made great strides in their home country, even with relatively inexpensive models and have been increasingly rivalling European manufacturers in their own markets.

In China, Tesla previously had to offer its cars at lower prices due to sales problems, and Tesla has been charging at least 10% less for the Model 3 and the Model Y than previously.

While inflation has driven up costs in various industries, Tesla has been lowering its prices amid fierce domestic competition in China from providers such as BYD, Xpeng and Nio.

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