VHere’s news that will please the placid German Chancellor, Olaf Scholz, who lands this Saturday, April 13 in China for a three-day visit. The Volkswagen group announced on Thursday April 11 that it would invest an additional 2.5 billion euros in its large research center in Hefei, in Anhui province, in eastern China. A decision that comes at the right time to demonstrate to the German Chancellor’s political interlocutors that his country is not abandoning the Middle Kingdom while Western investments are becoming rarer there. At the moment, the feeling in Europe, as in the United States, is more concerned about the renewed aggressiveness of Chinese exporting manufacturers. And particularly in the automotive sector.
Since in 2023, the manufacturer BYD established itself as the world number one in electric cars and dethroned Volkswagen from its place as the leading manufacturer in China, the defensive reflex has taken over. As evidenced by the investigation launched by Brussels into subsidies for Chinese electric vehicles which have already captured nearly 25% of the European market in less than two years. Europeans and Americans are tempted to give up on a Chinese terrain eaten away by the price war in which the hundred or so local producers are engaged.
Volkswagen has chosen the counter-offensive. The money invested in its center will allow it to double its workforce to develop within three years a 100% Chinese electric platform which will constitute the basis of four low-cost models. In addition, the German company is teaming up with local startup XPeng to design two more high-end models. The world upside down.
Spectacular swing
It must be said that the period is more favorable than it seems. Since January, there has been an unexpected reversal. The dynamic European electric car market suddenly stopped when the Chinese left. As a result, Volkswagen saw its sales jump in China, by 8%, including in gasoline cars. But it is in the electrical field that the shift is most spectacular. Its sales on the Old Continent fell by 24 % when they jumped by 91% in China, starting, it is true, from a very low point. That was all it took to convince the Germans that decoupling from China, strongly pushed by the Americans, was not a good idea.
But with a particularity. We are no longer talking about export but about 100% local production. This is the new German credo, “China for China”. A way of recognizing that world trade has entered a new era… and that Germany will be able to adapt.