Volkswagen Committed to China Despite Challenging EV Price War
KARL-HENRY BÖTTWICKE / STR In an exclusive interview with Welt Am Sonntag, Thomas Schäfer, CEO of Volkswagen's brand arm, has reaffirmed the company's commitment to China despite a "ruinous" electric vehicle (EV) price war by domestic rivals that has hit overseas automakers hard.
According to Schäfer, VW aims to remain the largest international automaker in China and will continue to operate its three joint ventures in the country. However, he acknowledged that the current situation is unsustainable and called for a reduction in prices.
"Looked at from an economic perspective, this price war cannot go on forever," Schäfer stated. "We can't just keep lowering prices ad infinitum; we'll be making huge losses."
Volkswagen has been struggling with falling sales in China due to intense competition from domestic manufacturers such as BYD. The company's group sales in the country plunged by 12% in the first nine months of this year.
Despite the challenges, Schäfer expressed confidence in Volkswagen's ability to adapt and innovate. The company plans to launch eight new models, including affordable entry-level EVs next year, and has already initiated cost-cutting measures at its German factories.
However, labor costs remain a significant concern for VW. According to Schäfer, the company needs to reduce its workforce in Europe and significantly adjust its production capacity to match market demand.
As part of its strategy to address financial difficulties, Volkswagen plans to close factories in Germany for the first time and reduce its workforce. The executive also emphasized the importance of investing in strategic locations such as China, the US, Mexico, and Canada to gain resilience in an increasingly competitive trade environment.
In conclusion, Schäfer reiterated VW's commitment to China despite the challenging EV price war and expressed his confidence in the company's ability to navigate these complexities through innovation and cost-cutting measures. However, experts remain cautious, acknowledging that Volkswagen's financial situation will continue to be closely watched by investors and analysts.