Electric vehicles

Volkswagen

Volkswagen eyes China to boost its electric car ambitions

PUBLISHED : Wednesday, 12 July, 2017, 9:54am
UPDATED : Wednesday, 12 July, 2017, 11:00pm

The world largest car maker, Volkswagen, has set a target to sell one million electric cars annually by 2025, with sales in the mainland Chinese market being a key driver of that growth.

“We will launch four families of electric cars by 2025 and the Chinese mainland will be the single largest market,” Jürgen Stackmann, head of global sales and marketing for Volkswagen Passenger Cars, told the South China Morning Post.

Stackmann said the shortage of infrastructure, especially the shortage of battery charging stations, would be “solved very soon”.

“I am not at all worried about this issue as the Chinese government has a long term commitment to make [electric car development] happen in the country,” he added.

Chinese brands put some pressure on us, but I don’t think they can cut prices to levels we cannot bear
Jürgen Stackmann, Volkswagen

Volkswagen will begin delivery of its first electric car by 2020 – the same time frame Tesla plans to ship one million vehicles a year. However, the Wolfsburg, Germany-based VW thinks it can stop the US electric-auto pioneer Tesla.

Herbert Dies, who oversees Volkswagen’s namesake brand, said in Frankfurt that the German company has the abilities that Tesla doesn’t have today.

Volkswagen is not the only carmaker with designs on China’s electric car market, which has overtaken the US in terms of size thanks to Chinese government policies favouring new energy cars.

In spite of the government support, the penetration rate of new energy vehicles in China is relatively low, accounting for only 2 per cent in 2017, while battery-powered electric cars are less than 1 per cent.

China has set a target of getting five million hybrid and electric vehicles on the road by 2020 when the subsidies are expected to be cancelled. However, there are some concerns that the high cost of batteries will hinder electric carmakers from earning a profit over the next two or three years.

For new electric cars, Stackmann believes there won’t be “sticker shock” for customers as he expects batteries – the most expensive component – will be more affordable, making the overall price of electric cars acceptable.

“People want less noise, clean engine and clean air...I think the time is ready [for electric car development],” he said.

Despite profitability concerns, most carmakers including China’s domestic brands Geely and BYD have ambitions to increase their market share in electric cars.

“Chinese brands put some pressure on us, but I don’t think they can cut prices to the levels we cannot bear,” said Stackmann.

Separately, electric cars are a “good fit” for Hong Kong with its high traffic density, according to David Goggins, managing director of Volkswagen Group Hong Kong. “The segment is growing very fast in Hong Kong. Customers here are open to any vehicle concept.”

One of the key Volkswagen’s strategies for Hong Kong is to introduce electric cars into the market, Goggins told the Post. “But one thing that doesn’t get help is probably the charging stations and that needs government support.”

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